Fuel Shortage: Causes, Impact, And Solutions

The International Energy Agency (IEA) projects that global oil demand growth will accelerate slightly in 2025, with an expected increase of 1.1 million bpd, bringing total consumption to approximately 103.9 million bpd.From supply chain disruptions to geopolitical conflicts, find out the key causes and solutions to the crisis. 

Fuel shortage is a recurring issue that affects economies, industries, and households worldwide. It occurs when the supply of fuel is unable to meet demand, leading to price surges, disruptions in transportation, and economic instability. 

According to the International Energy Agency (IEA), global oil demand reached approximately 100.6 million barrels per day in 2023, with supply struggling to keep pace due to geopolitical tensions, production cuts, and logistical issues. Periodic shortages have led to sharp increases in fuel prices, as seen in the 2022 energy crisis, where crude oil prices surged to over $120 per barrel following the Russia-Ukraine conflict.

The issue of fuel shortages is not limited to oil; natural gas and coal shortages have also been reported worldwide. In Europe, gas prices skyrocketed in 2021–2022, leading to electricity rationing in several countries. Similarly, in India, coal shortages in October 2021 resulted in a power crisis, affecting industries and residential consumers.

Recent examples of fuel shortages highlight the severe consequences of supply disruptions. The United Kingdom's fuel crisis in September 2021 saw long queues at petrol stations due to supply chain bottlenecks and panic buying. The situation led to temporary rationing and government intervention to stabilise supply. In Nigeria, Africa’s largest oil producer, recurrent fuel scarcity due to refinery inefficiencies and distribution issues has caused transport disruptions and economic losses.

The problem can arise due to multiple factors, including geopolitical conflicts, natural disasters, and market fluctuations. Understanding the root causes and impacts of fuel shortages is essential for developing long-term strategies to mitigate their effects.

Global cases of fuel shortages

Europe: The continent faced a significant decline in gas storage levels due to cold weather and halted Russian gas supplies. By January 2025, reserves had dropped to 59%, much lower than in previous years. Projections indicated that storage could fall to 30-35% by March, necessitating the purchase of at least 100 additional gas cargoes, valued at approximately $6 billion, to replenish stocks. This increased demand was expected to sustain high gas prices and intensify competition in the global energy market.

Bolivia: The country experienced a severe economic crisis, with significant fuel shortages leading to long lines at gas stations. This scarcity disrupted daily life, commerce, and agriculture, causing soaring food prices and widespread public discontent. The government's failure to address these issues exacerbated public frustration, leading to protests and calls for early elections.

Iran: Despite possessing substantial oil and gas reserves, Iran faced its most severe energy crisis in decades. Frequent power outages and natural gas supply disruptions were prevalent, attributed to outdated infrastructure, economic sanctions hindering foreign investment, and inefficient energy management. The crisis led to widespread industrial shutdowns and significant impacts on daily life.

Causes of Fuel Shortages

1. Geopolitical tensions and conflicts

One of the leading causes of fuel shortages is geopolitical instability. Many of the world's major oil-producing nations are located in politically volatile regions. Conflicts, trade restrictions, and sanctions can disrupt the supply chain, limiting fuel exports and causing price increases. 

The Ukraine war had a severe impact on global energy markets. Russia, one of the world’s largest oil and gas exporters, faced economic sanctions from Western countries, cutting off a significant portion of Europe’s fuel supply. As a result, fuel prices in the UK surged, with petrol reaching £1.91 per litre, and governments had to explore alternative sources. Similarly, in 2019, drone attacks on Saudi Aramco’s facilities in Abqaiq and Khurais temporarily cut global oil production by 5.7 million barrels per day, causing panic in markets and price volatility.

2. Supply chain disruptions

Fuel shortages can also arise from logistical challenges in supply chains. Delays in refining, distribution, or transportation can result in inadequate fuel availability in specific regions. Infrastructure failures, strikes, or regulatory changes can further impact supply chains, preventing fuel from reaching consumers on time.

In the UK’s 2021 fuel crisis, a shortage of 100,000 lorry drivers led to severe fuel supply disruptions. This was mainly due to Brexit-related worker shortages, causing long queues at petrol stations as people rushed to secure fuel. Similarly, in March 2021, the Ever Given container ship blocked the Suez Canal for six days, preventing the transport of millions of barrels of crude oil and LNG to Europe and Asia. This incident led to a 4% spike in crude oil prices, highlighting how supply chain bottlenecks can affect fuel availability.

3. Natural disasters

Hurricanes, earthquakes, and floods can severely affect fuel availability by damaging extraction sites, refineries, and transport networks. In 2017, Hurricane Harvey hit the US Gulf Coast, shutting down 25% of the country’s oil refineries, which led to a 20-cent-per-gallon increase in petrol prices across the country. 

Likewise, in February 2021, a severe winter storm in Texas caused a major power crisis, forcing refineries to shut down. As a result, fuel shortages spread across several US states, causing supply delays and price hikes.

4. Economic policies and regulations

Government policies, including subsidies, taxation, and trade restrictions, play a significant role in fuel availability. Over-reliance on imports, inefficient refining capacities, and restrictive energy policies can contribute to shortages. Countries that depend on imported fuel may experience supply disruptions if exporting nations impose trade restrictions.

In 2023, the Nigerian government removed fuel subsidies, leading to an overnight price surge of over 300%. This resulted in long queues at petrol stations, as people struggled to afford fuel for daily transportation. 

In Indonesia, a temporary ban on palm oil exports in 2022 disrupted global biofuel production, increasing the cost of biodiesel and further straining fuel markets. These policy decisions, although aimed at managing economic stability, often lead to supply crises when alternative solutions are not in place.

5. Increased Demand

Fuel shortages can also be a result of rising demand that exceeds supply. Growing populations, industrialisation, and increased vehicle usage contribute to higher fuel consumption. If fuel production and supply infrastructure do not expand accordingly, shortages can occur.

In India, fuel consumption increased by 8.5% in 2023, putting pressure on refineries to keep up with demand. This surge led to temporary shortages in several states, particularly during peak travel seasons. 

Similarly, China’s rapid industrialisation in 2021 resulted in a nationwide energy crisis, as high coal prices and rising fuel demand caused shortages and power outages across multiple provinces. 

Impact of fuel shortages

1. Rising costs of goods and services

Fuel shortages often lead to increased transportation costs, which can have a ripple effect on the prices of essential goods and services. As fuel prices rise, businesses face higher operational expenses, leading to inflation and reduced consumer purchasing power.

In the UK, inflation peaked at 11.1% in October 2022, the highest in 41 years, largely due to increased fuel and energy costs. The rise in oil prices also contributed to global food inflation, with the United Nations Food and Agriculture Organization (FAO) reporting a 14.3% increase in global food prices in 2022. This was particularly evident in developing nations where transportation expenses make up a significant portion of consumer goods pricing.

2. Economic slowdown

Industries that rely heavily on fuel, such as logistics, manufacturing, and agriculture, experience significant disruptions during fuel shortages. Production slowdowns and increased costs can lead to lower economic output, job losses, and reduced investment in affected sectors.

In Sri Lanka, the 2022 fuel crisis forced businesses to operate at reduced capacity, leading to a 9.2% contraction in GDP and a severe economic downturn. Similarly, the US airline industry saw airfare prices rise by 18% in 2021, as jet fuel costs increased. 

3. Transport and mobility disruptions

Public and private transportation systems depend on a steady fuel supply. Shortages can lead to limited public transport availability, long queues at fuel stations, and increased commuting costs. In some cases, fuel rationing may be implemented, further restricting mobility.

In Pakistan, the 2023 fuel crisis caused public transport fares to increase by 30%, making daily commuting unaffordable for many citizens. In France, fuel refinery strikes in 2022 led to shortages at over 60% of petrol stations, forcing people to queue for hours. 

4. Energy crisis

In regions where fuel is a primary energy source, shortages can lead to power outages and energy supply disruptions. Industries and households relying on fuel for electricity generation may face energy rationing, impacting daily activities and productivity.

In South Africa, load shedding in 2023 lasted over 200 days, with power outages occurring daily due to fuel shortages for power plants. In Bangladesh, the 2022 energy crisis forced the government to impose electricity rationing as rising oil prices made fuel imports unaffordable.

5. Social unrest

Prolonged fuel shortages can lead to public dissatisfaction, protests, and political instability. Fuel price hikes and restricted access to fuel can trigger social unrest, as seen in several countries where fuel crises have led to demonstrations and policy changes.

The 2018 Yellow Vest protests in France were sparked by rising fuel prices, forcing the government to reconsider its fuel tax policies. Similarly, in Ecuador, fuel riots in 2019 resulted in economic losses of over $1 billion, as demonstrators blocked roads and disrupted businesses in response to subsidy cuts.

Solutions to fuel shortages

1. Diversifying energy sources

One of the most effective long-term solutions to fuel shortages is diversifying energy sources. Investments in renewable energy, such as solar, wind, and hydroelectric power, can reduce dependence on fossil fuels. Governments and businesses should encourage the adoption of alternative fuels, including biofuels and hydrogen.

The UK generated 40% of its electricity from renewable sources in 2022, decreasing reliance on imported fuel. Norway has also promoted electric vehicles, with over 80% of new cars sold in 2022 being electric, reducing petrol consumption.

2. Increasing fuel efficiency

Improving fuel efficiency in transportation, industry, and households can help manage fuel consumption. Advances in vehicle technology, better public transport infrastructure, and fuel-efficient appliances can reduce the strain on fuel supplies.

The European Union’s 2023 fuel economy standards require cars to reduce fuel consumption by 15% by 2025, which is expected to decrease fuel dependency. In Japan, 30% of vehicles are hybrids, demonstrating how fuel-efficient technology can reduce consumption.

3. Strengthening supply chains

Enhancing supply chain resilience is essential for mitigating fuel shortages. This includes investing in refining capacity, improving storage facilities, and ensuring efficient transportation networks. Governments and fuel suppliers should collaborate to build strategic fuel reserves that can be used in times of crisis.

India has developed strategic oil reserves that can support the country for 10 days in emergencies. Similarly, China is expanding its refining capacity to boost domestic production and reduce import dependency.

4. Policy reforms and strategic planning

Governments play a crucial role in managing fuel shortages through policy reforms. Reducing reliance on fuel imports, incentivising local production, and implementing fair pricing policies can contribute to a stable fuel supply. Effective emergency response plans should also be in place to address unexpected shortages.

The US Inflation Reduction Act (2022) provides subsidies for clean energy projects, aiming to reduce fossil fuel reliance. In urban areas, sustainable transport initiatives, such as London’s Ultra-Low Emission Zone (ULEZ), encourage electric vehicle adoption.

5. Promoting sustainable transport

Encouraging the use of electric vehicles, expanding public transport networks, and supporting non-motorised transport can reduce fuel demand. Sustainable urban planning that integrates efficient transport systems can also contribute to long-term fuel conservation.

London's Ultra-Low Emission Zone (ULEZ) promotes the adoption of EVs, leading to lower fuel consumption and emissions. Similarly, China's high-speed rail expansion offers an efficient alternative to fuel-based transport, decreasing the demand for fossil fuels.

Final thoughts 

Fuel shortages are a complex issue with multiple causes and far-reaching consequences. While they can be challenging to address, there are several strategies that can help mitigate their impact. Diversifying energy sources, investing in infrastructure, maintaining strategic reserves, implementing effective policies, and promoting public awareness and conservation are all important steps that can be taken to prevent and manage fuel shortages. By taking a proactive approach, governments, industries, and individuals can work together to ensure a stable and reliable energy supply for the future.