Britain could face diesel drought

British motorists are facing a potential “diesel drought” because the country has too few refineries capable of producing the fuel, reports The Telegraph.

Demand for diesel fuel has grown by 76 per cent over the past 20 years as more consumers have shifted to the traditionally more economical option.

But the RAC Foundation is warning that by 2030 diesel will outsell petrol in service stations by four litres to one. As more refineries are shut down and existing facilities not updated, this will mean that the UK will become increasingly dependent on imports.

Steve Gooding, director of the RAC Foundation, said: “Today, every other car bought is a diesel, but our refineries have struggled to keep pace with demand and have not attracted the investment they need to switch over from petrol production.”

According to the RAC Foundation, in 2009 there were nine major refineries in the UK but today there are six, with many of these up for sale.

The potential shortfall in domestic diesel supplies is also due to some older refineries being configured to produce petrol rather than diesel, said the foundation.

Refining in the UK is in decline. New investment has fallen into updating facilities capable of processing new fuels, which comply with European Union emissions regulations.

In February, Total said that it would reduce the workforce at the Lindsey refinery in Lincolnshire to 400 workers, from a staff of around 580, and halve production by about 5m tonnes of fuel at the site.
In 2013, Ineos threatened to close the giant Grangemouth refinery and petrochemicals complex in Scotland after racking up losses in the region of £600m over the past four years.

The UK became a net importer of petroleum products, including car lubricants and petrol, by a margin of some 2m tonnes in 2013, according to government data, which also revealed a 0.7 per cent decline in the consumption of fuels for transport over the same period.

“Most of our refineries – some of which are more than half a century old – were built when diesel was a niche product. Retrofitting them is a billion-pound decision that has failed to stack up for investors who see refining as a low-margin business despite our sky-high pump prices,” said Mr Gooding.

The report claims the number of diesel cars has risen dramatically, from 1.6m in 1994 to 11m in 2014. The number of heavy goods vehicles has also climbed: from 421,000 in 1994 to 474,000 in 2014. But this is below the pre-recession peak of 510,000 in 2007.

Concern over diesel shortages comes as oil prices hit multi-year lows of under $50 per barrel, driving down the cost of fuel for consumers. However, the RAC Foundation is concerned that growing dependence on fuel imports could undermine savings from lower crude prices.

“Recently motorists have benefited from falling forecourt prices. We should be concerned about the potential for things to go the other way,” said Mr Gooding.