Bank crisis, high street blues and now petrol pumps could run dry

SCOTLAND is facing its biggest energy crisis since the fuel blockades of 2000 which brought the country to a grinding halt.

Then, petrol stations ran dry as truckers and farmers blockaded oil depots in protest at rising fuel duties. Now, as a strike at Scotland's sole oil refinery looks inevitable, filling stations across the country have only three days worth of fuel left.

Contingency plans are believed to have been drawn up to bring fuel up from refineries in England, such as the Stanlow facility in Cheshire, if the strike goes ahead as planned next weekend. But industry insiders believe that widespread and protracted petrol shortages are almost inevitable.

Fears have also been expressed that it could result in domestic power cuts, supermarket food shortages and put the emergency services and hospitals under severe pressure.

Grangemouth distributes more than 200,000 barrels of fuel every day and supplies petrol station across most of Scotland as well as parts of the north of England. Even a brief halt to production and distribution would have considerable knock-on effects.

A spokesman for the UK Petroleum Industry Association, which represents the country's nine major oil body, said filling stations had between three to seven days' fuel supply left, depending on their location.

He said: "Grangemouth is a significant oil refinery for the whole of Scotland. The danger is that people will dash out and stockpile fuel and generate shortages. Filling stations in the main towns and cities are usually resupplied two to three days a week – while in rural areas it is around one a week."

During the fuel blockades of 2000 hundreds of petrol stations across Scotland were forced to close with the severe shortages having a knock-on effect on buses, trains and supermarket supplies.

David Capitanchik, a national security and oil industry expert with Robert Gordon University in Aberdeen, said a Grangemouth strike could have an even more severe impact as electricity is generated at the site.

"Any significant stoppage could cause serious fuel shortages in Scotland and beyond for a month or longer. It is does stop functioning then it could also have serious effects for domestic power supplies.

"I have heard it said in the past that any terrorist attack on Grangemouth would mean lights going out in parts of London. If the plant is brought to a halt by strike action then there is no doubt that it would be a very serious matter and peoples' domestic power supplies could be affected.

"It could also potentially impact on the movement of food supplies and the emergency services."

The problem for supermarkets is that they operate a "just in time" delivery system enabling them to cut down warehouse stocks, relying on regular deliveries to keep shelves filled. A day without deliveries would wipe out some stocks of chilled and perishable goods.

Other products would begin to run out within three or four days, although supermarkets say they can last a week without deliveries of most goods.

Supermarket giants Tesco, ASDA, Sainsbury's and Morrisons have contingency supplies of fuel in their distribution centres which would be used in the event of shortages.

Fuel shortages would also leave water, gas and electricity companies without supplies to carry out repairs. The Scottish Government last night said it had "initiated appropriate contingency measures" but did not divulge details.

However, the fuel blockades of eight years ago give an insight to the likely UK-wide response to industrial action at Grangemouth.

Then Tony Blair readied the Army, with 80 fully-loaded military tankers and 160 troops moved to secret locations across the country. Business leaders said the crisis cost the country £250m a day.

Shops began rationing food, schools were closed, factories told workers to go home and farmers warned that livestock would starve.

In 2000 several hospitals were forced to cancel all routine operations and many ambulance services were forced to limit how many emergency calls they could respond to.

The stress on services meant the NHS was put on red alert for the first time in more than a decade.

Agreements mean that this time supplies from England will get through to the emergency services and hospitals.

However, it may see non-vital ambulance journeys being temporarily cancelled and other non-emergency incidents being put on hold.

The Federation of Small Business in Scotland believed the impact on strike could have a disastrous effect on the economy.

Spokesman Stuart Mackinnon said: "This has come totally out-of-the-blue and is terrible news for Scotland's small businesses.

"We would encourage both the unions and the management to get around the table and get this sorted."

Top prices

Even when it is available, the rising price of oil is driving UK fuel prices up to unprecedented levels, writes Marc Horne.

As ever, Scotland's most rural and remote areas are worst affected.

The Welcome Inn filling station at Lower Barvas, on the Isle of Lewis, may well be selling the most expensive petrol in the country.

Last night, unleaded petrol there was £1.20.9 a litre.

Richard Mackay & Sons at Durness, Sutherland, is thought to be selling the dearest diesel, at £1.32 a litre.

However, neither comes close to matching the prices of the Chelsea Cloisters filling station in London. There the cost of a litre of unleaded petrol is £1.34.

If you know of more expensive fuel, contact Scotland on Sunday at [e-mail] or phone [phone]

Consumers cutting back on treats as credit crunch bites

Murdo MacLeod, Jen Lavery and Samantha Novick

SCOTTISH consumers are cutting back on many of life's little luxuries as the credit crunch continues to bite.

Families hit by a wallet-crippling combination of rising food costs, soaring petrol prices and mortgage hikes are increasingly substituting budget options when it comes to shopping and services.

Last month, research by Scotland on Sunday revealed that living costs for many middle-class Scottish families would be between £1,000 and £4,000 more in the coming year, driven in part by an 11% increase in the typical shopping basket.

Many shoppers have been forced to find ways of sparing the pennies. They include:

• Avoiding £25 taxis by taking £2.50 night buses instead;

• Shunning £750 Highland dress outfits outright in favour of a £350 kilt and hiring the rest of the outfit for £65.

• Booking holidays in Scotland rather than flying overseas, with one budget hotel chain saying bookings for May are up by more than 20%.

Across the UK, budget shops are benefiting from the economic downturn as shoppers turn away from the high street where sales have slumped by 1.6%.

Primark, the discount clothes retailer, has seen trade increase by 4%. Aldi, the budget supermarket, has reported a 25% increase in sales.

John Keogh, proprietor of Greenock kilt firm Keogh and Savage, said: "We are noticing a difference because of the credit crunch. And it's in sales of Highland dress. Instead of buying the whole thing, they are instead buying the kilt and maybe hiring the rest. We also notice that, while previously you would see people come in and say that they wanted a complete outfit, just because they wanted it, it's now very much a special thing – say a 21st or a 30th or a 40th."

Taxi firms say the change has been noticeable for just over a month.

Andrew Walker, who runs D&S Cabs in Dunblane, said: "Yes, it is certainly noticeable. Not very many people are out taking taxis any more – and the pubs are quieter and the restaurants are quieter. We are definitely noticing an impact on our income."

Cut-price retailer TK Maxx – where a £130 designer Quiksilver coat can be bought for £50 – is among the winners. It said the economic squeeze would lead to it opening new stores in Scotland.

Spokeswoman Helen Gunter said: "Our value proposition is certainly very likeable during times like these. TK Maxx is very popular with people looking to save. We are currently doing very well in Scotland and will be expanding."

In addition, restaurants north of the Border have been telling suppliers to cut costs.

One wine supplier said: "This is my third recession and it's following a familiar pattern.

"Restaurants are talking to suppliers about how to cut costs – they will be using cheaper cuts of meat, for example. As far as wine is concerned, because of the weakness of the dollar, we are looking to source wine increasingly from dollar-based economies such as Chile and Argentina in order to cut costs.

"Very rich people are less affected by recessions and will continue to eat out. For the rest of us, eating out will return to being something of an occasion, like it used to be."

A spokesman for cut-price hotel chain Travelodge said bookings for Scottish leisure breaks had increased sharply.

"We are already seeing a 22.5% increase in bookings for the May bank holiday and that trend is being reflected at our 23 Scottish hotels, showing that more people are opting to take their holidays here. What we're finding is that travellers who would otherwise go for more expensive hotels are saving money by going for discount hotels."

The increase in discount hotel bookings is in sharp contrast to the overall hotel sector, where occupancy rates fell 1.3% in three months.

Shoppers at the Meadowbank Centre in Edinburgh admitted they were being squeezed.

Support worker Deborah Reilly said: "I've seen reports and I have felt we've had to cut back a bit recently."

Nick Gladding, an analyst at Verdict research, said: "It is clear that people are cutting back on discretionary spending. Electricals, furniture and DIY items are all showing signs of the slowdown.

"There is going to be a cloud over the consumer economy all year. And there are signs that middle-class shoppers are trading down, with discount stores doing very well out of people's belt tightening."

Fiona Moriarty, director of the Scottish Retail Consortium, said: "Things are slightly different in Scotland compared to the rest of the country. We're slightly helped by the fact that council tax is not going up by so much, and we have more people working in the public sector so they are not as much affected by the downturn."