Diesel prices are soaring. Does Britain have a plan besides hoping Donald Trump backs down?

Over the last few years, we have navigated a pandemic, energy crises, soaring inflation, higher interest rates, and repeated shocks to global supply chains.

But at some point, uncertainty itself becomes an unacceptable cost of doing business, and we are rapidly reaching that point with the latest crisis: diesel.

Donald Trump is considering restricting US diesel exports as he attempts to bring down fuel prices for American consumers. His administration has also been pressuring European countries, particularly France and Germany, to release emergency diesel reserves to help ease global prices. There’s certainly some irony here given that the war with Iran is one of the key issues causing soaring prices, and there are the mid-term elections, which are no doubt on his mind.

For Britain, this matters enormously because the UK imports more than half of the diesel it uses, with the US accounting for around a third of those imports. Meanwhile, average UK diesel prices have already reached record levels of more than £2 a litre in some areas.

This isn't a theoretical problem about what might happen several months from now. Businesses are paying the price today. At UK Commercial Group, our monthly fuel bill has risen from around £40,000 to £55,000. That is an extra £15,000 every month simply to keep our engineers and teams moving around the country doing their jobs, and £15,000 less I can invest to grow the business.

Multiply that across construction, logistics, manufacturing, agriculture, retail, facilities management and thousands of other businesses, and you begin to understand the scale of the problem. The Government must urgently seek an exemption for Britain from any US export ban or restriction.

That brings up uncomfortable questions we can no longer ignore. Successive governments have made decisions about North Sea oil and Britain's refining capacity without paying enough attention to our long-term energy resilience.

The UK now has only four operating oil refineries and does not produce enough diesel domestically to meet demand. We cannot change those decisions overnight, but at the very least we can learn from them and start doing something about it.

The Government says Britain has diverse and resilient fuel supplies and is engaging with international partners and the fuel industry. We have also been involved in discussions with European partners over the potential release of strategic reserves. That is welcome, but businesses need to know what happens next.

If supplies become seriously constrained, could diesel rationing or prioritisation be introduced? If so, which sectors would receive priority and what would happen to businesses operating essential vehicle fleets? And at what point would emergency measures be triggered?

Businesses cannot plan around rumours. If the Government is considering its contingency plans, it needs to explain them because the danger isn't simply that diesel becomes more expensive.

If these pressures continue into the medium term, the costs will work their way through virtually every sector of the economy.

Hauliers pay more to move goods, construction companies pay more to operate machinery and transport workers, farmers pay more to produce food and service businesses pay more to keep vehicles on the road. Some industries, including agriculture and certain other eligible sectors, can use lower-taxed red diesel for specific purposes, but they are not insulated from the pressures. Red diesel prices are also rising and fluctuating, making it increasingly difficult for businesses to forecast their fuel costs, price work accurately and plan with confidence.

Businesses can absorb increases for a while, but ultimately higher costs feed into prices, risking adding another inflationary pressure just when companies and households desperately need stability.

Nobody knows yet whether President Trump will ultimately impose an export ban, but hoping that he doesn't is not an economic strategy. Britain needs to be negotiating now, planning now and communicating now. As business leaders, we can deal with difficult circumstances, but what is much harder is not knowing what those circumstances will be.

Give us clarity, and give us a plan.

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Tony Earnshaw is the Founder and CEO of UK Commercial Group.

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