As the Russia and Ukraine conflict rages on and Europe cracks down on economic sanctions against the world’s second-largest oil producer, there have been growing concerns on what this means for the petrol crisis long-term, PBC Today explains
In 2021, we saw the beginning of the petrol crisis. The long-term effects of the pandemic caused a shortage of drivers due to the aging demographic of the sector, meaning a lot of workers retired during Covid-19. Adding to the already growing issue, in September fuel demand increased, which combined with the shortage of delivery drivers, created a mismatch between supply and demand, causing fuel prices to skyrocket. By October 2021, fuel prices were at their highest level since May.
Now, as the Russia and Ukraine conflict rages on, and more economic sanctions are put in place to deter Russia from further invasion of Ukraine, we are beginning to see the start of a detrimental petrol shortage and price increase, as prices hit a record high, spiking to £1.50 a litre.
This means that fuelling vehicles will become the most expensive that it has ever been. If petrol costs rise to £1.60 per litre, filling up a family car will cost as much as £88, according to RAC.
‘Untold financial difficulties for many people’
RAC fuel spokesman Simon Williams commented: “Both petrol and diesel reached new record levels yesterday. Unleaded is nearly 149.5p a litre and diesel almost 153p.
“Russia’s actions will now push petrol pump prices up to £1.50 very soon. The question then becomes where will this stop and how much can drivers take, just as many are using their cars more and returning to workplaces.
“If the oil price was to increase to 110 US dollars, there’s a very real danger the average price of petrol would hit £1.55 a litre.
“This would cause untold financial difficulties for many people who depend on their cars for getting to work and running their lives as it would skyrocket the cost of a full tank to £85.
“At 120 US dollars a barrel – without any change to the exchange rate which is currently at 1.35 US dollars – we would be looking £1.60 a litre and £88 for a full tank.”
What does the petrol crisis mean for the construction industry?
The petrol crisis will likely increase construction project costs, in terms of delays and production costs. We already saw this with the fuel crisis last September, but as prices hit an all-time-high, we can only expect this to get worse.
The soaring prices in fuel will not only hit large companies, but individual contractors. Many contractors rely on public petrol stations to fill their vans, so shortages and rising costs may mean a shortage in work and a means to go and make a living.
How Russian invasion of Ukraine could impact on cost of living:
* Energy price cap could hit £3,000 in October
* Food prices could rise by 8.2% in April
* Petrol prices expected to rise to more than £1.70 a litre
— Steven Swinford (@Steven_Swinford) February 24, 2022
Petrol has surged past the grim milestone of £1.50 a litre for the first time.
Industry data out this morning shows the Russia-Ukraine crisis is already impacting pump prices:
⛽️ petrol now on average 151.25p a litre
⛽️ diesel now 154.72p a litre on average #CostOfLivingCrisis— David Churchill (@David_Churchill) February 28, 2022
