Donald Trump‘s war with Iran could bring petrol rationing, medicine shortages and empty supermarket shelves to the UK within weeks, consumers were warned today.
Former Downing Street energy expert Nick Butler said Tehran’s effective closure of the Strait of Hormuz to shipping meant there would be a global ‘shortage’ of oil in no time.
Prof Butler, who was an adviser to Gordon Brown and worked for BP for nearly three decades, insisted ministers must be ready to protect the ‘crucial sectors’ of the economy.
He told the BBC that it would mean ‘a form of rationing’, adding: ‘In the short-term, we have to look at what supply we have and look at the crucial sectors, the health service, food supply, hospitals, those are key elements that must be protected.
‘And beyond that, it is then for the Government to decide how to ration what is left if we get to that situation.’
But it came amid reports that hard-pressed families already struggling with the soaring cost of living may not get government assistance, with aid limited to benefit recipients and pensioners.
Officials are said to be examining whether to model aid on the current warm home discount scheme which gives six million people receiving pension credits or welfare cash £150 every winter.
The fighting between the US, Israel and Iran, now in its third week, has closed the Hormuz bottleneck that is used by supertankers leaving the Gulf oil production areas, since last week.
Trump has suggested the area has been mined and called for international help to protect shipping, though Sir Keir Starmer today said the UK would not be ‘drawn into a wider war’.
The PM vowed to force energy companies to pass on ‘every penny of the savings that we delivered at last year’s budget‘ to consumers, saying they would not be allowed to ‘make huge profits from the hardship of working people’.
He also insisted that switching the UK to reliance on green energy was the way to bring everyone’s bills down.
But if only benefit claimants and pensioners are eligible, millions of working households could miss out on support at a time of a general spike in the cost of living triggered by the US military action.
Domestic gas and electricity bills are covered by regulator Ofgem‘s price cap, which is fixed until June, but if the conflict continues and Iran maintains its stranglehold on shipping households could face dramatic hikes at that point.
Sir Keir Starmer today vowed to force energy companies to pass on ‘every penny of the savings that we delivered at last year’s budget’ to consumers
Additionally, diesel prices have soared by an average of 18p per litre since the start of the Middle East conflict, new figures suggest.
The RAC said the average price of the fuel at UK forecourts on Sunday was 160.3p per litre.
Asked on BBC Radio 4’s Today programme if the crisis was already going to have an effect, Prof Butler, now a visiting professor at King’s College London, said: ‘We’ve now had more than a week of almost no tankers coming out of Hormuz, that will continue this week on everything that you’ve reported this morning…
‘And there will be a real shortage, a physical shortage of supply in a few weeks’ time. How long that goes on we don’t know but I think the Government here, and other governments, must now be preparing for a significant shortfall of supply over the next two months.’
At a press conference Sir Keir told reporters: ‘We’re not ruling anything out, but it is very difficult to say at this juncture what the position will be in July, which is when the current energy cap runs out, or what the position will be in September.’
Sir Keir announced that a new fund of £53million would be paid out to help people who use fuel oil for heating, after the conflict led the uncapped price to double.
‘There’s no denying – because we’ve seen this first-hand, we saw it in Ukraine, we saw it in the Twelve-Day War, we’re seeing it again now – if you’re on the international market for oil and gas, you’re vulnerable to the price going up on the international market,’ he said.
‘Because we, the UK, have little control over that, and obviously, oil doesn’t give us control over that, because we sell onto the market.
‘What gives us control is renewables, our own home-grown energy, which is then more secure and more independent, which is why I think that we should go further and faster in relation to renewables.
‘Let’s get control of our own energy, so that whatever is happening in the world, we control what’s happening in this country.’
Analysts at Cornwall Insight have forecast that household energy bills could rise by 10 per cent from July following sharp increases in wholesale gas prices.
This would mean Ofgem’s price cap for July to September surges to £1,801 a year for a typical dual fuel household – an increase of £160 or 10 per cent on April’s cap.
Officials told the Times, which first reported the idea that help could mirror the warm homes scheme, that planning was still at an ‘early stage’.
But Caroline Abrahams, director of Age UK, said: ‘Even before prices started rising because of the war, nationally representative polling commissioned for Age UK found that this winter one in three (35 per cent) of people aged 66+, around 4.2 million, had recently cut back on heating or powering their homes.
‘The clear implication is that many older people simply cannot cope with another increase in energy costs.’
Chancellor Rachel Reeves acknowledged the ‘real and urgent problem’ for low-income households reliant on heating oil.
The Treasury said Northern Ireland, where a greater proportion of homes rely on heating oil, has been allocated £17 million, while England will receive £27million, Scotland will get £4.6million and Wales given £3.8million.
The funding allocations were based on census data, the Treasury said, and will be allocated directly to the devolved governments to be used to support vulnerable households, mostly in rural areas.