UK Prime Minister Boris Johnson pledged to delegates at the United Nations in New York that the UK will cut carbon emissions by 68 percent from 1990 levels by 2030. “We have the tools for a green industrial revolution,” he said.
Sure enough, when the Prime Minister returned to London, he found that many cars could no longer operate due to lack of gasoline. That was one way to cut carbon emissions—but probably not what Johnson had in mind when he gave his speech.
Traffic is still backed up in London as motorists line up to buy gasoline, a situation reminiscent of the 1970s. With a scarcity of truck drivers to supply gas stations with fuel, Johnson has put the army on standby. British gasoline prices have hit an 8-year high of over $7 per U.S. gallon, or 136.6 British pence per liter.
Price hikes may discourage panic buying, but one London resident told me, “I queued for over an hour on Friday, and it felt surreal… I’m committed to taking the car twice a week to carry groceries. We’re all affected, because the taxi-drivers and delivery-drivers are also finding it hard to get fuel. So most deliveries are taking a bit longer because of the logistical challenges. And the supermarket orders are more likely to have missing items.”
Covid-19 has taught us the weaknesses of supply chains. The UK has 100,000 vacancies for truck drivers, and they appear to be the weak link in the supply of gasoline.
At the same time as vacancies for truck drivers, the UK has about 1.5 million people receiving unemployment benefits and 1.6 million on furlough. Those on furlough are laid-off workers who were still attached to their jobs and expected to return to them—they are not counted as unemployed. The government paid 80 percent of their wages under the Coronavirus Job Retention Scheme for most of the pandemic, and now pays 60 percent. The program will end in October.
Payments to unemployed and furloughed workers are made with the best of intentions, but they keep underutilized workers from finding new jobs, including driving trucks. Surely some could drive trucks, even temporarily.
To add to the difficulty of getting truck drivers, the UK’s exit from the European Union means that foreign truck drivers, who used to fill job openings in Britain, can no longer come without special visas.
The jump in crude oil prices is another factor spurring fuel price increases. The price of Brent crude has almost doubled over the past year to around $80 a barrel.
It’s not only truck drivers who are needed in Britain. During the week ending September 19, there were a record-high 1.9 million job vacancies in the UK, according to the Recruitment and Employment Confederation, compared to about 34 million people in the labor force. For comparison, the United States has 11 million unfilled job openings, with 162 million people in the labor force.
Labor shortages and other problems with supply chains are resulting in an increase in prices. Inflation is about 3 percent in the UK, lower than the U.S. rate of 6 percent, but high enough to affect paychecks. If supply chains don’t keep up with demand, prices will go higher, leading to further erosion of the value of paychecks and to unwillingness to work.
Last month the city of Xiamen in southeastern China was one of several cities locked down, impeding the manufacture of electronics. With the interwoven global economy, Asian factories closed by Covid lead to shortages in America and Britain—and again to price rises.
Although many in the UK are blaming Covid-19 and Brexit for shortages of gasoline, the heart of the problem likely lies closer to home. The result of generous unemployment benefits is that employers can’t get the workers they need to deliver gasoline and diesel—bringing the transportation system to a halt. There must be a better means to reach Johnson’s emissions targets.
