Fuel prices have reached record highs in the UK this year. In June, petrol prices grew by 18.1 pence – the greatest increase since records began in 1990. At the beginning of July, prices for petrol reached 191.53p, and diesel prices soared to 199.07p. And, the UK isn’t the only place seeing significant price rises for fuel.
In the US, petrol prices have shot up by more than two-thirds in the last year, according to figures published in June. Globally, the cost of filling up a car, van or HGV has rocketed over the last year – particularly since the early days of the Covid-19 pandemic when fuel prices plummeted, with the cost of a barrel of crude oil around $40.
As is the case with any substantial rise in prices, there are, naturally, huge implications for a wide range of stakeholders. From consumers to suppliers, escalating fuel costs can affect a variety of stakeholders in a number of industries.
In this post, the OCI team takes a look at the impact of surging fuel prices, and examines the wider consequences for global supply chains. Read on to find out more, and if you’d like to speak with our experts – please call us today on +44 (0) 203 137 7326.
Repercussions for a Variety of Stakeholders
Increasing fuel prices have far-reaching consequences on a global scale. Simply put, when fuel prices rise, there are major effects on the entire economy – from consumer spending to transportation costs for suppliers. One of the most significant impacts is on the costs that companies across all sectors are currently experiencing.
In essence, any business that relies on logistics or transportation is hugely affected by fuel price rises, as it means that the cost of transporting goods has gone up markedly. For instance, retailers such as supermarkets are facing much higher costs when transporting via lorries, trains and ships. With these growing costs, a notable proportion of these increases will subsequently be passed along to consumers. In short, when fuel prices rise, the cost of goods does too.
As a result, consumers will experience higher prices when spending on products – whether they’re buying bread and milk, or a brand-new mobile handset. Overall, fuel price rises will mean that consumers have far less disposable income to spend within the wider economy. Consequently, there will be a fall in economic activity related to consumer spending.
Impact on Global Supply Chains
2022’s increases in petrol and diesel prices are having a considerable impact on global supply chains. Price rises are being felt at every single stage of the supply chain – from cost of materials and shipping costs to distribution costs and the price of equipment. Suppliers are passing on rises to the next stage of the supply chain, and a so-called domino effect can be seen across the entire economy. Looking towards the long-term, it remains to be seen just how long the record highs last, and experts agree that these increases won’t continue forever.
However, if there is one area that might also see increased interest – it’s sustainable supply chain management. Adopting more sustainable supply chain practices may help many organisations and companies to reduce their fuel and transportation costs, and support long-term ESG initiatives.
How OCI Can Support You
At OCI, our team of experts can support your organisation to transform its supply chain and power long-term growth. We provide tailored commercial management solutions, making smart use of our extensive global network and specialist expertise, to optimise the overall performance of large corporations and governments.
From sourcing intangibles and tangibles to logistics for optimal management of your shipments and trade flows, OCI helps clients all over the world in a number of ways. We will deliver solutions that unearth and unlock your company’s true potential, maximising the results you achieve. As we’re industry and product agnostic, we can assist a diverse range of businesses across multiple industries including Media, Technology, Pharmaceuticals, Consumables and Industrial.
If you would like to learn more about how the OCI team can help your business optimise its supply chain management and unlock long term working capital, then please do not hesitate to contact us today. You can reach us by email at hello@oci-group.co.uk or drop us a message via the online form on our website. Our specialists will be in touch with you shortly to discuss your requirements further.