Downing Street fears panic at petrol pumps

 Sir Keir Starmer will hold an emergency meeting to discuss the cost-of-living crisis and how to prevent panic at the petrol pumps.

Ministers will meet on Monday to hammer out a strategy to prevent panic buying at forecourts amid concern that motorists could bleed pumps dry despite ample supplies.

The issue of fuel supplies to forecourts and how to manage any future shortage has emerged as a major concern for No 10.

One source said the Government was grappling with “behavioural science’’ and studying the 2021 fuel-supply crisis – the first for two decades – which saw pumps run dry across the country after reports of a shortage of tanker drivers.

While Britain produces more than enough petrol to cover demand, the bulk of diesel volumes come from imports, which could be disrupted as Iran continues to prevent shipping leaving the Persian Gulf.

Ministers are said to be nervous about communicating any concerns about fuel supplies for fear of sparking a rush to the pumps.

The source said: “Clearly we need to stay ahead of the situation, but that said, you have to be very responsible and careful about what you say, as 2021 showed.”

A source within No 10 said: “The advice continues to be to fill up as normal. We have a good supply and there are no immediate concerns, but we are monitoring the situation.

“Part of these conversations is always how to communicate what has been decided.”

Fuel rationing has already started to hit Europe. On Saturday night, Robert Golob, Slovenian prime minister, said drivers would be limited to buying 50 litres of fuel a day after service stations warned of shortages.

Slovakia last week separately allowed petrol stations to curb sales of diesel and impose higher prices for foreigners amid claims that drivers were travelling across borders to get cheaper prices.

The meeting of the Government’s Cobra emergency response team will also focus on the impact on the cost of living and the Government’s response to surging energy bills as the closure of the Strait of Hormuz interrupts oil supplies.

Fresh food costs will be first to rise

The cost of tomatoes and peppers will rise in the next six weeks, and the price of milk is likely to rise within six months, according to the head of the National Farmer’s Union (NFU).

Tom Bradshaw, of the NFU, told the BBC Radio 4 Today programme that pressures “span the whole food chain” and said it was something the Government should take seriously.

Fresh produce grown in glasshouses is likely to go up in price the soonest, as they are heated with natural gas. This includes foods such as cucumbers, tomatoes and peppers.

The surging price of fertiliser will also have an impact on prices in supermarkets, as livestock and dairy farmers struggle to absorb the increases.

Prices are increasing because the Strait of Hormuz carries around 30 per cent of globally traded fertilisers.

The Gulf also supplies much of the world’s ammonia and urea, used in the production of fertiliser.

The British Retail Consortium has warned that the disruption to shipping routes could affect the cost, and availability, of some goods.

Pain at the pump already real

Consumers have already felt the impact of the war in the Middle East at the petrol pump. The average cost per litre is up almost 12p since the beginning of the conflict.

Diesel prices have surged even further, by 24p since the outbreak of war in the Middle East, with prices rising by 2p over the course of just two days last week, according to the RAC.

Simon Williams of the RAC warned consumers that further cost increases “look all but inevitable” in the coming days.

He predicted that the cost of unleaded was likely to reach 150p per litre, and diesel 180p per litre, by Easter.

The surging costs have prompted the RAC and the AA to issue advice to motorists on how to save fuel, such as cutting non-essential journeys and avoiding harsh accelerating.

The International Energy Agency (IEA) has said people should limit commuting where possible, as it reduces fuel demand.

It also urged governments to lower motorway speed limits by at least 6mph to cut fuel use for passenger and freight vehicles.

The Government has pushed back against such advice and said that people should “continue to go about their days in a normal fashion”.

Steve Reed, the Housing Secretary, said on Sunday there was “no need to ration fuel” and that the Government was monitoring the situation.

Cameron Brown, who was an adviser to Kwasi Kwarteng, the business and energy secretary during the last petrol crisis in 2021, said that what had begun as a logistics issue at a handful of filling stations in the South East after Covid ballooned into a crisis because of what he called “irresponsible media reporting”.

He said: “The system was strained but there was no fuel shortage at UK refineries, just delays getting that to forecourts to meet extreme demand.

“But after the media coverage, people started to queue up at forecourts across the country and that led to real shortages. So we then had to get a lot of trucks out to replenish that demand.”

‘Catastrophic impact’ on mortgages

Those looking to take out or renew a mortgage have been warned that the conflict in the Middle East has had a “catastrophic impact” on the UK market.

Britain’s biggest banks pushed up mortgage rates after the Bank of England warned it could raise borrowing costs if the war drives up inflation.

The average five-year fixed rate has risen from 4.95 per cent at the beginning of this month to 5.39 per cent as of last Friday, the highest rate since July 2024, according to Moneyfacts.

Two-year fixes have also increased, from 4.83 per cent at the start of March to 5.35 per cent last Friday, putting it at the highest level since March 2025.

Rachel Springall, of Moneyfacts, said that product choice had fallen by almost 1,000 options in a fortnight, and warned there may be further changes to come.

Around 1.8 million deals are scheduled to end in 2026, with the majority of borrowers facing the need to secure a new mortgage amid the global turmoil.

Halifax and Santander raised their mortgage rates on Friday, following in the footsteps of Barclays.

Experts warned that borrowers should act quickly to secure rates and safeguard against further increases.

Price of summer holidays will be higher

Holidays are set to get more expensive as plane tickets go up in price.

The cost of jet fuel has almost doubled since the war in the Middle East began, according to the International Air Transport Association (IATA).

“You are already seeing airlines put prices up,” said Willie Walsh, director general of IATA.

Michael O’Leary, the chief executive of Ryanair, said there had been a “meaningful surge in pricing” for tickets for flights “through April and May and after”.

He warned that the price of summer holidays in Europe would be higher this year because fewer destinations meant more people would be holidaying on the continent.

“If it goes on longer I think the demand profile in Europe will be stronger because nobody is going to be able to go to the Gulf,” he said. “More people will stay in Europe, demand will be stronger and pricing will be higher.”

On top of this, jet fuel prices will feed through into ticket prices. “Oil prices will begin to bite,” he said.

“So in the short term to medium term there likely is more demand in intra-EU, higher prices, but also higher prices on our unhedged oil.”

Kenton Jarvis, chief executive of easyJet, said last week that people who had not yet booked a summer break should do so now to beat higher prices.

“I think the message would be to book as soon as possible, because that will start feeding in at some stage,” he said.

Holidaymakers may also find they have fewer flights and destinations to choose from. SAS, Scandinavia’s largest airline, last week cancelled flights because jet fuel had become prohibitively expensive. Air France-KLM has said it is considering cancelling routes to parts of south-east Asia over fears that there will not be enough fuel there to get planes back to base.

Energy price rise to hit factories

Energy-intensive industries have warned that British factories face production cuts within weeks as a result of surging gas prices.

These are likely to include chemical companies, ceramics businesses and glass manufacturers, all of which heavily rely on gas to power high-temperature machinery.

Arjan Geveke, the director of the Energy Intensive Users Group, told The Telegraph last week that those industries were at “high risk” of reducing their production.

He said that the Government would probably need to introduce support within weeks, or even sooner, if energy prices remain as they are.

Chris O’Shea, the chief executive of Centrica, which owns British Gas, said that increases in energy prices may be “inescapable” if the situation in the Middle East does not change,

He said that the world had lost about 20 per cent of the 100 million barrels of oil used each day as a result of the closure of the Strait of Hormuz. It had also resulted in the loss of up to 4 per cent of global gas supplies.

The chemicals sector will additionally suffer from an increase in gas prices as it is used as feedstock, the raw material that many products are made from.