Richard North, 21/08/2019  

The BBC seems to have joined Project Fear big time, running a story revealed unto the sainted Faisal Islam about how a no-deal Brexit is going to run us out of fuel and we're all going to die – or something like that.

This was something touched upon in the "Yellowhammer" dossier, where it was reported that tariffs applied to UK refined petroleum products would make their export to EU Member States uncompetitive.

Industry, the dossier says, had plans to mitigate the impact on refinery margins and profitability, but UK government policy to set petrol import tariffs at zero percent inadvertently undermines these plans.

This, we are told, will lead to big financial losses and the closure of two refineries (which are converted to import terminals) with about 2,000 direct job losses. It is then hypothesised that resulting strike action at refineries would lead to disruptions to fuel availability for 1-2 weeks in the regions they directly supply.

I have a little difficulty with this as the EU provides us with its Market Access Database which lists the tariffs for thousands of product codes. And, as far as I can make out, refined petroleum gets the code 27090010, which gives us a zero tariff.

The BBC knows different, of course, and it is reporting that the current EU tariff on fuel imports from third countries is 4.7 percent, which will be applied to our exports to Ireland and other EU Member States, once we have left with a no-deal Brexit.

On the other hand, since the UK government has decided to apply a zero tariff on our imports, that means the UK market will be open to a flood of cheaper imports from Russia and other major exporters, while we lose out on exports to the EU states, which become "uneconomical".

The theory is that the resultant closure of UK refineries would lead to a long-term increase in consumer prices. Somehow, though, this has been elided into the general rhetoric on fuel shortages, which are supposed to arise in the first instance from congestion around the Channel ports, which disrupt the distribution of supplies.

When we add hypothesised strike action, this obviously makes the situation worse and, should that ever happen, it's pretty certain that panic buying will kick in and there will be empty tanks at the garages, long queues and rationing.

To beef up their story, the BBC has "seen" some of the contingency plans for local authorities. And, although Aberdeen City Council lists as a low risk "reduced/lack of fuel affecting waste disposal, school transportation etc", the state broadcaster still manages to work in its name alongside suggestions that "fuel supply could be an issue".

The thing is that, typically, the national transport fleet averages half-empty (or half-full) tanks so, if collectively, the bulk of owner/operators decide to keep their tanks full, that in itself is enough to trigger a shortage at the pumps, even without any downturn in production.

With that, it is difficult to avoid the impression that the tariff issue is being overstated. Petrol is subject to massive duties plus VAT. This is charged on the duty-inclusive price, so we have a situation where customers are paying tax on a tax.

In Ireland, for instance, some 60 percent of the pump price goes to the government in duty and VAT, making a 4.7 percent tariff rather small beer.

One also suspects that Ireland, with established supply arrangements, could compensate for any tariffs by reducing slightly the duty payable, so that the net effect would be revenue-neutral, with no increase in the pump price either.

Altogether, therefore, it would look as if Aberdeen City Council has got it right, listing as a low risk "reduced/lack of fuel". And so far, only the BBC has been running the shortage story big – as lead item on the main evening TV news.

The rest of the media seems to be holding off, although the likes of Sky News is making the most of the "Yellowhammer" story.

Three days into that story, since the Sunday Times broke it over the weekend, we're getting a taste of how the media will be playing Brexit as we get closer to the 31 October deadline. Throughout the decades, the media has never needed an excuse to run headline stories on scares, and has never been troubled by minor things such as facts.

I think my favourite was at the height of the 1988-9 Salmonella and eggs scare, when the Observer gave its front-page lead to the graphic tale of a man who had eaten a fried egg for his breakfast, and was being hospitalised with salmonella food poisoning by lunch-time.

Given that the typical incubation period of Salmonellosis is 18 hours, and less than eight hours is unheard of, a period of just over four hours rates as extremely improbable – and demonstrably so. But that didn't stop the Observer running with the story.

Over the next couple of months, I rather suspect that we are going to see an increasing flow of Brexit-related scare stories, rising to a flood as the day of our departure draws closer. This will not be Project Fear, as such, but the natural tendency of the media to exploit bad news for its own commercial purposes.

In terms of supplies – whether food, medicines or fuel – such stories can very easily trigger panic buying, turning predictions into self-fulfilling prophesies. Largely random and unpredictable, these could frustrate planners' attempts to maintain the flow of key products.

And this is not helped by the lack of certainty as to the outcome of the Brexit process. Although I have little doubt that we are facing a no-deal exit on 31 October – especially after the response of Donald Tusk to Johnson's letter – at this late stage the possibility of a last-minute deal cannot be ruled out, even if that is extremely unlikely.

If, as some suspect, Johnson is indulging in a devious blame-shifting strategy, where he wants to pin the responsibility firmly on the EU – thus clearing the way for a general election – then we can expect the uncertainty to continue to the last minute. It will be necessary to maintain the charade of "talks" right up to the eleventh hour, to give the impression that serious attempts are being made to reach an orderly settlement.

Where the European Commission is relying on a form of words - as it did in yesterday's response to Johnson – to the effect that it stands "ready to work constructively with the UK and within our mandate", hope will forever spring eternal that something can be fixed – right up to the moment when it can't.

And when Angela Merkel is also talking in terms of the EU being "ready to find a solution to the backstop issue" – although she is confining the prospect of any talks to the political declaration – this would appear to leave the door open in a way that can be exploited by Johnson and his advisers.

All of this creates a febrile atmosphere, where rumour and misinformation can thrive, and where the media – as with the BBC and its petrol story – can build on slender threads to start multiple scares running.

The lack of information then feeds on itself, intensifying the uncertainty and making it very difficult for non-government actors to do any serious planning without incurring what may turn out to be unnecessary expense.

Unable to take considered action, we are all reduced to the role of spectators where, in terms of action we have little available to us but to respond to the ebb and flow of [often baseless] media scares. It might be said that the only things now open to us are to do or [panic] buy.

comments powered by Disqus

Log in

Sign THA

The Many, Not the Few