HC Deb 05 November 1973 vol 863 cc610-7
Mr. Benn

(by Private Notice) asked the Secretary of State for Trade and Industry and President of the Board of Trade whether he will make a statement on oil supplies for the United Kingdom following the latest cut-back in Middle East production.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker)

The Government have received no official communication from Arab States following the meeting of Arab Oil Ministers that took place in Kuwait yesterday. Nor as far as we know have there been any official communications to the oil companies concerned.

The reports coming from Kuwait talk of a 25 per cent. reduction to continue until the end of November and a further cut of 5 per cent. in December, but this has not been confirmed. Reports also state that no reduction should affect the share which any friendly State imported from any Arab producer during the first nine months of 1973, and that the Algerian Minister of Energy and the Saudi-Arabian Minister of Petroleum will be visiting Western capitals to explain the Arab viewpoint on restrictions. The United Kingdom has received assurances to which we attach great value from certain of the Arab producers that our supplies will be maintained. We are urgently seeking to clarify the implications of any decisions made by the Arab States yesterday and I will keep the House informed of any further developments affecting our supplies.

The Oil Industry Emergency Committee was reconvened at the time of the outbreak of the Middle East war and I have decided to activate the Oil Supplies Advisory Committee, which has been in suspense since 1956 and comprises all the main oil companies operating in the United Kingdom, so that this Committee can keep me constantly advised as to the exact position of the supply situation.

Contingency plans for a rationing scheme have been prepared, and are in a state of readiness should the need arise.

As my right hon. Friend the Prime Minister informed the House last week, we shall not hesitate to introduce such a scheme if and when we judge that the moment is right.

Mr. Benn

Is the Secretary of State aware that to say that he has had no official communication is simply not good enough? He is the Minister responsible for securing for this country the energy supplies needed. I should like to put some plain questions to him.

First, do the Government themselves now believe that a petrol rationing and oil restriction scheme will be necessary, and when will the House have the Bill put before it?

Secondly, what price increases at the pump do the Government expect will take place this year? Shall we know whether it is across the board or whether there will be differences between different types of product?

Thirdly, will the Secretary of State say what effect the Government now believe that the restriction of supplies and the increased costs will have on their planning for stage 3, with which the right hon. Gentleman is concerned intimately, in respect of balance of payments costs and the possible risk to production?

Fourthly, will the right hon. Gentleman say plainly whether the Government intend to supply oil to the Dutch as part of a Common Market pooling plan? If so, do the Government also contemplate that we shall be committed to a long-term sharing of North Sea oil with our Common Market partners?

Finally, will the Secretary of State comment on what the Foreign and Commonwealth Secretary said in a broadcast at lunchtime about the supply of oil being the dominant consideration in the Government's mind? Does that mean that their policy generally is dictated by that?

Is it not time that we had plain answers to those questions instead of the hesitation and dithering that we have had up to now?

Mr. Walker

It is obvious that if the right hon. Minister for Bristol, South-East (Mr. Benn) were responsible for these matters he would react immediately to every report and we should have a great deal of incompetent instant Government.

I repeat that we have had important assurances from the Arab States that British oil supplies will be maintained. At present there is no definite information contrary to that, and we are endeavouring to ascertain whether yesterday's meeting affects those assurances in any way.

Inevitably the position on future prices is uncertain, but as regards present prices we have considerable supplies in this country which came in at the old prices. The oil being supplied at present is at the old prices.

Of course, the price of future oil will have a considerable effect upon the balance of payments, but it will not be the straight impact of the price increase itself. That must depend on the effect of the way in which that money is used across the foreign exchange markets, the additional purchases which might be involved, and the degree to which they might benefit the British economy.

As regards the Dutch situation, the Foreign Ministers of Europe are meeting today in Brussels. This is a matter which will be discussed there and it will be for my right hon. Friend the Foreign and Commonwealth Secretary to report back to the Government on those discussions.

The right hon. Gentleman drew attention to my right hon. Friend's broadcast today and his remark about the supply of oil being a main consideration of the Government. If cuts were applied at the overall levels being spoken of there would be a need to take measures. The Government have always said that if and when we judge that the time has come to take such measures we shall not hesitate to take them. I think that the country will be behind us in any action of that kind.

Mr. Skeet

Will my right hon. Friend bear in mind that these assurances are likely to be shaky remembering that an embargo has been imposed against the Dutch? Although my right hon. Friend may not have heard this afternoon's report, from reports which have been coming in from the Middle East are not we right to conclude that a boycott is in operation against the Dutch in a way which is likely to upset all the oil going to the Community of Nine? Will my right hon. Friend say what is happening in the OECD about this? Will he bear in mind that with rising prices and a shortfall of 4 million barrels a day, the world is likely to be in a very tricky position?

Mr. Walker

If such cuts continued there would be considerable difficulties in Europe and the world in general. However, the duration of such cuts is uncertain. Developments are taking place with a view to a peace settlement in the Middle East, and we have to bear in mind the effects that those negotiations will have. We do not anticipate a position in which these cuts will be continued for a long period and will cover all countries. The European situation is a matter which my right hon. Friend the Foreign and Conmonwealth Secretary is discussing today with the Foreign Ministers of Europe.

Mr. Skinner

Since we are now in an extremely serious energy situation, and since we are losing miners from the industry at the rate of 700 a week, will the right hon. Gentleman take steps to ensure that a settlement is reached, possibly akin to that already achieved by the Glasgow firemen? Will the right hon. Gentleman meet the leaders of the National Union of Mineworkers with a view to reaching a settlement along those lines?

Mr. Walker

As the hon. Gentleman knows, my Coal Industry Act was the most important single measure taken for many years to assist the mining industry, and it was recognised as such by the union. As for seeing the miners and trying to understand their point of view on wage negotiations, representatives of my Department have seen them and, what is more, my right hon. Friend the Prime Minister had a lengthy and detailed meeting with the union to discuss these matters.

Mr. Adam Butler

Whatever the future volume of oil supplies, is it not clear that the level of prices will certainly rise? Is, there not a reason for economy on those grounds alone? Will my right hon. Friend redouble his efforts to encourage economy on those grounds?

Mr. Walker

Oil prices are likely to be at substantially higher levels than before, and this is a factor which will affect our energy policy, as it has already in terms of our efforts to encourage other sources of energy. Certainly it is becoming clear that the price increases will be important to the balance of payments and to stage 3. Therefore methods of economising in the use of oil will be encouraged by the Government.

Mr. John Mendelson

As regards helping the Dutch Government and people in their present situation, will the right hon. Gentleman be a little more forthcoming and say what attitude the British representative will adopt at today's meeting? Will he remember that the people of Holland, friendly to this country and our allies in peace and war, have a right to see to it that this Government live up to their expectations and do not allow Holland to be isolated by a boycott?

Mr. Walker

Obviously as a member of the European Community we are anxious about the Dutch position. This is a complex matter which is being discussed by the Foreign Ministers today.

Mr. Hugh Fraser

Will my right hon. Friend expand a little on the doctrine of this country being exempt from the Arab oil boycott? This is the doctrine of the immaculate exception. Ought it not to be made clear to the world if we intend to go on subjecting ourselves to Arab control of our foreign policy, in a way which is quite unacceptable?

Mr. Walker

I note my right hon. Friend's views.

Mr. Douglas

Will the right hon. Gentleman give the House details of our reserve position at the moment? Does he accept that the withdrawal by the Arab countries of 6 million barrels a day is more than the total consumption from those sources of the United States of America and Japan and thus places considerable restrictions on the countries of Western Europe? Will the right hon. Gentleman undertake, either himself or with his right hon. Friend the Foreign and Commonwealth Secretary, to keep the House informed about developments in Europe and elsewhere?

Mr. Walker

The supply position is one which varies from day to day, bearing in mind loadings and the manner in which ships and oil companies are receiving supplies from various Arab oil countries. In conjunction with the oil companies, I have set up a system whereby we can keep a day-to-day watch. I assure the House that there is no need for immediately introducing any scheme of restriction or rationing on the information available to us.

Mr. Wingfield Digby

Although it can provide no short-term relief, does not the present situation emphasise the need for speedy decisions on nuclear energy both for power generation and perhaps for ship propulsion?

Mr. Walker

Yes, Sir. As my right hon. Friend knows, before the present crisis we made decisions on the rationalisation of the nuclear energy programme. As I said in my statement last week, within the next few weeks decisions will be made on reactor types.

Mr. Mayhew

Reverting to the Dutch situation, does the Secretary of State agree that to forward arms to Israel during the war while cutting off arms supplies to the Arab countries is to take sides in the war? Is it not foolish of those who pursue this policy to expect the Arabs to continue normal relations with them? Will Her Majesty's Government be very careful before they agree to pooling oil resources with Governments who do not appreciate this simple point?

Mr. Walker

I note what the hon. Gentleman says. The whole question of the Dutch situation, which has many political involvements, is being discussed by the Foreign Secretary, who has responsibility for this matter.

Mr. Tebbit

Has my right hon. Friend noticed, as I have, the curious divergence of opinion on the Opposition benches—and among the leaders of the Labour Party—in that there seems to be a dictum being promoted by the Leader of the Opposition that while North Sea oil is for our sovereign use only and no one should have any of it, Arab oil has to go wherever the customers require it and the Arabs should have no control of it? I do not discuss the morality of that, but I do notice the difference.

Mr. Walker

It is, alas, a frequent occurence.

Mr. William Price

Why is the Minister being so coy? Why for some months past has his Department issued one statement after another denying that there was any impending oil crisis? Why does he not admit one simple fact—that we must either have limited rationing now or we shall have much more severe rationing later? Will he give us an assurance—we understand his dilemma this week—that he will face up to the matter on Friday morning?

Mr. Walker

All I can assure the hon. Gentleman about is that as far as by-elections are concerned—[Interruption.] I am absolutely certain that in the climate of the Middle East crisis there would be no handicap to any Government announcing measures to restrict, allocate, or ration petrol. This would be perfectly acceptable. I must point out that no country in Western Europe has introduced oil rationing as yet. Nor has the United States. The only restrictions put on by any Government in the western world have been the Dutch restrictions upon Sunday motoring, which would make a minute impact on total oil resources. The Government are not alone in being wise and prudent enough to watch the situation carefully. Where we are alone is that we have much better reserves than most other countries.

Several Hon. Membrs


Mr Speaker

Order. I suspect that we shall return to this topic. We have a very important debate ahead of us. I have the names of about 40 hon. Members who wish to take part in the debate.