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Releasing diesel reserves could be a “short-term buffer” against soaring prices, but risks limiting protection against future shocks, experts have said as the Government insisted that Britain was not facing a shortage. Average diesel prices reached £2 a litre for the first time in the UK on Friday, RAC figures show, as the war in Iran continues to disrupt the passage of oil tankers through the Strait of Hormuz. Britain joined talks with Brussels on Thursday as they discussed whether to release fuel stocks amid pressure from the US to begin drawing down on reserves.
Transport minister Keir Mather insisted that Britain has a diverse range of supply of diesel and that people should not be concerned about shortages. Jonathan Owens , an operations and supply chain expert for the University of Salford, said: “Releasing emergency stocks can provide an important short-term buffer. “Additional diesel entering the market could help maintain availability, reduce immediate supply pressures and potentially limit extreme price movements.
“Crucially, it also buys businesses time to adapt their logistics, sourcing and inventory strategies.” However, Mr Owens said emergency stocks were “effectively an insurance policy”, adding: “Using them now reduces protection against future disruption until those stocks are replenished.” He said that drawing down on reserves can help manage the “immediate symptoms of a supply shock” but that it does not resolve underlying problems such as around weaker refining capacity and dependence on international energy markets. “Emergency stocks can provide valuable breathing space, but they are a short-term intervention rather than a long-term solution,” he said. US President Donald Trump has said he was “thinking” about introducing a ban on exports of US diesel.
This would force Britain to compete with other countries for an alternative. Angel Talavera, chief European economist for Oxford Economics, said a ban would have “devastating consequences” for consumers. “If enacted, a full ban could lift European diesel prices by 40% to 50%, which would have devastating consequences for consumers who have seen prices at the pump already go up by 40% since the start of the US war with Iran,” he said.
It comes as companies have been flagging that higher prices are pushing up transportation costs and putting pressure on their supply chains.
Source: The Independent
