The world is becoming increasingly more expensive and uncertain place for drivers. With Brexit and, more recently, drone strikes on Saudi oil refineries the single inevitable factor is an increase in petrol prices.
A new Middle East crisis?
On 14th September 2019, two major Saudi Arabian oil refineries were hit by drone strikes, the impact being the oil production from the Kingdom has been effectively halved overnight. That is equivalent to 5% of the world’s oil supply suddenly being switched off.
The reaction from the international markets was an expectation that the price of crude oil could increase to $80 per barrel or more. Experts feel that this could be short lived as the oil production system has coped with similar reductions in the past and the effect on the pump price was not massive. However, if this is the start of a longer campaign, with more strikes in the future it could lead to a more sustained increase in prices.
international energy policy expert Professor Nick Butler believes “if retaliation becomes a reality, any spike could be sustained feeding the risk of an economic recession”. So, the risk of an increase in activity could see the potential of inevitable increase in fuel costs. This has been demonstrated before during the previous wars in the region, however we have not, to date seen such an incursion on Saudi oil production within the Kingdom, so this is a somewhat unknown quantity.
Therefore, if you are the driver of a fossil fuel powered vehicle you should expect to see the pump prices rise. There may well be some levelling out over time, however, the prospect of a future war could see the increase sustained and even potentially become worse over time.
The Brexit scenario
The second potential driver for fuel increases is Brexit. The recently published Yellowhammer papers give, what the government wants to assure us is a ‘worst case scenario’ for Brexit.
The nation could be accused of Brexit fatigue, with the machinations becoming more astonishing and confusing on a daily basis. We have to presume that we will enter an environment where we have no established trade deal with the EU and, as the previously leaked Yellowhammer document has illustrated, this could well lead to issues with fuel supply.
As well as predicted delays of up to two days for lorries crossing the channel, there is a prediction of fuel shortages in London and the South-East of England and widespread panic buying, all of which is likely to push up the price of petrol and diesel. For example, the Financial Times predicted that the export of petrol to the EU would become uncompetitive with the potential loss of jobs in the petroleum industry and strike action leading to a major effect on fuel supply reliability.
Whatever happens, the change in circumstances will see an opportunity for fuel providers to increase costs. Talk of potential shortages will lead to a rush to horde fuel and this, with ongoing tensions in the Middle East affecting supplies further could see pump prices rocketing and there are those in the industry who speak of the potential of a £2 litre of petrol not being inconceivable in the near future.
Is there an alternative?
The obvious alternative is to drive an electric vehicle. Many drivers may not have considered this to be an option previously, however, with the UK now generating most of its required electricity from renewable sources, not only is this a ‘green’ option, but also one which could be isolated from the frustrations of external fuel supplies.
Recent sales of electric vehicles have tripled to an all time high, with a reduction of the sale of diesel vehicles as taxes and emissions costs start to bite. In August the Tesla Model 3 was the third most popular vehicle sold, beating the Ford Focus and Mercedes A Class.
Improvements in technology and an increase in the number of charge points means that, perhaps for the first time, electric vehicles provide a credible alternative to fossil fueled vehicles. Now most have battery range measured in hundreds of miles and noteworthy performance, tallied with a range of vehicles from most major manufacturers.
They offer a way to reduce both the cost and risk of motoring. With potential fuel shortages and the risk of escalating pump prices, the electric vehicle offers consistent and exciting driving, allowing drivers to pass queues at the pumps to charge at home or at the workplace with cost effective, renewable supplies.
Of course, history could prove us wrong. There is a possibility that Brexit will run smoothly and not affect the cost of fuel and supplies, and that the potential issues in Iran will be countered. However, this does not negate the ongoing regular cost increases for petrol and diesel which is certainly in finite supply and the costs imposed by the government in an effort to reduce emissions and reduce our carbon footprint.
Whatever happens, we are facing the sunset of the fossil fueled vehicle and the time is right to consider and purchase one of the many new, and exciting electric models on the market.