OIL SUPPLIES

HC Deb 07 November 1956 vol 560 cc106-12

The Minister of Fuel and Power (Mr. Aubrey Jones)

With your permission, Mr. Speaker, and that of the House, I should like to make a statement on oil supplies. In view of the situation in the Middle East, and its effect on oil supplies, the Government have decided, as a precautionary measure, to make an immediate reduction of 10 per cent. in oil consumption. Given the co-operation of all oil consumers it should be possible to achieve a saving of this order without any elaborate rationing machinery and without seriously affecting our economy. The oil companies are, therefore, being required to reduce deliveries to their customers forthwith to 90 per cent. of what they would normally have supplied.

The 10 per cent. cut on motor fuels—petrol and diesel oil for road vehicles—will apply to all deliveries except to police, fire, hospital and ambulance services and public passenger transport, whose demands will be met, but who will be expected to make what economies they can. Supplies to garages will be cut by 10 per cent. and I am writing to all garages asking them to keep a small reserve at all times for doctors, home nurses and midwives. I ask all motorists to moderate their demands wherever possible. To prevent hoarding I have made an Order prohibiting the sale of motor fuel otherwise than into the tank of a vehicle or for immediate use for other purposes.

Deliveries of fuel oil, gas oil and diesel oil, are also being cut by 10 per cent. This will affect supplies to industry and also the use of these oils for heating. I ask all users of these fuels to consider immediately how they can reduce oil consumption. The only exceptions to this cut will be agriculture, fishing and essential coastal shipping, and buildings like hospitals, where special considerations arise; but I hope that these users also will make whatever economies they can. The gas and electricity industries are being asked to make bigger savings and reduce their requirements of oil to the maximum extent possible without affecting their production.

For the present the oil companies will continue normal deliveries of other petroleum products such as aviation fuels, vaporising oil, lubricants and paraffin, which make up only a small proportion of our total consumption of oil. But the Government ask all users of these oil products to exercise restraint.

Mr. Callaghan

We shall all desire to co-operate in ensuring that industry, at least, does not go short of the necessary fuel. May I ask the Minister whether he thinks that a saving of 10 per cent. is adequate in present circumstances? And if he finds that it is working out badly—or even if he does not—what measures is he proposing to take to try to increase the flow of oil? Is an approach being made, and if not, ought it not to be made at once, to the United States with a view to securing their help in stepping up the flow of oil from that part of the world?

Mr. Jones

If I may take the last point first, dollars have been made available for the purchase of oil in the United States and considerable purchases are now being made there.

I think it well to remind the House that fuel oil represents 10 per cent. of the total fuels made available to British industry, which really means that there is only a I per cent. cut of the total fuel made available to British industry. I think that this would be possible without any serious effect on production.

I would like to add that the situation is uncertain. We cannot tell how long it will take before the Suez Canal is open; certainly, it is not for me to prophesy and I am not disposed to accept various estimates. This action is, therefore, a precautionary step. Should it appear that the Canal may not open for a considerable time, then more stringent measures may well be necessary, and for those preparations are in hand; but I trust that they will not be necessary.

Mr. Callaghan

Can the Minister say how long this state of affairs is likely to last? [An Hon. Member: "Of course not."] Well, is industry and the domestic consumer to be left in a state of uncertainty for a considerable time? If so, should not the Government have counted this cost before they embarked on their adventures?

Mr. Rankin

Where is the Suez group?

Mr. Jones

Life itself is a very uncertain thing. Certainly, no being on this earth can give an estimate of the length of time which this may take.

Mr. Nabarro

My right hon. Friend will be aware, of course, that large numbers of firms have switched over entirely to the use of oil fuel for industrial power purposes in response to the policy of Her Majesty's Government—[HON. MEMBERS "Resign."] While it may be true that the overall reduction for the whole of industry is about only I per cent., can my right hon. Friend give assurances that firms which are entirely reliant upon oil fuel for their sources of industrial power will receive some preferential treatment, so that their machinery and plant may be kept fully occupied?

An Hon. Member

Ask a policeman.

Mr. Jones

The essence of what I have described to the House is that it is rough and ready measure. [An HON. MEMBER: "Very rough."] It does not amount to a formal rationing or a formal licensing scheme. If any hon. Members complain about its roughness and readiness, then the only alternative is a formal licensing and rationing scheme, but, granted its character, which I think all of us will accept in present circumstances, there can be no exceptions other than those which I have stated.

Mr. Lee

Following the point made by the hon. Member for Kidderminster (Mr. Nabarro), has any attempt been made to measure the effects on employment in certain industries? Is the Minister aware that a mere flat reduction of I per cent. will affect employment in some industries to a far greater degree than others? Will consideration be given to those industries which will be affected by this apparently small but vital reduction so far as they are concerned?

Mr. Jones

All averages are misleading but, even so, I am assured by the Federation of British Industries that this cut ought not to have any untoward effect on production, granted the level of stocks in the country.

Mr. Hale

In view of the fact that the Government's economic figures were only balanced a few weeks ago by the influx of the capital purchase of the Trinidad Oil Company, can the right hon. Gentleman now tell us to what extent dollar purchases of oil are likely to deprive us of that somewhat dubious benefit?

Mr. Jones

Any questions as to the effect of dollar purchases must be addressed to my right hon. Friend the Chancellor of the Exchequer.

Mr. Hobson

May I ask the right hon. Gentleman whether he has had consultations with the Minister of Transport and Civil Aviation about the cut in oil, particularly to the power station at Neasden, belonging to the London Passenger Transport Board, which provides the electrical energy for the greater part of London's transport? In view of the fact that at least eight of their boilers are run on oil fuel, will a special arrangement be made? Otherwise, there will be serious repercussions on London Transport. The Minister referred to the cut in gas oils. Does that apply to paraffin for home consumption?

Mr. Jones

I have had general but not detailed consultations with my right hon. Friend. I must add once again that this is a voluntary restriction, dependent, therefore, to a great extent on cooperation. For that reason, only a very limited number of exceptions are being made and I cannot add to the exceptions which I have detailed. Paraffin is in the last category of products I mentioned for which, at the moment, supplies are being held at their normal level.

Sir C. Taylor

Will my right hon. Friend consider addressing a general suggestion to industry that, at any rate for the duration of our troubles, it should consider sending as much freight as possible by rail instead of by road?

Mr. Jones

I believe that my right hon. Friend the Minister of Transport and Civil Aviation has already anticipated my hon. Friend's question.

Mr. Woodburn

Would the Government take steps to stop the shutting down of the shale oil industry in the meantime, because that will provide a little contribution to the solution of this difficulty?

Mr. Jones

I should like notice of that question; but let it not be forgotten that the contribution of the shale oil industry is infinitesimal compared with our total consumption.

Mr. F. M. Bennett

Is it not a fact that the question about Trinidad Leaseholds oil having an effect on the dollar position is incorrect and irrelevant considering that, under the arrangement, oil continues to be bought in sterling?

Mr. Speaker

The Minister said that such a question should be addressed to the Chancellor of the Exchequer. Mr. Mikardo.

Mr. Mikardo

If this worthy attempt by the right hon. Gentleman should, in the uncertain situation, be insufficient, and he is finally driven to petrol rationing, will he ensure that each petrol coupon which is printed bears a portrait of the Prime Minister?

Major Legge-Bourke

Will my right hon. Friend give an assurance to the House that the pumping stations necessary for efficient land drainage, particularly in Fenland, will be included under the heading of agriculture?

Mr. Jones

I should require notice of that question.

Mr. Mellish

In view of the very difficult situation, for which the Government have only themselves to blame, is any action to be taken to control prices?

Mr. Jones

I have taken powers which would enable me to control prices if the occasion arose, but I hope that it will not be necessary to use those powers, because the oil companies have agreed to seek my permission before raising prices. I hope that the hon. Member realises, however, that there will be a certain increase in cost.

Captain Pilkington

Will my right hon. Friend ensure that underneath the picture of the Prime Minister on each coupon there will appear the words, "He stopped the war"?

Mr. Mikardo

You will get a free transfer, son; that is what will happen to you.

Mr. Callaghan

In this situation, will not there be a great temptation to firms and industries to build up stocks? What guidance is being given to those who have to deliver this oil to retail consumers as to the choices they must make between those industries which are regarded as essential—such as those which depend entirely upon oil—and those which are not? We all hope that the Minister will get through without rationing, but will he state whether he is, in fact, preparing a scheme, so that if he finds this voluntary 10 per cent. cut does not work we can have a proper allocation system at an early date?

Mr. Jones

I think that I have already answered the hon. Member's question. Preparations for severer measures are being undertaken, should they be necessary.

Mr. Collins

In view of the fact that consumption by priority users—which it is hoped to maintain—will be very much than that of the ordinary motorist using fuel for private and domestic purposes, will the right hon. Gentleman make it clear that if the 10 per cent. cut is to be achieved the cut which private motorists will have to make in their consumption of petrol may have to be about 50 per cent.

Mr. Jones

Yes. I hope that all those who motor for private purposes will accept a much greater cut than the 10 per cent. which I mentioned. I am appealing to them to do that. The success of this measure depends upon the co-operation of the consuming public as well as the garage proprietors.

Mr. Gresham Cooke

Has my right hon. Friend seen the forecast of Lord Rotherwick, a director of the Suez Canal Company, that in his opinion, from the present information, the Canal could be cleared in a month? If that forecast is correct will not the clearing of the Canal quite quickly ease our oil supplies?

Mr. Jones

I have seen the forecast, and I certainly hope that it will be realised, but, for my part, I prefer to suspend judgment at the moment.

Mr. Gaitskell

Since these difficulties, unhappily, affect not only the United Kingdom but other European countries, can the Minister say whether any discussions are taking place with European consumers of oil from the Middle East, with a view to a fair allocation of what supplies are available?

Mr. Jones

Yes, Sir. Discussions have been taking place with Continental consumers, and I think that most of the Western European countries will be introducing measures not dissimilar to the one which I have announced this afternoon. Further, a meeting of the O.E.E.C. Oil Committee has been arranged for Friday of this week, and I should think that that should be the forum where this matter may be pursued further.

Mr. Gaitskell

Can the Minister say whether the American Government are co-operating with the O.E.E.C. Oil Committee?

Mr. Jones

I have no reason to believe the contrary.