From NOT A LOT OF PEOPLE KNOW THAT
By Paul Homewood
Alarm bells have been ringing about the prospect of President Trump banning the export of US diesel supplies, in an attempt to lower prices in the US domestic market. We rely on the US for about a fifth of our diesel.
There is even talk of prices reaching £3.00/litre here.
But we only have ourselves to blame.
Although oil prices have risen substantially this year, diesel prices have gone up much faster than petrol. A year ago, the differential between petrol and diesel was just 8p, now it is 23p.
https://utilhub.co.uk/resources/uk-fuel-prices
The reason for this growing differential is our increasing reliance on imported diesel. We are having to compete for tight supplies on the global market.
Twenty five years ago, in 2001, the UK was a net exporter of diesel. Last year, we imported more than half our supply.
In contrast we are still a net exporter of petrol.
Oil refinery output has, of course, been tumbling for many years:
In 2001, we had nine major refineries, with capacity of 1.78 mb/d. Now we are left with just four – Fawley, Humber, Pembroke and Stanlow, which have capacity of 1 mb/d.
The reasons for refinery closures are many and varied. But there is one major, underlying problem – the Emissions Trading Scheme.
Kathryn Porter has estimated that it is currently costing the refinery sector more than £200 million a year to purchase carbon allowances. That makes them uncompetitive against imports from countries which do not have carbon taxes.
But the problem is worse than that. Refineries receive free allowances, which help to keep the cost down to £200 million. But these allowances are being phased out over time, meaning the prospect of higher costs in future.
Refineries can also opt to sell their allowances and stop producing – Grangemouth, which shut down its refining operations last year, now operates as an import terminal.
Along with the looming ban on petrol/diesel vehicles, there is little reason why companies should invest money in building new refineries or upgrading existing ones.
And drivers are now paying the price.
