Exclusive: Powers for monitoring resilience in the fuel sector were delayed despite repeated warnings from Whitehall
Ministers ignored warnings about serious flaws within the UK’s fuel supply chains for years, The Independent has learnt.
It has emerged that the government’s own documents and statements, dating back years, lay bare a host of concerns about the vulnerability of the petrol and diesel supply chain.
Ed Miliband, Labour’s shadow business secretary, said in response that it was “appalling and wilful intransigence and complacency that has got us to this point”.
The government was accused of dragging its feet for at least four years on creating legal powers to avoid fuel disruption as officials warned of further supply issues to come.
Panic buying of fuel entered its fifth day after lorry driver shortages caused some petrol stations to close – triggering fears over wider outages.
“Ministers must urgently address the 100,000 HGV driver shortfall, which is at the root of this chaos,” Mr Miliband added. “With every hour and day that goes by the public will feel increasingly outraged by the incompetent and shambolic government that has brought us to the point.”
Sales of jerry cans to store fuel rose sharply over the weekend, with retailer Halfords reporting a seventeen-fold increase in the number sold compared with the same period a week earlier. Transport secretary, Grant Shapps, advised the public against filling empty drinking bottles with fuel on Tuesday.
Then business minister, and now trade secretary, Anne-Marie Trevelyan, told parliament in a June written ministerial statement that the government was bringing forward new legislation so it could monitor fuel supplies in the country.
This was necessary because of an “increased risk of market disruption” and the sector’s reduced “capacity to react to sudden supply and demand shocks”.
The UK has been a net importer of petroleum products since 2006, and British refineries further curbed their capacity in response to falling demand during the pandemic. The UK’s largest refineries have also increased their reliance upon third parties in recent years to cut costs, contracting out parts of their supply chain. These factors have added to concerns about keeping track of UK fuel stocks.
Ms Trevelyan said in June that the government did not have the tools it needed to monitor fuel stocks and that companies had fallen short on managing “higher impact risks” leaving the fuel supply chain exposed to pressures from “accidents, severe weather, malicious threats, industrial action, and financial failure”.
The government first mooted these new powers in the draft Downstream Oil Resilience Bill in 2017, but failed to bring forward legislation that would empower it to monitor the fuel supply chain until June this year.
Officials familiar with fuel security told The Independent that fresh legislation had slipped down the list of the government’s priorities despite a sharp worsening of the fuel sector’s resilience in light of the pandemic, and studies of the sectors’ financial frailties in the run-up to Brexit.
“In the last year, Covid-19 has impacted heavily on the sector, and industry are now looking to how they can recover sustainably. Ensuring a reliable and secure fuel supply to essential services in coming years will be critical,” said Ms Trevelyan in a separate statement to parliament on 7 June this year.
“The government can take emergency powers during a crisis – primarily through the Energy Act 1976 and the Civil Contingencies Act 2004. However, our ability to proactively protect fuel supply is limited. The bill seeks to address this deficiency, recognising that it is better to prevent than react,” she added.
A business department spokesperson said it already had a number of powers to help ensure continuity of fuel supply, but that it recognised the need to “modernise them”.
“That’s why our new Downstream Oil Resilience Bill will both complement existing powers, and strengthen them further to ensure we are fully prepared and resilient to any disruptions well into the future,” the spokesperson said.
Fractures in UK fuel security were flagged to government in 2012, when a major refinery, Coryton, collapsed due to financial pressures. Concerns about petrol delivery disruption and refineries’ finances were also raised in the lead-up to Brexit, one of the top priorities of the emergency planning effort codenamed Operation Yellow Hammer.
The sector has been made more fragile by the sudden drop in demand for fuel amid the Covid-19 lockdowns. This reduced call for fuel hit some petrol makers’ balance sheets leaving them vulnerable to disruption even without the current crunch in specialist lorry driver capacity.
Essar Oil, which generates around a sixth of the fuel used in British lorries and cars, was forced to defend its financial position over the weekend amid reports it was close to collapse. It said it was “in discussions” about a “short extension” with HMRC over a £223m payment for a VAT bill.
A spokesperson for the UK Petroleum Industry Association, (UKPIA), which represents refineries in the UK, said that it had shared “early feedback on the Downstream Oil Resilience Bill with BEIS, and we will further develop our understanding of the Bill as more details emerge”.
They added that UKPIA will “continue to work with BEIS to consider both the effectiveness of potential new measures and if they would contribute meaningfully to the strong market mechanisms and legislation already in place”.