HC Deb 06 February 1968 vol 758 cc209-10
3. Mr. Lane

asked the Minister of Power whether he has completed his examination of the effects of devaluation on oil prices; and if he will make a statement.

8. Mr. Emery

asked the Minister of Power what increases he now estimates will be caused by devaluation on the price of petrol or diesel oil for industry, for public transport and for the domestic user.

Mr. Marsh

On 22nd December, 1967, I announced that a detailed examination had found that devaluation would raise the prices of petroleum products by an average over all products of Id. a gallon. The devaluation element varies for the different products. For petrol it is 1½d. a gallon and for diesel oil it is 1d. a gallon. I also announced that I had concluded that the temporary surcharge of 2d. per gallon on all products allowed since 29th June, 1967, could be reduced to the extent necessary to compensate for the devaluation increase. The schedule prices of the main petroleum products were therefore unchanged.

Mr. Lane

Does the Minister agree that the prices of individual oil products ought to be free to move down or up in the time ahead in response to market pressures?

Mr. Marsh

This is a very wide-ranging subject and I think it would create real difficulties at the moment. We have a very friendly relationship with the companies, and since, after full and fruitful discussions, we were able to reach an amicable agreement. it would be a pity to spoil it all.

Mr. Emery

Has not the Minister anything further to add than merely repeat the statement that he made in December? Has he not taken into consideration the effect that a lowering of rebate may well have on the purchase of oil in the industrial and public transport sectors?

Mr. Marsh

It is very difficult. I am asked what the effect of devaluation was. There has only been the one devaluation. I cannot be expected to change the answer as weeks go past.

The question of rebates is a very complicated issue. The rebates vary from industry to industry and customer to customer.

Mr. McGuire

Is my right hon. Friend aware that a more prudent estimate of the increase in the cost to the country of the effects of devaluation, coupled with the natural forecast increase in oil, is about £275 million?

Mr. Marsh

I regard that as a somewhat large figure. The effect of devaluation on this is about £75 million per annum.

Mrs. Thatcher

How does the Minister square his decision on oil prices with his oft-repeated assertion that devaluation would improve the competitive position of coal with relation to oil?

Mr. Marsh

There are other devaluation Questions on the Order Paper later which may be discussed. The devaluation position improves the position of coal in terms of exports. The whole point that I have made is that the increase in fuel oil prices in relation to coal is so small as not to affect internal demand.