A food distributor is facing a £2m diesel bill as prices surge in response to the Russian invasion of Ukraine.
Carmarthenshire wholesaler Castell Howell Foods has seen fuel costs increase 30% in a month for its fleet of about 150 vehicles covering Wales and the west of England.
The cost of fuel has reached record highs since Russia invaded Ukraine.
Meanwhile, one forecourt boss said staff were getting “unacceptable” abuse from some customers due to the prices.
Fuel has increased because the wholesale price for crude oil used in manufacturing petrol and diesel has increased following Russia’s invasion of Ukraine.
Castell Howell normally spends about £1.2m on fuel for its vehicles, but finance director Nigel Williams said its bill has soared in recent weeks.
“What we’re seeing over the last month has been an increase of around 30% in the prices we pay and, over the past year, an increase of around 60%,” he said.
“So that represents an increase on an annualised basis around £700,000.”
If price rises are sustained, the company faces an annual fuel cost “increasing to closer to £2m,” which he said posed “a significant challenge” for the business.
- West targets Russian energy with new restrictions
- How has Ukraine conflict affected petrol prices?
“We are taking it for granted that we’re going to have to address this ourselves by being as efficient as possible, passing as much of the price increases on, so that we’re not left with incurring losses ourselves.
“I understand the difficulty that presents to customers who are facing similar challenges and, I think, ultimately, the end user will have to pay more for products.”
Carmarthenshire garage boss Sion Jones said he was having to put the price of diesel up 22p a litre compared with his previous delivery at Valley Services, near Llandysul.
But the price has increased by a total of 36p since the war began, he said.
“The tanker itself will cost me £8,000 more… from last Wednesday.
“Not in 30 years of being here, I’ve never seen a price increase like this.”
“We’ve had to ask a few people not to call again due to abuse that some of our staff have had to take which, in my opinion, is totally unacceptable.”
Energy expert Dr Carol Bell said the oil and gas market had experienced a “tremendous period of volatility”.
“It has seen volatility in one direction, and that’s been upwards. And that has been the case, both in oil and gas,” she said.
The UK will phase out the use of Russian oil by the end of 2022, but it will not cut off Russian gas supplies.
Dr Bell said Russian oil was easier to replace than gas, because of the ability to transfer oil more easily around the world in tankers.
“The interdependence of the energy markets, particularly gas, back to Russia across the continent of Europe is something that we’ve all learned a lot more about in the last few months.
“We were already enjoying shortages and very high prices in natural gas and in energy generally in the UK.
“This is adding another layer to that.
“And it means that inflation will be with us for longer, irrespective of what happens now in Ukraine almost,” she said.
Add Comment