PETROL PRICES (Hansard, 26 June 1967)

§ LORD ERROLL OF HALE
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ LORD STONHAM
My Lords, my right honourable friend the Minister of Power is now examining various proposals for higher prices of petroleum products, including petrol, which have been put to him separately by individual oil companies under the voluntary early warning arrangements. He hopes to complete his examination shortly.

§ LORD ERROLL OF HALE
My Lords, while thanking the noble Lord for that helpful and informative reply, may I ask whether he can give an indication of when he is likely to be able to make an announcement; and, secondly, whether Her Majesty's Government will give consideration to the excellent proposal in the Sunday Express yesterday to offset any price increase in petrol by a corresponding reduction in the excise duty so as to avoid an increase in the cost-of-living index?

§ LORD STONHAM
My Lords, with regard to the first question, my right honourable friend is still considering representations. With his great knowledge of this subject the noble Lord will be aware how fluid such a situation is. My right honourable friend has not yet made up his mind about agreeing to any increase, and it is therefore impossible to say when he will make such a decision. As soon as it has been made, he will announce it.
With regard to what the noble Lord described as the "excellent" suggestion made in the Sunday Express article, he will accept from me that all such suggestions will of course be considered by Her Majesty's Government, but he will no doubt have regard to the fact that one penny off the duty on fuel oil will cost the Treasury £29 million, and one penny off motor spirit £14 million. These are not sums that any Chancellor 6 Of the Exchequer can conjure up out of thin air.

§ LORD BYERS
My Lords, surely the figures that the noble Lord has given are for a full year. Are we expecting the Canal to be blocked for a full year?

§ LORD STONHAM
My Lords, I am most grateful to the noble Lord. I was quoting for a full year because I have not figures for any other period. How long the present situation will last, it is still too early to forecast.

§ LORD NUGENT OF GUILDFORD
My Lords, is the noble Lord aware that one of the suggestions now current is that if there is a price increase it should be a differential one which would have the effect of throwing the greater part (if not all) of the extra cost on to the price of petrol for the private motorist. Is the noble Lord aware that that kind of solution will be totally unacceptable to the people as a whole?

§ LORD STONHAM
My Lords, I have already said that it is too early to forecast whether there will be an increase. If one is decided upon, obviously the most convenient method would be an increase on the wholesale prices of the different oil products—all of them. I would add that there is no compulsion on any firm to increase its prices, if an increase is agreed, by the agreed amount or indeed by any amount if it does not wish to do so.

§ LORD FRASER OF LONSDALE
My Lords, excellent as is the proposal of the noble Lord, Lord Erroll of Hale, from the point of view of saving the customer money, is it not wholly uneconomic and contrary to economic law? If petrol is to be scarce—and that is the premise—then obviously the only way to make it go round will be either to ration it or to raise the price. If you offset the price rise by dropping the taxation, have you not vitiated the whole purpose of the exercise?

§ LORD STONHAM
My Lords, nothing in what I have said in reply to the noble Lord, Lord Erroll of Hale, indicated to any degree whatsoever approval of the proposal. While I do not wish to discuss the whole matter, certainly what the noble Lord, Lord Fraser of Lonsdale, has said is an important factor.

§ LORD STRATHCLYDE
My Lords, will the noble Lord say whether, in the event of the Canal's being reopened, he anticipates any great increase in the cost of petrol?

§ LORD STONHAM
My Lords, this would entirely depend on when the Canal is reopened. The noble Lord will be aware that already freight rates have increased from around 30s. a ton to £7 a ton. There are many other factors in increased cost which are already taking effect. It would depend entirely on when the Canal is opened. But certainly if supplies were readily available as they were before from the Middle East, and could come to us readily, and there was no increase in cost, there would be no possible justification for increasing the price of oil products.

§ LORD OAKSHOTT
My Lords, can the noble Lord assure the House that when his right honourable friend makes his Statement with regard to the price of petrol he will include a statement with regard to the availability of supplies of oil?

§ LORD STONHAM
My Lords, I will certainly bring that point to the notice of my right honourable friend, but I cannot over-emphasise the fact that the situation is fluid; it is changing almost from day to day, and there are important factors such as the availability of Nigerian oil and what is going to happen about Libyan oil. It will depend entirely on when my right honourable friend is able to announce a decision about increasing prices of oil products, if increases are to be agreed.

EARL FERRERS
My Lords, can the noble Lord give an assurance that there will be no rationing?

§ LORD STONHAM
My Lords, it is quite impossible to give an assurance that there will be no rationing. I can give an assurance that no decision whatever has been taken about petrol rationing; but, as noble Lords will be aware, we have taken the precaution of making, or beginning, preparations in case rationing should eventually be necessary.