Using evidence from Extract 1 below, and fully labelled demand and supply diagrams of your own, essay answering the following two questions:

1. What happened to the supply and demand for vehicle fuel in the autumn of 2021, including effects on equilibrium price and quantity for vehicle fuel over that time period?
2. What are the intended effects on fuel supply and demand of the government policies aimed at counteracting those market effects?

Extract 1

Extracted from John Detrixhe, The Quartz, 'Why the UK has a fuel shortage', 27 September 2021

Filling stations in the UK are running dry, as a shortage of truck drivers and panic buying leave British motorists stranded. The government insists there's plenty of fuel. The shortfall, instead, appears to stem from a long-running lack of truck drivers - the UK had a deficit of about 60,000 drivers before the pandemic and the shortfall has grown to 100,000 in recent months, according to the Road Haulage Association (RHA). It's unclear whether, and how quickly, the government's plans to bring in workers from the EU can repair the supply chain.

'This announcement is the equivalent of throwing a thimble of water on a bonfire', British Chambers of Commerce president Ruby McGregor-Smith said of the government's plans for worker visas.

Brits are scrambling to buy fuel, exacerbating a shortfall that some officials say was relatively minor until motorists started hoarding gasoline and diesel. The lack of fuel results from 'panic buying, pure and simple', Petrol Retailers Association (PRA) chairman Brian Madderson told the BBC. Some two-thirds of the PRA's 5,500 members are out of supplies, he said, while the remainder are running low and may soon be exhausted. The UK has more than 8,000 filling stations.

What is causing the truck driver shortage in the UK? Many countries, from the US to Germany, have a deficit of trained truck drivers. In the UK, the shortfall has been inflamed by retirements, post-Brexit difficulties in hiring workers from the EU, and drivers leaving the industry for higher-paying jobs in other sectors, according to the RHA. Some 40,000 driving tests were canceled last year because [of] Covid-19, and the RHA says the pace of certification and licensing is too slow to make up for the disruption. Some reports and studies cite working conditions as a reason as well as tax changes, known as IR35, that have crimped earnings by as much as 25%.

How officials are trying to alleviate the fuel crisis

UK politicians are trying to repair the damage by, among other things, issuing 5,000 temporary visas for foreign drivers, training thousands of new drivers, and encouraging drivers to return to the industry. Politicians are suspending competition rules, known as the Downstream Oil Protocol, to make it easier for energy companies to target parts of the UK with the most severe strains in fuel deliveries.

'The industries must also play their part with working conditions continuing to improve and the deserved salary increases continuing to be maintained in order for companies to retain new drivers', transport secretary Grant Shapps said in the statement.

(Detrixhe, 2021)

Extract 2

Extracted from BBC News, 'Petrol shortage: Is the fuel crisis improving?', 5 October 2021

Only 127 petrol tanker drivers from the EU have applied for temporary visas to help tackle the petrol crisis, according to the prime minister. The government is offering 300 short-term visas for overseas drivers. Meanwhile, military personnel have started driving fuel tankers to help resupply petrol stations.

Has the petrol shortage improved?

The Petrol Retailers Association (PRA) - which represents nearly 5,500 of the UK's 8,000 filling stations - says the worst-affected areas have seen a 'marginal' improvement but still face a 'challenging' time. It said about a fifth of forecourts in London and south-east England were out of fuel on Monday.But elsewhere in Britain, that figure was 8% and there had been a 'marked' improvement, the association said.

What''s the government doing?

Last week the government said it would offer temporary visas for 5,000 overseas HGV drivers - including 300 immediate visas for tanker drivers. But Boris Johnson told BBC Breakfast that so far only 127 European Union fuel drivers have applied for the scheme.

He said the low number of applicants reflected a 'global' issue causing 'a particular problem in the UK'. He blamed long-standing underinvestment in pay and driver facilities. Separately, about 200 Army and RAF personnel - including 100 drivers - will help deliver fuel to forecourts in the hardest-hit areas, including London and south-east England. They have been given training in safety procedures, equipment and forecourt driving manoeuvres.

Other measures include:

• A suspension of competition law between oil firms, which the government said would make it easier for companies to share information and prioritise areas most in need
• The process for getting an HGV driver licence will be sped up, and nearly one million letters have been sent to existing HGV drivers to encourage them back into the industry, plus there are plans to train 4,000 others.

Is there a limit on how much petrol I can buy?

The government has powers to limit how much fuel drivers can buy, and the hours when they can buy it, but hasn't used them so far.

Some petrol stations have introduced a 30 cap on the amount of petrol people can buy.

How did the petrol shortage start?

On 23 September, BP warned it would have to "temporarily" close a handful of its petrol stations, because of a lack of drivers. Long queues started to build up outside stations across Great Britain in the following days, amid fears that fuel might run out.

So what's behind the crisis?

Oil companies have stressed there is plenty of petrol available.

However, the key issue is there aren't enough drivers to deliver it to forecourts.

There's an estimated shortage of more than 100,000 HGV drivers, which has already caused problems for a range of retailers - from supermarkets to fast food chains.

Fuel tanker drivers need additional safety qualifications on top of their HGV licence to be able to transport chemicals such as petrol.

What caused the shortage?

There are a number of reasons - and many countries across Europe have been affected - but the UK has been especially badly hit.

After Brexit, many European drivers returned to their home countries, or moved elsewhere, because working in the UK involved additional border bureaucracy which had an impact on their income.

The pandemic saw even more drivers return to their home countries, with few coming back. Meanwhile, some older drivers have retired, and there's a huge backlog in HGV driver tests due to Covid.

What's happening to fuel prices?

Petrol prices are at an eight-year high. According to the latest weekly statistics, the average petrol price at UK forecourts on Monday was 136.1p a litre, up from 135.19p a week earlier.

The price of a litre of diesel rose from 137.95p to 139.2p over the same period.

Simon Williams of the RAC said the increase was largely down to the rising price of oil rather than the recent supply problems.

(BBC News, 2021)