The price of diesel is expected to soar after the UK’s largest independent oil refinery went into administration, putting 1,000 jobs at risk. The company failed to reach an agreement with its lenders on its $1.75 billion credit line.
Diesel prices in particular are set to rise by up to 3p to a record £1.45 a liter. That would mean more than £100 to fill up a typical family saloon with a 70-litre tank.
There are also fears that, along with the EU embargo on Iranian oil and a walkout by tanker drivers, it will drive up prices on the forecourt.
However, Charles Hendry, the oil minister, said motorists should “carry on their lives as normal” after the Coryton plant in Essex, which supplies a fifth of fuel in London and the South East, halted supplies.
Meanwhile, Essar Energy has said its refinery in Stanlow was operating as normal, adding: “If there are opportunities to fill gaps in the market caused by the absence of Coryton we would obviously look to do so.”
Although Coryton has stopped supplying petrol, diesel, jet fuel and heating oil, it is continuing to refine them and is thought to have about a week until its supplies of crude oil run out and it is no longer able to continue.
Coryton was bought by Petroplus from BP in 2007 for $1.4bn (£900m). The company was downgraded by Standard & Poor’s late last year from B to CCC+.
A survey by energy consultancy Wood Mackenzie in 2010 found that 29 of 96 refineries in theEuropean Union did not generate a positive net cash margin.