HC Deb 10 March 1980 vol 980 cc916-8
14. Mr. Michael Spicer

asked the Secretary of State for Energy if he will make a statement on the Government's policy for the pricing of North Sea oil.

Mr. Gray

Producing companies have a right to the market price for their North Sea oil. The Government have no powers to control those prices but, in the national interest, they must on occasion urge companies to be timely and moderate with price increases.

Mr. Spicer

Will my hon. Friend confirm that there is no question of the Government influencing any producing company to sell oil at prices below world market prices?

Mr. Gray

I can confirm that that is not the Government's intention. We have always urged companies to follow the price rather than to lead it. The prices of North Sea crude is relative to prices being obtained in Algeria, Libya, and such countries.

Mr. Douglas

Does the hon. Gentleman accept that the enormous increase in the price of oil—now selling at about 34 dollars a barrel—has resulted in considerable windfall revenues to the Exchequer and to the oil companies? What are his proposals for advising the Chancellor of the Exchequer to raise PRT in the forthcoming Budget?

Mr. Gray

I suggest that the hon. Gentleman tables a question to the Treasury on that subject.

Mr. Emery

Does my hon. Friend agree that world oil prices are now set by the largest oligopoly that we have ever seen—namely OPEC—and that this is not a freely negotiated world price but a price established by those nations?

Mr. Gray

My hon. Friend is correct. In relation to OPEC we are subject principally to the rates of oil price in the countries that produce crude similar to that produced in the North Sea. It is interesting that even Saudi Arabia, which produces a much heavier crude, has not been able to control world oil prices. Sometimes people suggest that we should be able to control them but our production is only one-fifth of the production of Saudi Arabia.

Mr. Benn

Quite apart from the case for taxing the oil profits, which are now astronomical as a result of factors for which the oil companies have contributed nothing—namely OPEC price increases—does not the fact that North Sea oil can now be sold at roughly five times its cost of production indicate that the Government have a clear duty to retain the ownership of the oil? That would mean that 100 per cent. of that excess profit accrues to the British people through the Treasury. Does not the increase in the OPEC oil price make it absolutely vital that every barrel of oil owned by BNOC is retained by the Government since it is an asset that is appreciating more rapidly than any other asset in cur reserves?

Mr. Gray

The right hon. Gentleman always had difficulty in separating State ownership from British ownership. The two are not necessarily the same. As far as future investment in North Sea oil is concerned, the Government have tried to create a climate which will encourage future investment there and this has been achieved. Already there are substantial signs to that effect.