UCLan business expert warns of increased energy prices, blackouts and reduced production for Lancashire due to Ukraine crisis

As the crisis in Ukraine intensifies, an expert in international and UK business at the University of Central Lancashire (UCLan) explains how it will affect the people of Preston.

Following Russia’s launch of military assaults and the moving in of more military vehicles into Ukraine this morning, Dr Robin Carey, says it is not only Eastern Europe that will feel the effects of Russian aggression.

Although he describes Russia as a relatively poor country, with only the 11th highest GDP globally, Dr Carey emphasises that 40% of the country’s budget comes from their oil and gas production, which makes up 60% of their exports, and this is where the main impact on Britain comes in.

Dr Carey, Head of the Business School, explained: “People will say ‘well, we don't get most of our oil and gas from Russia’, but it affects global prices, so what we've been seeing over the last year has been a supply issue whereby the Kremlin has used gas and oil to shore up their economic position, because effectively if you cut off gas supplies to Germany, then that has a massive effect on the West.

“As we get to a position whereby there'll be issues around the supply of gas, what does that mean for people in Lancashire? It means our gas and oil, which have already gone up significantly, will probably go up significantly more because of supply and demand.

"The consequence of this is that gas and oil are the key things that drive our economy, whether that's our industry, our offices, our cars, our homes, so it will probably mean significant additional rises to the ones that we've already had with regards to those commodities too, so that is quite stinging.”

As well as the price increases in gas, oil, and other commodities, Robin adds that it’s “possible” that these global shortages of oil and gas could also lead to energy blackouts here in the UK.

In addition, Dr Carey explains that gas and oil shortages will impact other aspects of the UK's economy, particularly production, especially if Putin cuts off supply completely as a punishment for sanctions, and this in turn affects availability for local consumers.

He said: “It's going to be more difficult for us to produce goods, and we've already got very strained supply chains at this moment in time due to Brexit, shortages of labour, and recovery from the pandemic, so add on to that the extra factor of issues around supply of gas and oil, that's gonna really hurt.”

In the long term, Dr Carey warns that production will be further dampened if the current situation with Russia and Ukraine worsens as more of our factories may have to be dedicated to producing weaponry, whilst much of the UK's industry depends on "very extended supply chains", so we may find more factories and more production closing due to shortages of key components made overseas.

Dr Carey adds that the hampering of global production, caused by tensions and shortages, will affect people in Preston, and across the world, due to the reduced availability of the day-to-day products consumers are used to.

"The global nature of business may really be hit very hard if there is sustained long term economic issues within Europe, and we need to bear in mind that this isn’t somewhere in South America, this is very close, this is on our doorstep, and it will will have a profound effect on supply chain", he says.