§ 6.9 p.m.
§ LORD SALTOUN rose to ask whether His Majesty's Government are in a position to make any statement about the request of the Minister of Fuel and Power in 1946 that firms should convert their plants from coal to oil fuel; whether they are aware that a large number of firms responded to the appeal; and whether these firms will receive regular supplies of oil at reasonable prices in the future. The noble Lord said: My Lords, in asking His Majesty's Government the Question which stands in my name, I shall try to save your Lordships' time as much as possible. I think it is common ground between him and myself that in the second half of 1946 the Minister of Fuel and Power had what almost amounted to a campaign to induce firms to change over from the consumption of coal to the consumption of oil. I know he had a great triumph with what was 137 then the Great Western Railway. Although he said that it was difficult to induce these firms to make the change, because of the expense involved, he had considerable successes, for he induced about 1,200 firms to make the change and the cost to them. I think, was something over £12,000,000.
Unfortunately, the prospects held out to these firms were not confirmed. Let me take the history of one of these firms. When later on, in 1947, they applied to the Ministry of Fuel and Power, they were given an allotment of 9,000 tons of fuel oil for the boiler plant, but that fuel could not be supplied. At the end of 1947 it could not be supplied; nor in 1948. But in April, 1949, the Ministry said that they would be able to supply the oil necessary, but added:
you will appreciate that in abnormal or emergency conditions, it would be advantageous to you to he able to make use of alternative fuels if necessary.…
In the circumstances the firm did not feel justified in making a change-over from coal to oil, since there was a definite inference that the supplies of oil might be stopped at any time. That was a perfectly natural decision of the firm. It was not improper under those conditions, and I would point out that it must have been a great shock to the firm, which had gone to the expense of introducing oil plants, and perhaps had even started to terminate their coal contracts, suddenly to be told that they could not get the oil.
§ That is only one firm. I understand that the experience of a great many firms has been similar. I would like to ask His Majesty's Government now the Question that stands in my name on the Order Paper. I should like to emphasise the point that, if you are going to substitute oil for coal, it must be possible for the firms to acquire oil at prices which are reasonable compared with those of coal. I should like to ask His Majesty's Government what those prospects are, in view of the changed situation to-day and the establishment of great oil refining plants in the southern part of the country, and also in view of the discovery of enormous new quantities of coal.
§ 6.13 p.m.
§ LORD CHORLEY
My Lords, in reply to the noble Lord's Question, I should in the first place like to agree with him that towards the end of 1946 the Minister of 138 Fuel and Power did encourage firms to go over from coal to oil. It is within the recollection of your Lordships that coal difficulties were acute at that time, and there was every reason to believe then that oil supplies would continue to be good. They were at that time excellent. It was not until towards the end of 1947 that, from the point of view of the supply of oil, the situation became difficult as a result of an enormous increase in the consumption of oil in the United States and the high proportion of the tanker fleets of the world which went to serve that country. As a result of that, towards the end of 1947 a certain number of the firms which were converting were informed that their supplies of oil would be deferred. No doubt the firm to which the noble Lord has referred was among those, but it would be wrong to assume that this deferment applied to the vast majority of these firms which went on to the conversion. Indeed, although in perhaps rather a limited way, the campaign, as the noble Lord called was successful, because no fewer than 1,800 firms which converted from the use of coal to the use of oil are now working on oil, and adequate supplies are being furnished to them.
The consumption of oil within the country has increased by more than 2,500,000 tons per annum. There was a considerable use of oil, of course, before this campaign started, but it has increased something like three times during that period, as a result of this encouragement which has been given by my right honourable friend the Minister of Fuel and Power. In March the Minister made a statement to the effect that those firms who had been told earlier on that their oil supplies must be deferred could now go ahead, because adequate supplies of oil were available; and that is the case. Adequate supplies of oil are now available for all those firms which have been told that they could go on to convert from coal to oil. That does not mean, of course, that it is now open to every firm to take to conversion. Conversion will be authorised only in special cases—broadly speaking those where it is of high economic advantage. There are certain types of industry, such as pottery and glass, in which oil is a much better fuel than coal.
My Lords, I am glad to hear what the noble Lord has to say. I think there must be more than one firm which is in difficulties because, in a letter of May 20, from which I obtain my figures of the firm to which I referred, I am told that they are now facing a fuel oil scarcity which promises to be every bit as bad as the other shortage of two winters ago. I am sure the Government are doing all they can in that matter. I hope that the noble Lord can dispose of that point.
§ LORD CHORLEY
My Lords, that does not accord with my understanding of the position and the information which I have. I understand that the fuel oil supply situation is very good and that, so far as ordinary commercial prognostication goes, there is no reason to suppose that it will not continue to be good. We are living in a rather troubled world and I have no doubt that the sort of advice to which the noble Lord referred, that firms which have a coal-burning apparatus there will be very well advised to keep it, so to speak, in reserve, is good, because with the world in its present state one never knows what is going to happen. It would be wrong for my right honourable friend to give any sort of guarantee that fuel oil supplies will continue indefinitely. No commercial concern would dream of doing such a thing. The noble Lord may take it that adequate supplies of oil are available now and that, so far as commercial prognostication goes, there is no reason to suppose that will not continue to be the case.
§ LORD CHORLEY
My Lords, neither the Minister nor His Majesty's Government control prices. The amount of oil which is produced within the British Commonwealth of Nations is very small, and the price is ruled by world supplies and demand. The supply of oil is in the hands of commercial companies, and it would be impossible and wrong for the Government to express any opinion as to what is likely to be the future trend of prices in the oil industry over which they have no control.
My Lords, I thank the noble Lord for his reply, which will be studied with great care. It is the 140 Minister's advice in the matter of price that is wanted, so the question of price does come in.