Energy Prices (Hansard, 8 March 1982)

§ 7. Mr. John H. Osborn
asked the Secretary of State for Energy what will now be the estimated level of energy prices, whether electricity, gas, oil or coal, for industry and the domestic consumer in the United Kingdom over the next 12 months; and if he will indicate from information available to him how these are expected to compare with those in other EEC countries.

§ Mr. Lawson
Market prices for oil products depend on the balance of supply and demand in a highly competitive market. The price of gas to the home will remain much cheaper than both oil and electricity and among the cheapest in Europe. For most other energy consumers, the prospect is that prices will rise broadly in line with other costs in the economy. I would expect that prices to the vast majority of consumers will remain generally in line with those on the Continent.

§ Mr. Osborn
First, will my right hon. Friend tell industry how gas and electricity prices in Britain will compare with those on the Continent over the next 12 months? Secondly, will he assure domestic consumers that they will have a price advantage, at least for gas, especially over France and Germany, for the next two or three years, as they do not appear to be aware of the fact?

§ Mr. Lawson
My hon. Friend is right that British consumers are generally unaware of the fact that, despite the considerable increase in the price of domestic gas, it is still a great deal cheaper here than in France or Germany. It is perhaps understandable that they are not fully aware of that fact, but they are more keenly aware of the fact that gas is still a far cheaper fuel for them than is electricity or oil.
I expect that the price of gas and electricity to industry will remain broadly in line with prices on the Continent. As my hon. Friend is aware, there is a problem with heavy users of electricity, but I hope that before long we shall have a little alleviation on that front.

Mr. J. Enoch Powell
Are the Government looking ahead to the time when North Sea oil will be dear oil and considering how best to protect ourselves against the danger of having to buy our own dear oil?

§ Mr. Lawson
If I may say so to the right hon. Gentleman, these matters are probably best left to the market.

§ Mr. Palmer
Does the right hon. Gentleman agree that, as the Select Committee on Energy did a great deal of work on the question, it is a pity that it had such a disappointing and unhelpful reply from his Department?

§ Mr. Lawson
I do not agree that the reply was unhelpful. I applaud the Select Committee for its work on that and other energy matters. I do not believe that the last word has yet been said by my Department.

§ Mr. Ian Lloyd
Does my right hon. Friend agree that the market has done a splendid job in destroying the cohesion of OPEC? As the cohesion of OPEC was a virtual disaster for the Western world for the best part of the last decade, will he now formally encourage that process?

§ Mr. Lawson
I hope that my hon. Friend is not trying to lure or seduce me into saying something that might be considered undiplomatic, but I fully take the force of what he has said. I hope that he will therefore approve the positive way in which BNOC recently responded to market forces in reducing the price of North Sea oil by $4 per barrel.

§ Mr. Merlyn Rees
As I understand it, the Minister has just confirmed the NEDC report's finding that comparative prices for heavy users of electricity work to the disadvantage of this country. Does his reply mean that he intends to do nothing about the NEDC report's recommendation?

§ Mr. Lawson
First, it was not the NEDC report recommendation. The task force investigated all kinds of comparative industrial energy prices—oil, gas, electricity, and so on—both for small and large consumers. Although it found that in general there was no longer any disadvantage to speak of between industrial energy consumers in this country and on the Continent, it identified an area, particularly among electricity users, where there was a considerable disparity. I suggested that we hope very shortly indeed to be able to do something significant—I do not say that it will be all that the industry would wish—in that area.