The Financial Times has reported that the UK could face diesel shortages by mid-May if disruption in the Middle East continues:
“Supermarkets and refineries are on course to run down their stockpiles of diesel by mid-May if the conflict in Iran is not resolved soon.”
That claim, and the commentary that surrounds it, is important because of what it reveals about how our economy is organised and how poorly prepared it is for predictable shocks.
First, there is the issue of dependence. The UK imports only around a tenth of its diesel directly from the Middle East, which is an argument being used by ministers at present to suggest that there is no cause for concern. However, the reality is that more than 40 per cent of UK diesel comes from refineries in the Netherlands and Belgium, which in turn depend heavily on Middle Eastern crude. As a result, our supply chains are global, and we are systemically vulnerable as a consequence. The suggestion that the UK is insulated from geopolitical shocks is simply not credible.
Second, if the claim in the article is correct, a further two-week closure of the Strait of Hormuz could cut UK diesel imports by 40 per cent. That is an indication of an extraordinary level of fragility resulting from exposure to a single point of failure. Any system that can be so easily disrupted is, by definition, not resilient. It is, instead, optimised for cost efficiency at the expense of security.
Third, there is the role of pricing implicit in the FT's article, which suggests, without offering country opinion, that shortages might be avoided if prices rise sufficiently to curb demand. In other words, the apparently endorsed solution to scarcity is to make fuel unaffordable for some users. This is standard textbook market logic that should be expected from the Financial Times, but it is deeply problematic. It assumes that those with the greatest need for fuel are also those most able to pay. That is plainly untrue. Essential workers, those on low incomes, and those in rural areas will, in reality, bear the brunt of this crisis, and serious economic and social injustice will arise as a consequence.
Fourth, there is an obvious contradiction at the heart of government policy. The Chancellor, Rachel Reeves, has warned against “profiteering” and “price gouging”. At the same time, traders spoken to by the FT are suggesting that higher prices may be necessary to reduce demand. The government appears to want both lower prices and lower consumption, and these are goals not easily reconciled within a market framework. Rachael Reeves has to make up her mind about what she is really going to do, because of that rationing, her goals appear unachievable.
Fifth, there is the issue of information management on this issue. The government is not apparently commenting publicly on fuel supply risks for fear of triggering panic buying. That may be understandable, but it also reveals a lack of trust in the public and a reliance on secrecy rather than transparency. Markets, meanwhile, are being reassured privately. That asymmetry is troubling and could ultimately lead to a worse outcome than candidly explaining the true situation and taking steps to manage it.
The consequences of this situation are significant.
To begin with, inflationary pressure is almost inevitable. Hauliers are already facing a significant pricing increase, which is only going to get worse and which will feed through into the cost of goods. This will disproportionately affect those least able to absorb higher prices.
In addition, there is the risk of social disruption. Panic buying has already been observed in other countries. The UK is not immune. Indeed, the mere expectation of shortage can create the conditions for it. This is a classic case of a self-fulfilling prophecy.
There is also a deeper structural issue. The UK's energy system is clearly not designed with resilience in mind. Like most of the neoliberal economy, it is dependent on just-in-time supply chains, minimal stockholding, and global sourcing. That model may minimise costs in stable conditions, but it performs very badly under stress.
And then there is the environmental dimension. The suggestion that people should drive less or work from home to reduce fuel demand is entirely sensible. But it is being framed as a temporary response to crisis, rather than as part of a long-term strategy for reducing fossil fuel dependence. That is a missed opportunity. The required response to this crisis is systemic, and not temporary.
So what conclusions should we draw?
First, the UK needs a serious strategy for energy security. That means diversifying supply, increasing domestic capacity where possible, and maintaining adequate strategic reserves. The current approach is clearly inadequate.
Second, we need to rethink the role of markets in essential goods. Pricing mechanisms that ration access based on ability to pay are not appropriate for something as fundamental as energy. There is a strong case for more direct intervention, including rationing if necessary, to ensure fair access.
Third, transparency matters. The public should be treated as capable of understanding risk and responding responsibly. Withholding information may avoid short-term panic, but it undermines trust in the long run.
Fourth, this is a reminder of the need to accelerate the transition away from fossil fuels. Dependency on imported oil creates vulnerability, whether it be economically, politically, or environmentally. Investing in alternatives is not just about climate policy; it is about resilience.
Finally, and most importantly, what this issue represents is a failure of political imagination. The risks we are now facing were foreseeable. That they have not been addressed reflects a broader unwillingness to challenge the assumptions of neoliberal economic policy. Those assumptions prioritise efficiency over resilience, markets over planning, and short-term cost over long-term security. The vital point, however, is that they are just assumptions unrelated to the real world. Real economic planning has to be based on the actuality of our existence, and this crisis proves that this is far from the case.
If this crisis forces a reconsideration of that planning and a move away from neoliberal thinking, it may yet have some value. But that will only happen if we are willing to learn the right lessons and act on them, and that may be the biggest assumption of all.
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It seems rather than sensible strategy and rationing to ensure those that need fuel to supply us our food and care for us can continue, we will wait for a crisis. Those in cities with a public transport option will be okay, but those of us who live in areas with no alternative may find ourselves unable to get fuel needed for essential work journeys etc. Lots of us already work from home, but have to travel to for services Londoners can walk to.
The situation in the middle east is deeply unstable and unlikely to be easily resolved. What is wrong with Rachel Reeves that seems totally unable to think strategically or have the slightest insight into the impacts of her decisions? Her NI hike has had a huge impact on jobs in the South West, but her London centric city focussed view isn’t interested.
[…] I have already noted this morning, the current fossil fuel crisis that we are facing delivers an urgent reminder that the world has […]
The Trump induced crisis brutally shows that neoliberalism has failed. The outsourcing, just in time supply chains are collapsing.
Expecting “markets” to produce the correct answer is patently incorrect.
This crisis shows the stupidity of the USA, 20% of the worlds supply of helium which is vital for chip production, and running other equipment like MRI scanners, comes from the Gulf. If the Houthi’s join in and block the Red Sea that’s nearly 30% of the world’s oil supply out of action.
Change must come in the UK. The UK needs huge investment to repair its infrastructure, schools, health service, remove dependence on US software, move to sustainable energy production and so on.
We have to start with getting the message out that yes the UK can afford it and must afford it. Money creation rules OK!
[…] have already published two posts this morning, here and here, in which I have discussed the madness of neoliberal economics and how its preferred […]
From reading National Preservation yesterday it seems that most hauliers ‘hedge’ their fuel so the real impact – assuming of course they can still get fuel will be when they take out new contracts
The story of diesel is a joke in the modern era.
I remember when it was cheaper than petrol and looked down on.
Then they started to improve the engines for domestic buyers because fleet buyers of company cars extolled their cheapness. Slovenly engines were turbocharged; claims that diesel engines burned their fuel more completely became urban myths (because it takes a long time for a diesel engine to get warm enough to do that); lies were told about particulate filters; pollution was understated by corrupt manufacturers; mpg claims ruled the roost and every one went diesel even me…………………so the oil companies put up the price to make up for fewer visits to the pump. Gotcha!
My brother works on lorries and his view is that the diesel explosion was one of the worst things in the auto industry ever. Diesel was never really meant for domestic use and he, like all those who work on industrial diesels (locomotives for example) know that it is a dirty form of combustion best left to HGVs and tractors and of course railways – not large scale everyday personal transport. On diesel, we have been totally had. Marketing over reality; managed exploitation over utility and poor air quality in our cities and much more to boot.
Shocking.
You are talking about DERV, road going fuel, ferries fuel, domestic heating oil are all closely related as is aviation JET fuel.
JetA1 is considered to be diesel fuel with the wax removed and anti freezing additive added.
Those of us old enough remember the derv fuelled trucks fuel freezing in the winter crossing the high level roads like Shap.
I think strategic barriers to trade can serve as necessary tools when pure free trade leaves societies vulnerable.Globalisation has delivered cheaper consumer goods, but often at the expense of local industries, skilled jobs, and supply chain security. We’ve witnessed manufacturing hollowed out, communities gutted, and over-reliance on distant suppliers for essentials—from food and medicine to critical minerals. Trade deficits and financialized economies allow wealthy elites to benefit while workers bear the brunt of disruption. Tariffs or targeted protections aren’t inherently “anti-economy”; they can buy time for domestic investment, retraining, and rebuilding productive capacity that markets alone neglect.Consider strategic sectors like green technology, defense-related manufacturing, or agriculture. Blind adherence to comparative advantage assumes frictionless adjustment, ignoring real-world lags in labor mobility, infrastructure gaps, and geopolitical risks. Mild protectionism—think temporary safeguards rather than isolationism—could encourage reshoring, foster innovation at home, and reduce exposure to volatile global shocks, as seen in recent pandemics and conflicts.That said, warnings against tariffs enriching the already powerful ring true too: poorly designed measures risk inflation, retaliation, and cronyism. The goal shouldn’t be autarky but balanced policy that pairs selective protections with robust public investment in skills, R&D, and sustainable industry. Free trade has merits in theory, yet in practice, it has exacerbated inequality and fragility.A pragmatic middle path acknowledges that economies serve people, not abstract efficiency. Strategic protectionism, used judiciously, might help rebalance toward resilience without abandoning openness entirely. Murphy’s emphasis on real-world constraints over ideological purity offers a useful nudge in that direction.
I think this is why progressive protectionism has withered on the vine.
Get your finger out Rachel. I drive my diesel vehicle for my job, I can walk to the shops thankfully, but care needs don’t reduce due to fuel prices. My manager tells me the mileage rates are set by HMRC, so we just have to suck up the cost.
It seems to me that it also shows that market based economies work when the supply side is unconstrained. For essential items, it needs to be able to produce to meet demand. The moment there are an exogenous events that limit the quantity available, the least well-off will always suffer. During WW2, this was coped with via rationing. I’m far from clear on what options would work in today’s world even if it could be implemented, as I suspect that would be significant resistance to rationing with immense political resistance.
Sadly, and perhaps I just lack imagination, but I don’t see any fair solution to the problem of ensuring that all in our society have their fair share of available essentials. However, I would like to see (and perhaps be involved in) discussions. The alternative is that I suspect rationing when it’s needed will just be cobbled together without carefully planning and thought.