Concerns over queues at the petrol pump are growing at the very top levels of both business and government.
And whatever Westminster says, there are credible figures warning that forecourts could soon be hit by shortages due to the ongoing Iran war.
Nick Butler, the former BP executive who worked for Gordon Brown in government, said yesterday that those oil and gas shortfalls could come in the next two to three weeks.
He said the government should be “seriously planning how they’re going to handle that” – a message that is starkly at odds with the “keep calm and carry on” approach of ministers to date.
But behind the scenes, the worries go much further than fuel, and contingency planning more widely is now the government’s number one live priority.
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I’ve picked up that there are three areas where industry is warning government that it needs to be more active and show more concern.
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In turn, senior figures in government insist they are aware and working at pace in a complicated environment.
Here are the three areas.
Jet fuel availability
The first is jet fuel availability – a commodity at risk because it can’t be stored for very long.
The price is up 72% since the Iran crisis began, and some airlines don’t hedge their fuel purchases – so that is likely to be quickly passed through into the price of tickets, so what happens to summer and autumn flights will become an issue.
This morning, Bloomberg pushed a story about soaring airfares ruining your summer holiday: expect this theme to increase.
Ammonia for fertilisers
The second worry is around ammonia for fertilisers, because we simply don’t have enough facilities to produce it in the UK, and there’s a worry about the impact on food prices at this critical time.
That’s one of those things where price, as much as supply, makes a difference, because price spikes just mean lower use and lower yields. And that means higher food prices, above and beyond those from higher fuel and transport costs.
This will be a big and painful issue for the government over the next year.
Helium
And the third area of concern that business is being warned about is around helium, which is critical for the semi-conductor industry as well as MRI scanners, scientific equipment and defence systems.
Qatar hosts one of only two global sources.
There are moves the government can make – including mandated industry-held stockpiles for high-tech minerals and gases, and “growth partnerships” with alternative sources like Canada and Norway to bypass the Middle Eastern bottleneck.
But like all the other priority areas, it’s complicated, targeted and everyone is fighting globally for the same things.
These are not the full list of things that could be subject to a shortage – but those that senior business figures worry that the government need to show more active signs of planning around.
Read more:
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Fairly imminently, the Treasury is meeting with bank chief executives, with a headline message to speak more to vulnerable customers, amid ongoing fears of interest rate rises and inflation pushing people into hardship.
Business Secretary Peter Kyle had a call with industry leaders yesterday with the topline message “we’re on it” and an appeal for data.
And we’ve had the first concrete development on contingencies for business, with a really fascinating politics around what’s going on in Teesside: government help to re-open the Ensus Teesside plant – which produces Ethanol and CO2 – which was a casualty of the the UK-US trade deal, and Trump’s insistence that the US get a carve out for Ethanol at the last moment.
The Teesside plant closed pretty much straight after.
Business Secretary Peter Kyle has now acted due to concerns that imported carbon dioxide could run short, partly because of the impact of soaring energy prices caused by the Iran war on European fertiliser factories, which also make the gas as a by-product.
Some plants in the EU have also been closed for planned maintenance.
The Financial Times quotes one government official as saying: “The irony is that the plant was shut because of a deal with Trump and now it’s reopening because of Trump’s war in Iran.”
This is the first move in a complicated jigsaw to keep the economy working in the face of the Iran crisis. There will be many more.
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