HC Deb 23 February 1981 vol 999 cc642-3
8. Mr. Lennox-Boyd

asked the Secretary of State for Energy what progress is being made towards international adherence to the Venice summit commitment to economic pricing of oil.

Mr. David Howell

Good progress is being made. The United States has recently taken steps to ensure that domestic prices for oil should take into account representative world prices. We shall continue to pay close attention to this subject in the appropriate international bodies.

Mr. Lennox-Boyd

I recognise the action taken in various countries on international prices of oil, especially in the United States, but does my right hon. Friend agree that the time is ripe for further initiatives on the prices of gas in various countries, particularly the United States, to ensure that gas prices are set on an economic basis, along the lines of the courageous policy adopted by Her Majesty's Government?

Mr. Howell

I agree with my hon. Friend's objective. In fact, the Government have made it clear at International Energy Agency ministerial meetings that we believe that economic pricing policy should apply to all fuels, and not simply oil. If that does not happen, as my hon. Friend rightly says, industries in this country, as throughout the rest of Europe, are subjected to considerable unfair competition. That is not satisfactory. I fully agree with my hon. Friend that it is a matter that must be changed.

Mr. Douglas

Will the right hon. Gentleman concede that his policy of running ahead of the field, in particular in relation to United States energy pricing, is severely damaging to British industry? Does he not accept that we should call a halt until the United States and other like nations catch up with us?

Mr. Howell

The hon. Gentleman must realise that a policy of general intervention to hold down energy prices would not help solve the particular problems that some energy-intensive industries face. The idea that one can deal with particular problems, which often go far deeper than energy pricing, by general and highly expensive intervention in energy pricing not only undermines future energy investment, but is highly cost-effective. It would be the worst way to help the industries concerned.

Mr. Merlyn Rees

But what does "economic pricing" of oil mean? Does it mean Government intervention to put our prices at the level set by OPEC?

Mr. Howell

It means that the price of oil is the world market price, which is set in the Rotterdam world oil market. If the right hon. Gentleman thinks that there is another price of oil that can be secured, I urge him to try to buy oil below the world market price or to sell it above the world market price. He will find that he cannot do it.