Gas Prices (Hansard, 10 March 1986)

§ 6. Mr. Dubs
asked the Secretary of State for Energy if he will make a statement on the level of gas prices in the light of the fall in oil prices.

§ Mr. Alick Buchanan-Smith
Gas prices are a matter for the British Gas Corporation, which takes account of relevant factors, including costs and the price of competing fuels.

§ Mr. Dubs
Is the Minister aware that many people are puzzled that, with significant cuts in oil prices, there has been no corresponding reduction in the price of gas? The charge that is being made against the Government is that they are seeking deliberately to keep gas prices high to pave the way for privatisation, which shows scant regard for consumer interests.

§ Mr. Buchanan-Smith
The hon. Gentleman should pay attention to two factors. First, British Gas, not the Government, fixes the price of gas. Secondly, it has made no announcement yet about prices in 1986. The hon. Gentleman may have noticed that in the interruptible gas sector, which is in direct competition with oil, prices have been reduced in recent weeks.

§ Mr. Portillo
May I express the hope to my right hon. Friend that concern for neither gas prices nor oil prices will lead him to instruct a cut in oil production? Will he confirm that such a cut would be damaging to Britain, and will he therefore reject calls which have come from the Opposition Benches for a cut to be made?

§ Mr. Buchanan-Smith
My hon. Friend is right. It would make commercial and technical nonsense of North sea oil production, given conditions in the North sea, if the companies concerned were not left to take their own decisions in the light of their experience. I find it extraordinary that there are calls for a depletion policy, which we hear many times, especially from Liberal Members—[HON. MEMBERS: "Where are they?".] These calls for a depletion policy show extraordinary ignorance of the British offshore industry.

§ Mr. Mason
In the light of the fall in oil prices, will the Minister give us his initial assessment of the effects on the coal industry?

§ Mr. Buchanan-Smith
It takes some time for such factors to work their way through. As the right hon. Gentleman knows, oil has to be produced, transported and refined. It is far too early in the new state of prices to come to any conclusion on what the position may be.

§ Mr. Watts
Is my hon. Friend satisfied that there are sufficient supplies of gas not already contractually committed to British Gas for producers to have an opportunity to supply the contract market directly, using the enhanced powers under the Gas Bill?

§ Mr. Buchanan-Smith
On our assessment, we are still blessed with gas reserves. Looking forward into the 1990s—in relation to the Sleipner gas deal—I believe that it is for the benefit of Britain that we should be able to meet our needs almost wholly from our own resources and that if there is any gap between supply and demand it will be far smaller than that on offer from overseas.

§ Mr. Orme
What information has the Minister had from the gas industry about prices to domestic consumers, following the reduction of prices to industrial consumers as a result of the oil price reduction? When will the domestic consumer benefit?

§ Mr. Buchanan-Smith
As the right hon. Gentleman knows, there is a completely different marketing and pricing system for interruptible gas supplies. The price to domestic consumers is up to British Gas, which has not yet announced what it is doing. Under the Gas Bill currently before the House, there will for the first time be a regulator and a maximum price will be fixed which British Gas cannot exceed. I hope that the right hon. Gentleman and the Labour party will welcome that.