In general, accountants try to stay away from looking at politics and world events. We tend to leave those matters to economists, who like to speculate on the eventual effects of what they call ’macro’ events right down to the ’micro’ level ie particular business sectors and consumers. However, unless you’ve made a conscious decision to avoid reading or listening to news reports for the last three or so years, you’ll perhaps have noticed that we’re living in rather ’interesting’ times and that a lot of world events apparently seem to be coming together in the near future, with the distinct possibility that they will have a direct impact on your business.
Look abroad first: Donald Trump is playing with fire around the powder keg that is the Middle East, particularly as regards Iran. One miscalculated move and we could find severe disruption to crude oil supplies within a very short time and even the threat of that is enough to send crude prices through the roof. Not that Trump is the only actor on that stage who could send the whole thing up like a balloon; the Iranians and Saudis confront each other over the issue of Yemen, and in recent weeks we’ve seen what effect even a relatively small (in military terms) overspill from that confrontation can potentially have on oil supplies (and again, more immediately on oil prices) when some of the Saudi refineries were hit by drones.
Then look closer to home. More than three years on from the Brexit referendum and nothing has happened. Regarding that October 31 deadline, at the time of writing the only feasible scenarios appear to be that the UK does actually leave the EU with no deal, or that a UK government is forced to ask the EU to extend the deadline again (with no assurance that the Europeans will agree). Then throw in the possibility that around that date we may have the added uncertainty of a General Election here, with no guarantee of any resolution even after that.
a disaster for the UK?
So how will all this affect fuel and convenience retailing? Ignoring politics as such, it’s almost impossible to find any sane economist or accountant who doesn’t believe that leaving the EU without a comprehensive deal on customs tariffs with our biggest trading partners won’t be a disaster for UK businesses and the whole of our economy. In fact it’s almost as difficult to find any of these people who believe that any realistic ’deal’ the government might reach with the EU will not be worse than the position that this country has enjoyed for the last 45 years or so.
From what little has emerged into the public domain about government planning for a ’no deal’ Brexit, it would seem that in private the government shares the same view: turning the M20 into a permanent lorry park to cope with delays in goods moving in and out of Dover is just the start. There are fears that food products currently imported into the UK will perish on trucks waiting to get through Customs. Alongside a similar anticipated shortage of medicines from the EU, the government’s own planners expect this to lead to panic buying, possible rationing and then a chance of civil disorder.
With all this in mind, there does appear to be some consensus that even the most apathetic consumers may be tempted to do some stocking up before October 31. As experienced retailers will know, the next stage after that is for consumers to engage in real panic buying and hoarding. So it may be prudent to do some extra stocking up yourself, no point in doing that with perishables, but maybe some extra crates of tinned and dry goods would come in useful in a few weeks time.
There’s probably not much you can do now about the fuel side. Realistically Brexit in itself shouldn’t have a direct impact on the availability of fuel products, at least not in the short term. However, that doesn’t mean that consumer panic won’t happen any way, and there is the question about pricing. Every turn in the Brexit process seems to drive the value of the pound even lower against the dollar, so pushing oil prices up here in the UK; throw in the volatility of the Middle East and it’s difficult to see anything except rising oil prices coming our way.
Of course, it’s just possible that come the end of the month nothing will happen just like the ’Millennium Bug’ or the Mayan calendar end date; but as far as Brexit is concerned that would just defer the consequences a little longer.
From a retailing perspective it would seem sensible to stock up fuel and shop now assuming that you still can, since customers may be forming queues at your door in the very near future. Interesting times indeed.