Britain at risk from oil supply disruption?

Report suggests station closures and storage capacity cuts could lead to possible crisis

Findings gathered by business advisors Deloitte for the Department of Energy and Climate Change (DECC) argue that, due to reductions in storage capacities to save money, as well as the closure of thousands of petrol stations over the past 40 years means the UK is at risk of oil and petrol shortages if something was to disrupt supplies. It is estimated that the average petrol station has enough stock for just two days demand.

The report is one of two covering the impact the entry of supermarkets and the demise of independent retailers has had on the petrol retailing market. The second, produced by the Office of Fair Trading, rejected arguments from independents that competition in the market was not working because supermarkets controlled the market due to their purchasing power.

The report argues that petrol stations don't have enough stock to cope with disruption to oil supply

(Image source - Daily Mail)

John Hayes, energy minister, said the report showed the retail sector had more than enough stocks to “meet fuel supply shocks” before contingency measures were taken. However, the Petrol Retailers Association, claimed the Deloitte analysis demonstrated that the majority of forecourts were running with “dangerously low” levels of reserves.

In 2011, there were 8,700 petrol stations, down from 37,500 in 1970, with many people believing the rate of closures is due to the power of supermarkets, such as Tesco and Asda, who have petrol stations as part of nearly all of their UK stores. These supermarkets control around 40% of the petrol/diesel market (worth over £47bn a year) despite only accounting for 15% of petrol stations nationwide.