Returning home from Tokyo a couple of days ago, I spent much of the 14-plus hour flight thinking of what I might be writing here. I wasn’t quite expecting to be thinking about another war between the US and Iran; I thought that would probably be next month.
But here we are, and Donald Trump has pressed the big red ‘start’ button again. Now as I write this there’s been no immediate reaction in terms of oil prices, mostly because it’s a Saturday, and partly because the price of crude had already risen by around 3% on the Friday before the start of open hostilities. But give them time, and there’s likely to be a big spike in the coming days. How high, and how long it stays up is obviously going to depend on how long this war lasts.
As we all noted last June when the Americans last decided to bomb Iran in ’Operation Hammer’, the slightly longer-term impact of the war depends on whether the Iranians try to close the Strait of Hormuz to all shipping; something which they have the ability to do relatively easily.
Around 25% of all worldwide oil trade passes through that channel, much of that being middle eastern oil going to China, but a significant proportion is also destined for Europe. In fact, since Europe is no-longer importing oil from Russia, we’re very dependent indeed on the trade through the Strait. One could argue that the Americans have been quite ‘cute’ in that respect; a year ago their own oil supplies would potentially have suffered from a choking of traffic through there, but Trump took care of that a few weeks ago by effectively seizing Venezuela’s oil reserves. Never mind about Europe and China, the US can carry-on as it pleases.
Without wishing to be alarmist, or encourage panic-buying, in my view it would be sensible for UK fuel retailers to gently raise their base-stock levels while they can; that way they should be able to ride-out any short-term supply issues that may be coming. I’ve spent enough years in this industry to know that UK consumers are rather prone to emptying the shelves (and storage tanks) at a moment’s notice when their preferred tabloid news supplier mentions that there’s going to be a shortage of anything.
So, what was I intending to write about before the latest outbreak of hostilities? Actually, it was to do with my holiday to the exotic Far East. We’re often told by the experts that the future is already happening there; places like Singapore, China, Taiwan and Japan have embraced technology and are ahead of us in everything from AI, through to internet speeds and electric cars. I didn’t get to mainland China other than a brief stop in Hong Kong, but did visit the other named places, plus Vietnam.
Many of our travels were in some rather exotic MPVs which aren’t available in the UK (check-out the Toyota Vellfire/Alphard) and much to my fellow travellers’ amusement gave me the chance to talk with the drivers about their cars, petrol stations and fuel prices (old habits die hard).
My first surprise was that I expected to see the same flood of all-electric Chinese car brands that we’re seeing in the UK; wrong, most of the cars we saw were actually hybrids, and few were Chinese.
Fuel prices didn’t seem to be big issue as far as the drivers were concerned: they go up a bit, come down a bit and are much the same across most areas within any particular country that we were in. Perhaps even more of a surprise was that there seemed to be plenty of petrol stations – large ones, with many ancillary services attached, and different brands – at least in the major cities that we visited, but also out in rural areas as far as we went.
There appeared to be multiple flavours of petrol available, although diesel seemed to be confined to one grade at a minority of pumps. Interestingly, the most common shop branding seemed to be the almost ubiquitous 7-11, although I never managed to determine whether that was a specific brand, or just a generic description. The point is, that if indeed that’s what the future looks like, then it’s still reasonably familiar, and not quite the scenario that some in Europe imagine, where oil-based retailing is going to vanish any time soon.
- Jan Mikula represents nationwide franchise accounting company EKW Group – ekwgroup.co.uk
