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Petrol price to break through £5 a gallon as forecourts sell out amid fuel panic
Last updated at 00:52am on 27.04.08A major fuel crisis will send petrol and diesel prices soaring this weekend.
Industrial action has led to the closure of the Grangemouth refinery in Scotland, which produces 10 per cent of the country's fuel.
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Motorists queue to fill up at Shell petrol station in Gateshead after concerns grew over the fuel supplies following news that a key pipeline is to be temporarily closed
Knock-on effects will mean the shutdown of a pipeline that brings a third of Britain's North Sea oil ashore.
The crisis is being deepened by clear signs that motorists are panic-buying, despite pleas for calm from Gordon Brown.
There have also been allegations of profiteering by garages.
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Dumfries: Long queues form outside a Tesco petrol station
Critical: The vast Grangemouth refinery, which priduces 10 per cent of the country's fuel, was closed down last night
As a result, the average price of unleaded looks certain to break through the £5 a gallon mark (£1.10 a litre).
It is already averaging £1.09 a litre and rises of as much as 10p are being forecast.
Experts are also warning that if a large proportion of the UK's 33million motorists panic and fill up their tanks simultaneously, the whole oil company storage system could be drained.
In Scotland, some garages were rationing customers yesterday as queues stretched out on to roads.
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Rationing: Garage owners have been forced to limit the amount of fuel each customer can buy
Some filling stations had to shut as their supplies ran out in the face of rocketing demand.
The 48-hour strike by 1,200 workers at the giant Grangemouth oil refinery - part of a bitter pensions dispute - is not due to begin until tomorrow.
But operators Ineos closed the plant last night and warned that it could take up to three weeks for full production to resume.
Oil refinery bosses said the shutdown "will impact on the whole of the UK" and ministers admitted they could not guarantee forecourt supplies.
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It could take weeks for full production to resume at Grangemouth refinery
Last night BP was preparing to shut down the main Forties pipeline, which brings in 725,000 barrels of oil a day from the North Sea - more than a third of the UK's total oil output.
Oil in the pipeline, which is fed by up to 70 fields, is taken to BP's Kinneil depot, near Grangemouth, where gas is removed and the oil stabilised.
The plant relies on both steam and electricity from the Grangemouth refinery, however, and BP said it has to be shut down 24 hours before the power goes off.
Ineos chief executive Tom Crotty said Unite, the union representing the refinery workers, had refused "repeated requests", to maintain power and steam supplies to Kinneil.
Gordon Brown, on a visit to Swansea, said there was no need for the industrial action and called on the two sides to talk.
A Downing Street spokesman said that while the industry believed there were sufficient stocks to keep forecourts re-supplied, the Government was urging motorists not to buy extra fuel.
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That will do nicely: Where they were allowed, motorists started to stockpile fuel
But energy minister Malcolm Wicks sparked controversy when he admitted he could not guarantee that every garage and forecourt would have petrol every time motorists arrived to fill up.
More increases in fuel prices will hit families hard, especially against a background of rising food and housing costs.
Despite Downing Street's effort to avoid a repeat of the fuel protest chaos which so nearly derailed Tony Blair's administration in 2000, there were huge queues at filling stations in Scotland.
One worker at a Morrison's petrol station in Edinburgh said: "People are really panic buying and there is no need.
"We have had queues constantly - I don't think we will run out of fuel but if people keep buying as much as they do then I suppose it's a possibility.
"People are waiting ten to 15 minutes to get to a pump. We've had to get staff cover because we're so busy."
In Glasgow, some garages had imposed limits and several had run out of unleaded fuel.
Rural areas of Scotland were worst hit, with diesel virtually unobtainable in swathes of the country.
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Walk out: Workers at the Grangemouth site in Scotland
Oil industry bosses reported "widespread panic buying" and conceded that it was almost inevitable that filling stations across Scotland and possibly beyond could run dry.
The AA said motorists could expect to see another 3p a litre rise and said there was already evidence of some profiteering.
It warned of fury on the forecourts if motorists were confronted with 5p to 10p a litre rises.
The once unthinkable £5 gallon is now likely to become the norm for unleaded.
Chris Hunt, director of the UK Petroleum Industry Association, said that the UK's cars can store about three times as much in their fuel tanks as the oil industry could keep in its own storage systems.
He said: "If everyone fills up at once, you can see a week and a half's fuel stocks soaked up in just one day."
Experts say the UK has 67 days of reserves in the system.
There was deep frustration that Grangemouth still has big stocks but the 600 tankers a day which normally visit it will be unable to access them.
Hundreds of 'angry and defiant' workers held a mass meeting at the refinery yesterday.
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Grangemouth is one of the biggest oil refineries in the country
Tony Woodley, joint leader of the Unite union, said they were determined to win the dispute.
He said that if Ineos remained "intransigent" over plans to close its final salary pension scheme to new workers an escalation of the dispute was "absolutely inevitable".
A BP spokesman said the decision to shut down the North Sea pipeline would be left as late as possible, but preparations had already started.
The offshore oil industry body Oil and Gas UK warned that closing the pipeline could cost an estimated £50million a day in lost production - with taxpayers, through the Treasury, taking half that hit.
Energy Minister Malcolm Wicks
Tories attacked the Government for not acting earlier to end the dispute. Business spokesman Alan Duncan said: "The Government has been very slow to cotton onto the harmful effects of this strike.
"A prolonged strike would affect us all, with very serious consequences for the oil industry and for petrol prices."
Liberal Democrat Sarah Teather said: "Malcolm Wicks's comments that the Government could not guarantee petrol supply were very ill-conceived. "Ministers must be very careful not to end up talking the country into an avoidable fuel crisis."
Fuel protesters weighed into the crisis by announcing they would seize on the Government's discomfort by mounting a demonstration in London next Tuesday to highlight the 'excessive' tax levied on petrol and diesel - up to 70p in the pound.
A spokesman for the umbrella group 'TransAction' said: "A coffin that will represent the demise of the UK road haulage industry will be carried on the back of a low loader from Spalding in Lincolnshire to Park Lane and then to the House of Commons."
Reader views (9)
Here's a sample of the latest views published.
I apologize for not being more familiar with your situation, but if there are shortages, I have to suppose there must be some sort of price control in place. The surest way to scale back demand bring more supply to market is to allow prices to rise. Prices are the method by which the market communicates the level of need to producers and suppliers. Intervention in the price discovery mechanism always results in market distortions. I know prices are already very high, but it really comes to a choice between higher prices or shortages and prices will soon fall again as more supply reaches the market. No amount of government intervention can repeal the laws of supply and demand.
And do you really allow your government to rob you at a rate of 70 percent? When you are willing to fund government at that level of taxation, you will get just what you deserve - more government.
- Dph, Homewood, USA
Why doesn't the government emphasise of switching to electric cars, and people will only buy electric cars if the price is reasonable this would also mean that there would less crisis at the pumps and less CO2 emmisions burning into the atmosphere.
- Craig, Coventry
Malcolm Wicks's comments that the Government could not guarantee petrol supply is just a statement of the blindingly obvious. If - choose your own numbers if you don't like mine - we are all driving around with, on average, tanks just over half full and on average we each fill up every ten days, the effect of everyone rushing to fill up today would require filling stations to be resupplied at five times the normal rate. Is there, for each tanker on the road, another four standing idle just in case? For each driver, another four? Of course not. The best answer, as in the 1973-4 fuel crisis would be for filling stations to impose a minimum purchase, not a maximum, probably somewhere around £30.
- Tonyb, Twickenham
If Labour weren't in the pocket of the trade unions then perhaps they'd put pressure on the blackmailers to abandon this needless strike.
- Ian, London
More complacency from the government in the face of a looming crisis. Also will we never learn - if fuel is in short supply there should be a minimum charge at the pump not a maximum otherwise the shortage is compounded by people topping up all the time
- Pete, Barry Wales
If Malcolm Wicks makes the sort of statement he made today, it is little wonder that people who need petrol are buying what they can while they can. Fuel is a necessity for many and we should be able to expect the representative of a Government that has made so much of Civil Contingency Planning to be able to offer more certainty and comfort than Mr Wicks, with customary New Labour complacency, appears capable of doing. It is too easy for failing Ministers to accuse the public of panic buying when they are left with little choice.
- James Elliott, Eastbourne UK
Surely the parties involved are grown up enough to resolve this dispute, rather than creating havoc for many and ending--like it always does in some kind of bitter shoddy compromise.
- William Grierson, Kimpton, UK
Can this government mess everything up? Yes they can.
- Marian, London, NW1
If there is a fuel blockade that affects most petrol stations I wonder how much money the gov. will loose in tax and duty? Gutted for them.
- Dave, London
