Charities and businesses wrestle with diesel cost
UK charities and businesses are struggling with soaring diesel prices, which have surpassed £2 per litre. This is impacting operational costs and service delivery.
Intelligence analysis by Gemini 2.5 Flash Lite
Rising diesel costs, exacerbated by global oil supply disruptions, are placing significant financial strain on North East charities and businesses. Organizations like Daft as a Brush and Teesside Minibus Hire are forced to divert donation funds or pass on increased prices, risking sustainability.
Imagine your parents' car drinks a special juice called diesel. This juice has become much more expensive, like a candy bar suddenly costing twice as much! Charities that drive sick people to the doctor and companies that drive buses are finding it very hard to pay for this juice, so they might have to ask for more money or can't buy new, better cars.
Analysis
Daft as a Brush
The Newcastle-based cancer charity Daft as a Brush, which provides vital transport for patients to hospital appointments, is facing a severe financial challenge due to the surge in diesel prices. The charity operates a fleet of 30 vans, covering approximately 600,000 miles annually. Previously, filling a van tank cost around £40-£45. However, recent expenses have escalated dramatically, with a single fill-up costing up to £94. This has resulted in the charity spending an additional £5,000 per month on fuel, bringing their total monthly diesel expenditure to £15,000. This increased cost is directly impacting funds that were raised through donations, as the charity is not eligible for any fuel discounts, meaning they pay the full retail price at the pump. Scott Jobson, head of income generation, stated that this situation "stunts our growth and development," highlighting how essential funds are being diverted from their intended purposes.
Furthermore, the charity had plans to transition its fleet to electric vehicles, a move that would offer long-term cost savings and environmental benefits. However, the current financial pressure from diesel costs has made this upgrade unaffordable. The money that would have been allocated for the purchase of new electric vehicles is now being consumed by the day-to-day operational expense of fueling their existing diesel fleet. This forces the charity into a difficult position, potentially delaying or even cancelling their sustainability initiatives and leaving them reliant on increasingly expensive fossil fuels.
Teesside Minibus Hire
Teesside Minibus Hire, a business operating in Middlesbrough, is also grappling with the unsustainable rise in diesel prices. Director Billy Johnson explained that the company often enters into multi-year contracts with schools and other businesses, with pricing based on the fuel costs at the time of agreement. The current surge in diesel prices means these contracts are becoming increasingly difficult to fulfill profitably. While the company is not yet operating at a loss, Johnson indicated that they are close to a point where it is "not worthwhile or sustainable" to continue under the existing terms.
To mitigate these losses, Teesside Minibus Hire has attempted to pass on some of the increased costs to customers, particularly for services like day hires. However, this strategy is proving challenging as their clients are also contending with broader inflationary pressures and may be unwilling or unable to absorb higher prices. This has led to a concerning trend where customers are opting for cheaper, unlicensed hire services. These unlicensed operators do not incur the same overheads, including fuel costs and regulatory compliance, making them a more attractive, albeit potentially less safe, option for price-sensitive consumers. Johnson expressed grave concern for the long-term viability of his business, stating that if fuel prices do not decrease, the company "long term, probably not" survive.
Government Response and Market Context
The UK government has acknowledged the impact of rising fuel prices, which have been significantly influenced by global events, including the conflict in Iran disrupting oil production and transportation. In response, the government extended a fuel duty (tax) freeze until the end of the year. This measure caps the tax at 5p per litre for both petrol and diesel, a policy initially implemented after Russia's invasion of Ukraine in 2022 caused prices to spike. Despite these efforts, the average price of diesel has now exceeded £2 per litre for the first time, according to the RAC. The government has also sought to reassure the public about fuel availability, stating there are no concerns about potential diesel shortages due to the ongoing situation, citing a "diverse and resilient supply" chain. However, the article highlights that this tax freeze, while providing some relief, has not been sufficient to offset the dramatic increases in wholesale fuel costs for many businesses and charities.
Key points
- Average diesel prices have exceeded £2 per litre in the UK for the first time.
- North East charities and businesses are struggling with the increased cost of diesel.
- Cancer charity Daft as a Brush is spending £15,000 monthly on diesel, diverting funds from donations and delaying electric vehicle upgrades.
- Teesside Minibus Hire finds current fuel costs unsustainable for multi-year contracts and faces customer migration to cheaper, unlicensed services.
- The government has extended a fuel duty freeze, but it has not fully offset the surge in wholesale oil prices.
If global oil supply disruptions are resolved and wholesale fuel prices stabilize or decrease, charities and businesses could see their operational costs significantly reduced. This would allow them to reinvest funds into their core services, upgrade fleets to more efficient vehicles, and potentially offer services at pre-surge prices, easing financial pressure on both organizations and their customers.
If diesel prices remain elevated or continue to rise, charities may be forced to cut back on essential services or divert more donation funds to operational costs, impacting patient care. Businesses like Teesside Minibus Hire could face insolvency if they cannot pass on costs or secure new contracts, potentially leading to job losses and a reduction in available transport services, while customers may be pushed towards less regulated and potentially unsafe alternatives.
