Comments on UK Russian oil ban and EU Russian gas plan

The UK imported the equivalent of 57million barrels of oil from Russia in 2020, in the form of crude oil and petroleum products, accounting for 13% of UK imports. [1] If this had been repeated in 2022, then at today’s oil price of $120 per barrel the UK would have been paying Russia £5.1billion. [2] The Government's decision to phase out imports of Russian oil by the end of 2022 means that payments should be lower.

Dr Simon Cran-McGreehin, Head of Analysis at ECIU, commented: “The banning of Russian oil imports sends a major political message and delivers another economic headache to Putin. UK drivers are rapidly switching away from petrol and diesel anyway, doing their bit to cut the UK’s oil dependency. But with costs per mile for EVs now at less than a third of fossil fuel cars and a growing second-hand market, demand for cleaner cars and the net zero transport transition is only set to accelerate.” [3]

Fuel prices are reaching records levels of 155p per litre. Travel by petrol car now costs typically 18.2p per mile, whereas using an electric car costs over two-thirds less at just 5.7p per mile. Even once April’s price cap reflects the impact of the gas crisis on electricity prices, an electric car would cost just 7.8p per mile, still less than half the price for a petrol car. [4]

EV sales have risen by 76% from 2020 to 2021 [5] in part due to their low running costs and their lack of exhaust pipe emissions.

Commenting on the European Commission's proposals to reduce demand for Russian gas by two-thirds, Sepi Golzari-Munro, Deputy Director at the Energy and Climate Intelligence Unit (ECIU) said [6]:

“Leaders have grasped the ugly truth: that our dependence on oil and gas continues to replenish Putin's war chest, so the UK and European Commission proposals today are significant.

“Plans for accelerated renewables, heat pump and efficiency roll out to cut dependence not only on Russian gas, but gas overall, will bring down costs for European consumers and businesses while shaking off Putin’s grip.

“There will be bumps in the road and emissions may rise slightly in the short-term but the overarching message cannot be clearer: net zero is now synonymous with energy security and national interest.”

ENDS

Notes to editors:

1. See BEIS data ‘DUKES table 3.9’ (July 2021):https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1006613/DUKES_3.9.xls
2. Assumes exchange rate of 1.34$/£, based on recent trends.
3. UK to phase out the import of Russian oil and oil products by the end of 2022: https://twitter.com/KwasiKwarteng/status/1501229850454937600
4. This analysis is based on the following data: petrol price of 155p per litre; typical petrol car fuel efficiency of 8.5miles per litre; household electricity unit prices of 20.8p per kWh currently and 28.3p per kWh under the April price cap (inclusive of VAT); and typical electric car efficiency of 0.275kWh per mile. It assumes that an electric vehicle is charged at home using the standard unit rate, i.e. without a time-of-use tariff that would reduce costs for off-peak charging.
5. Data from SMMT shows UK sales of battery electric vehicles of 108,205 in 2020 and 190,727 in 2021: https://www.smmt.co.uk/2022/01/covid-stalls-2021-uk-new-car-market-but-record-ev-sales-show-future-direction/
6. The European Commission published plans earlier today to cut EU dependency on Russian gas by two-thirds this year and end its reliance on Russian supplies of the fuel “well before 2030”:https://ec.europa.eu/commission/presscorner/detail/en/IP_22_1511