The drop in Sterling’s value after the Brexit vote has seemingly rattled some oil suppliers world-wide, and they’re seeking compensation. So, whether you voted Leave or Remain, if your business is dependent upon UK transport operations, it will now be footing the bill of the recent fuel price increases.
But, hang on. Does our currency’s instability really mean that some fuel providers are justified in considerably hiking prices, or could there be a bit more to this? Hmm…
Here’s the thing, fuel cost campaigners believe there’s a new phenomenon emerging following the UK’s decision to leave the European Union, namely: post-Brexit opportunism.
Is fuel shooting up to as much as seven or even eight pence per litre really unavoidable, or have bulk providers been opportunistic, taking the chance to bolster profits as we begin the process of saying ‘adiós’ to the Spanish, ‘auf wiedersehen’ to the Germans and, well, you get the gist…
The fact of the matter is, as pump prices have risen by seven or eight pence per litre since the 23rd June, wholesale prices have, in parallel, decreased by three to four pence per litre. Those in the logistics industry are far from happy with this disparity. Fuel is such a significant factor in the overall cost of running operations, even marginal increases can decimate profits.
Challenging the Economic Argument
So, as the logistics industry now starts to challenge the economic argument for current fuel price rises, fuel cost campaigners are back in the political sphere, pushing for change. They can certainly make a strong case for the ushering in of an official government fuel price regulator – basically a control mechanism or ‘watchdog’ tasked with ensuring fuel prices are constrained not to exceed reasonable levels, thus avoiding artificial inflation.
The argument that, rather than escalating, oil and fuel wholesale costs have actually fallen since the Referendum (according to FairFuelUK) is certainly a compelling initial one for campaigners to put forward. Some campaigners believe that the fuel market overall has for too long operated unchecked, with seemingly plausible reasons for price surges being taken simply at face value, rather than being subject to more rigorous scrutiny. Furthermore, there are those who would assert that the cost of bulk diesel for hauliers has been allowed to fluctuate too easily, with no real accountability being demanded.
Oil supplier’s stated concerns about: ‘dramatic crude oil prices increases’, ‘worrying post-Brexit currency movements’, ‘exchange rate unpredictability’, and ‘the need for fuel prices to be set in line with cost shifts in the market’, are not easy for buyers to examine thoroughly. Moreover, over-arching phrases such as ‘market uncertainty’ are too generalised and opaque to support meaningful analysis.
Of course, in the upheaval that the Referendum outcome may cause, there’s bound to be a change to the status quo, in myriad industries, not just in oil and fuel supply. However, fuel campaigners argue that this doesn’t mean businesses and consumers should be expected to pay inflated prices in an unquestioning way, and without there being some kind of control over pricing.
With all of this, the implementation of an official government fuel price regulator is back on the political agenda. So, this apparent post-Brexit opportunism may yet prove a blessing in disguise – the catalyst to an ever-vigilant fuel price watchdog being put in place.