New law gives powers to prevent fuel panic-buying

Proposed new legislation giving the government greater powers to secure fuel supplies could help to prevent a repeat of the panic-buying in September, according to ministers.

Under the new law, BP would have been obliged to alert the business, energy and industrial strategy department to issues with its fuel deliveries, giving the government time to intervene and “to ensure that there was no disruption to supply”, a letter from Kwasi Kwarteng, the business secretary, claims.

In the event, the letter says, “BP was under no obligation to — and therefore did not — report to BEIS, the department responsible for energy resilience, the issues which it faced in making deliveries to forecourts”. The company instead raised the issues over driver shortages at a meeting with the Cabinet Office, details of which were leaked later, sparking panic-buying that led to many forecourts running dry in late September.

The proposed new powers are contained in the draft Downstream Oil Resilience Bill that was presented to parliament in June. It would give ministers greater control over companies involved in producing and supplying fuel in Britain, such as refinery owners and forecourt operators.

The bill would enable ministers to demand information from companies, to direct them to keep critical infrastructure running and would enable the government to provide financial support to the sector to improve resilience. It was drawn up amid fears over the strength of the sector as motorists switch to electric vehicles and as demand for petrol and diesel declines.

However, in a letter to the business, energy and industrial strategy select committee, which has been scrutinising the plans, Kwarteng suggested that the powers also could have prevented this autumn’s chaos by giving the government “a clearer picture of the situation in the sector and emerging risks beforehand . . . We could have used the direction powers to ensure that there was no disruption to supply by asking suppliers to take certain actions in relation to their downstream oil activities.”

In a report, MPs on the select committee back the proposed bill, but warn that its powers are “unusually and unacceptably broad”.

The UK Petrol Industry Association, which represents refinery operators, told the committee in evidence that the powers were so broad that they could “negatively influence industry decisions to invest in the UK”.

Darren Jones, chairman of the committee, said that the bill should be revised “to include more detail about why, when and how these new powers would be used”.

A business department spokeswoman said that the bill would “ensure that critical services, such as fire engines, ambulances and police vehicles, can continue to receive the fuel on which they rely”. She said that the “transition away from fossil fuels presents new challenges” and that the bill would ensure Britain was “fully prepared and resilient to any disruptions well into the future”.

The powers would be used “proportionately and only as back-stop when all other options have been exhausted”, she added.