An energy adviser has spelled out the potential impact of the Iran conflict and warned that 104,000 people could lose their jobs within six months, while Britain faces rationing too
Brits face petrol rationing, medicine shortages and empty supermarket shelves within weeks due to the Iran war, according to a top energy adviser.
Professor Nick Butler said Iran’s closure of the Strait of Hormuz to shipping in response to US-Israeli airstrikes meant there would soon be a global ‘shortage’ of oil. The expert – who worked for BP for three decades and was an adviser to ex-Prime Minister Gordon Brown – said ministers must be ready to protect ‘crucial sectors’ of the economy.
He said it would mean bringing in a ‘form of rationing’. The expert said: “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.”
“Beyond that it is then for the Government to decide how to ration what is left if we get to that situation. We’ve now had more than a week of almost no tankers coming out of Hormuz. That will continue this week.
“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.”
While benefit claimants and pensioners will get Government help with bills working families look set to miss out. Officials are reportedly considering issuing aid via the warm home discount scheme which gives six million on pension credits or welfare £150 every winter.
Fighting between the US, Israel and Iran – now in its third week – has closed the Hormuz bottleneck used by supertankers leaving the Gulf oil production areas since last week. US President Donald Trump wants the area mined and has called for international help to protect shipping.
But Prime Minister Sir Keir Starmer said the UK would not be ‘drawn into a wider war’. He 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’.
The PM said switching the UK to reliance on green energy was the way to bring folks’ bills down. Domestic gas and electricity bills are covered by regulator Ofgem’s price cap which is fixed until June.
But if the conflict continues households could then face huge hikes. Diesel prices have soared by an average of 18p-per-litre since the war began. The RAC said the average price of the fuel at UK forecourts on Sunday was 160.3p-per-litre.
Analysts at Cornwall Insight forecast household energy bills could rise by 10% from July following sharp increases in wholesale gas prices. This would mean Ofgem’s price cap for July to September will surge to £1,801-a-year for a typical dual-fuel household – an increase of £160 or 10% on April’s cap.
Caroline Abrahams, director of Age UK, said before the war a study found one in three of over-66s – 4.2 million – had cut back on heating or powering their homes. She added: “The clear implication is that many older people simply cannot cope with another increase in energy costs.”
Economists estimate 104,000 Brits will lose their jobs within six months due to the war. Unemployment will peak because Middle East turmoil will force the Bank of England to delay interest rate cuts.
James Smith, at investment bank ING, said employers will seek to offset rising energy costs by cutting jobs or freezing hiring. He said: “It depends how long energy prices stay high.
“If we’re in a scenario where the disruption lasts three months or so then I would imagine unemployment would be pushing above 5.5%.” Jordan Rochester, at Japanese bank Mizuho, said jobseekers will face an even tougher market.
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