OIL SUPPLIES (Hansard, 24 October 1973)

§ THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN)
My Lords, with permission, I will now repeat a Statement made in another place by my right honourable friend the Secretary of State for Trade and Industry.
The Statement is as follows:
"During recent months we have increased our stocks of oil. We now have stocks of 79 days on a forward consumption basis and there are in addition some 30 days supply on the ocean. We are now in a position to meet requirements for some months ahead if there were an emergency.
"As to future supplies, there have been some losses through the pipelines to the Mediterranean; and the Arab States announced last week their intention to make cumulative cuts in their oil production. It would appear that there will be some variations between countries as to the extent and the manner in which such cuts will be applied and the future impact is uncertain. The effect of these various restrictions on United Kingdom oil supplies is so far slight.
"On prices, the OPEC countries have announced a steep and immediate increase in oil costs equivalent to 2p a gallon in breach of agreements. The Government are discussing these increases with other consumer nations.
"Given the uncertainties overall the Government consider that it would 665 be prudent that certatin measures should be taken. It is naturally a time when we must ask the public to do everything in their power to avoid any wastage not only of oil but also of our total energy resources. I would ask that motorists should endeavour to cut down on petrol consumption and to use public transport to a greater extent where that is available. I would also hope that industrial and commercial users of energy would carefully examine any areas where they can make useful savings. I would ask domestic users to make all the savings that are possible in their homes, particularly with regard to heating appliances.
"In urging economy at home we clearly cannot permit exports to be uncontrolled. The Government will therefore take such powers as appropriate to control the export of oil and oil products beyond the Community.
"The Government do not consider it necessary to introduce a rationing scheme. In case we do ever need such a scheme, contingency plans have been brought to a state of readiness. There will of course be full prior consultations with industry, the oil companies and the motoring organisations should the Government decide that the implementation of these schemes is necessary. We shall, if required, bring before the House an enabling Bill that will grant us the powers to introduce these controls.
"Long before the recent announcements on the cost and supply of Middle East oil, the Government have been pursuing policies to develop our alternative energy supplies swiftly.
"We will continue to do everything possible to speed up the development of our oil and gas resources in the North Sea and we have asked the oil companies concerned to inform us of any delays that occur in developing their projects, and any matters that hamper them from proceeding as fast as possible with new schemes.
"The Coal Industry Act has had an important impact in arresting the decline in our coal production that had been allowed to take place in previous years, and we are in the course of discussing with the National Coal Board their long-range plans for further development of the industry.
666 "We have reorganised the nuclear power industry and we will be making important decisions as to the development of nuclear power stations during the next few months.
"I will keep the House informed of further developments."

§ LORD KENNET
My Lords, the House will be grateful to the noble Lord, Lord Drumalbyn, for repeating this Statement which, though it is not long, is certainly broad, and we shall all want time to read it to-morrow. The Statement probably marks the end of the era of profligacy with this valuable and increasingly scarce energy source, which may not be without salutary effect. I wonder whether the noble Lord would answer one or two questions, even so early as this? The Statement speaks of a price increase of 2p a gallon. Is this a flat rate across the board on all petroleum products or will it affect only some, and, if so, which? And above all, who will choose what it will affect?
I think that all noble Lords on this side of the House will wish to endorse the Government's appeal to the public to do everything in their power to avoid wastage, and to use public transport to a greater extent where that is available. Would not the noble Lord agree that the words, "where that is available" are the important part of this sentence? Can the Government soon get a decent prices and incomes policy so that urban transportation authorities will be enabled to keep going at all?—because they are rapidly folding up in many of our big cities. It will be a question of relating the wages of bus drivers to those of car makers.
My Lords, I think we must endorse the hope, indeed the request, that North Sea oil exploitation will proceed as fast as possible. Will the Government not lose sight, in this salutary haste, of the need for sound land use planning. And lastly, on the question of the coal industry and nuclear power, while it obviously becomes more urgent than ever that both these should be developed, will the Government now take charge of energy policy as a matter of urgency; will they determine it and will they enforce it in a way in which they do not at present? And on the question of nuclear energy, 667 can the Government undertake that there will be no purchase of American reactors until the matter has been debated in this House? Lastly, my Lords, will the Government now increasingly make direct contact with the Governments of the Arab oil-exporting States instead of leaving the negotiations to the discretion of great multinational corporations?

§ LORD GLADWYN
My Lords, the noble Lord will correct me if I am wrong, but as I understand it the Arab States are employing what they call cumulative cuts in oil production and doing so to the extent of 5 per cent. per month, and in the case of Saudi Arabia 10 per cent. per month, until such time as Resolution 242 of 1967 is fully implemented, presumably by the Security Council. If that is so, it is evident that unless we get some kind of settlement under Resolution 242 in the reasonably near future, the supplies of oil may be entirely cut off before long. Certainly if the negotiations last 10 months, which is quite possible, there will be no more oil anyhow from Saudi Arabia if this declaration is to be taken seriously. Therefore, would not the Government make serious representations to the Arab States involved to the effect that, at any rate, Her Majesty's Government are in favour of the implementation of Resolution 242? They have constantly declared their intention to put it into effect if they can, and the entire Security Council has come out in favour of that also. Would the Government therefore approach the Arab States in this sense, and represent to them that it is totally unreasonable to effect these cuts progressively, in any case to a country like Japan who has no interest in the dispute at all so far as can be seen, and also to ourselves who, after all, are doing our best to get a settlement within the limits of our possibilities?

LORD JANNER
My Lords, will the noble Lord—

§ LORD DRUMALBYN
My Lords, if I may I will answer those questions first, which I think would be in accordance with the usual practice. On the question of the size of the price increases, this is simply a calculation of what the increase in the Government "take" by 668 Arab States amounts to right across the board, expressed in terms of pence per gallon. It does not mean that there will be a uniform increase for all products; it is a calculation. Secondly, on the question of urban transportation policy, I think that the noble Lord, Lord Kennet, will have ample opportunity to debate that in the debate that we shall he having next week. Thirdly, on the question of North Sea exploration and exploitation (I am not certain which the noble Lord mentioned but I think that they both apply), we shall be going ahead with this as fast as we can and we are very much aware of the need for sound land use planning in this connection.
The noble Lord asked whether the Government will take charge of the energy policy. The noble Lord may not be aware of it, but the Government have firm charge of the energy policy. The various strands of the energy policy are gathered together in the hands of my right honourable friend Mr. Boardman and I think that he is doing all that he can in these matters. So far as the purchase of American reactors is concerned, I am not in a position to give a guarantee to the noble Lord on this point myself, but I shall certainly convey what he has said to my right honourable friend Mr. Boardman.
With regard to the direct contact between Governments and oil exporting States, the British Government are in contact with the oil exporting States. Of course, this is now obviously necessary because what they are doing is affecting everyone; but I think one has to bear in mind at the same time that direct negotiations are a matter for the oil companies, and not least because five of the seven oil companies operating in these countries have strong American interests.
I take note of what the noble Lord, Lord Gladwyn, said. I do not think there is anything between us on this matter. As I said, the Government are in touch with the Arab States concerned with these matters, and I am sure that what they have to say will certainly take account of the particular point he raised.

LORD JANNER
My Lords, I thank the noble Lord for what he has said, but surely it is time we realised, in view of the kind of action that has been taken from time to time by the oil States, that 669 energy problems should have been attended to long ago. May I ask the noble Lord whether he will see that our country will not succumb to blackmail (I call it "blackmoil") on the part of the Arab States? We have already seen the results of giving way to threats. If I may give an example, the Grand Mufti, whom we appeased, actually joined Hitler in the course of the war against us. Will the noble Lord keep these things in mind, and see to it that if there is an attempt to blackmail us we shall not succumb to it?

§ LORD DRUMALBYN
My Lords, the noble Lord talks about the preparation of energy policies. I would remind him that, as his noble friend Lord Kennet has mentioned, this covers the whole sphere of energy. He will be aware that we have been paying great attention, for example, to the development of our coal resources, and, indeed, are going to spend something of the order of £150 million to help coal next year. We have to a large extent stopped the rundown of the mines and the rundown of manpower. On the oil side, one has to bear in mind that at the moment the situation is not clear. We are not in a position to make clear decisions because we do not know what the situation is. The noble Lord asks whether we are going to succumb to blackmail. It is not in the nature of this country to succumb to blackmail, and I can assure him that we shall not do that.

§ LORD DAVIES OF LEEK
My Lords, while thanking the noble Lord for the Statement, may I ask whether the Government have considered the implications of the policy that has been suggested in this constructive Statement to both Houses of Parliament to-day? First, if we are asking motorists to help by carrying passengers from their homes to their offices or jobs, there should be some discussion with insurance companies to cover contingencies of accidents. This should be looked into. Secondly, without belabouring the point and asking long supplementaries, I want to endorse wholeheartedly the supplementary question of my noble friend on the Front Bench about nuclear reactors. There is a conspiracy of silence about the consequences of using nuclear reactors, and the world must realise that it is not a feasible policy to get either a 40 or 50 per cent. power energy as our knowledge of waste 670 materials stands to-day. Therefore, may we be assured of the possibility of a thorough debate in the near future on the energy policy, particularly in relation to nuclear energy, and before we adopt this polluting reactor that it has been suggested in the Press we are to get from America?

§ LORD DRUMALBYN
My Lords, I am grateful to the noble Lord, Lord Davies of Leek. The point he makes about insurance is one of which we are all aware from past experience. I am sure it will be borne in mind, but I will make sure it is by drawing it to the attention of my right honourable friend. On nuclear reactors, as I said, the Government will be making an announcement in due course. I should have thought, in the light of that announcement, then would be the right time at which to have a debate.

§ LORD KENNET
My Lords, I wonder whether I may press the noble Lord a little further about energy policy and nuclear reactors together. The noble Lord may remember that about a year ago we had a debate on energy policy, and I think there was a general feeling in the House that it was difficult to know what was true about the costs of different forms of energy, because there was no unified authority whose job it was to find out. We were at the mercy of conflicting claims. The noble Lord spoke eloquently on the way in which Mr. Boardman holds all the threads in his hands, but I have not even now seen any independent unified assessment of the costs of different forms of energy. It is this that we desperately need. May I once again press the noble Lord to go as far as he can in giving an undertaking to this House that there will be no purchase of American civil nuclear reactors until the matter has been debated once again in Parliament?

§ LORD DRUMALBYN
My Lords, the noble Lord will be aware that to a certain extent the costs of producing nuclear energy must be speculative, because we have not yet got the advanced gas-cooled reactors in operation, compared with the Magnox reactors and so on. However, I am certain that this is a point that is being well looked after at the present time. It would be absurd to attempt to make decisions without a comparison of the estimated cost. It would remain true 671 that they are to some extent speculative as we are dealing with such a new field. On the question of not making a decision to buy the light water American reactor before referring the matter to Parliament, as I said, I am not in a position to give a guarantee, but I will ask my right honourable friend about this and I will write to the noble Lord.

§ LORD BESWICK
My Lords, can the noble Lord clarify one point about the cost to be passed on to the consumer? Will it be the actual increase of cost of the raw material, or will it be the increased cost of the raw material plus, according to the Price Commission formula, the usual profit percentage? Can the Government give an assurance on that point?

§ LORD DRUMALBYN
My Lords, this is obviously a matter for the Price Commission. I am afraid I cannot answer that question.

§ LORD BESWICK
My Lords, what is involved here is so important that the Government themselves should accept responsibility in this matter.

§ LORD DRUMALBYN
My Lords, I am sure the Government will have a look at this matter, but it is governed at present by the law and the rules laid down by which the Price Commission have to operate.

§ BARONESS GAITSKELL
My Lords, may I ask the noble Lord how he thinks public transport and the Coal Board will manage to help us in this present position, particularly as when we debated both the coal strike and the railways the Government were out to squeeze both these nationalised industries in a really bad way?

§ LORD DRUMALBYN
My Lords, the noble Baroness will be aware that these matters are under discussion at the present time. So far as road transport is concerned, if, as I hope, there is a response to my right honourable friend's appeal to motorists to use public transport when necessary, this will greatly reduce the number of cars on the road and will therefore make it easier for public transport to be used in this way.

§ LORD ARCHIBALD
My Lords, may I ask the noble Lord whether he thinks 672 that the appeal to motorists to use public transport is likely to be helped by the situation which I find, having anticipated this Bill, and having used public transport not only to-day but on other occasions, that when you go into the tube station there is a notice saying that owing to the shortage of staff there will be fewer trains and passengers will be delayed whatever their destination? And when one knows that the shortage of staff is due to the Government's pay policy, how does the noble Lord reconcile this appeal with the policy the Government are carrying out on transport staff pay?

§ LORD DRUMALBYN
My Lords, we know the position as to shortages of staff, but one can reconcile this perfectly easily on the basis of the same kind of public spirit that the noble Lord has himself shown.

LORD JANNER
My Lords, while thanking the noble Lord for his Statement with regard to what I call "blackmoil", may I ask him whether, now that we are members of the E.E.C., he will seek ways and means by which the dastardly action on the part of the Arab States in refusing the Netherlands any oil will be considered, to see how that event can be dealt with by the European Community?

§ LORD DRUMALBYN
My Lords, I think this is a matter for negotiation and that on an occasion like this it would be a mistake to throw around recriminations of this kind. We shall have to negotiate with the Arab States on these matters and I hope we shall find a satisfactory solution in the end.

§ LORD GARNSWORTHY
My Lords, is the noble Lord aware that members of the public go to catch buses and Green Line coaches, and they just do not run? Where I live, if a Green Line does not run to London it can mean waiting over an hour for the next one. May I ask the noble Lord what the Government are prepared to do to improve the service, so that members of the public may be in a position to respond to his appeal?

§ LORD DRUMALBYN
My Lords, obviously that question does not arise immediately out of the Statement that I have made, but of course I shall study 673 what the noble Lord has said and bring it to the attention of the Minister of Transport.