OIL SUPPLIES

HL Deb 24 May 1979 vol 400 cc508-28

12.18 p.m.

Lord TANLAWrose to ask Her Majesty's Government what steps they are taking to ensure adequate and regular supplies of petrol, diesel and heating oil in the immediate future and over the next 12 months. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I had hoped that it would be a mere formality this morning, bearing in mind the questions which were asked yesterday in another place. However, in view of the vagueness of the replies given by the new Minister of Energy to the very pertinent questions which were raised by my right honourable friend Mr. David Steel, I feel that I must pursue these questions further with Her Majesty's Government in order to alleviate some of the concern which is being expressed in agriculture and industry and by the motoring organisations about regular supplies of fuel in the forthcoming months.

I want to express the deep concern that is felt by farmers—certainly it is felt by those in the South of Scotland, about whom I can speak with confidence, but no doubt the same concern is felt by farmers in other parts of the country—about the threat to diesel supplies. If I can explain why their concern should, in my view, take priority over the concern felt by other industries, it is simply because the crops will not wait. The crops have to be sown and the grass has to be cut; they will not wait for a change in the diesel supply position. The opportunity will be lost. For those of us in the South of Scotland, where we have had the hardest winter that I have ever experienced and also with an indifferent spring, the weather window is absolutely critical for farming operations within these next few weeks. We need more than assurances; we need at least some definite measures from Her Majesty's Government today, before Parliament goes into Recess. Perhaps I should remind the Government that the grass still grows during the Recess and the need to plant crops still remains, and therefore there is some uncertainty among the farmers as to whom they should apply if diesel shortages occur.

Before going further with the problems of the United Kingdom, it is worth mentioning the element of surprise that this question should have arisen at all. Industrial nations throughout the world appear to have been suddenly caught short by the change from a period of surplus less than 12 months ago which has now become one of shortages. The cause of the current world energy problems is not really one of supply but of consumption, so that there is an energy consumption crisis, which is real and it is now. Therefore there is an urgent need for all industrial nations to implement the 5 per cent. cutback in consumption advocated by the International Energy Agency and to implement practical energy conservation programmes without any further delay.

How is it that this situation has arisen so quickly and without forewarning? The balance between world supply and world demand of oil is fine. The total world supply is 52.6 million barrels per day and consumption has been running at that level. With the cutback of 2 million barrels a day in Iran there is a shortfall of approximately 2 million barrels. The largest industrial nation, the United States of America, consumes, according to the IEA, 19.7 million barrels a day. This consumption is rising so I feel it is necessary that we, as a nation, and through the Common Market, should support President Carter's call for a cutback in consumption. I feel that he needs some support against his own Congress. It would appear that the United States Congressmen are unable to see the need for a conservation policy through the smog of bloated self-interest which seems to blot out all else in American politics today. They have made a sad decision and it is one which I am sure they will have to rectify in the not too distant future.

Let us look at the problem in terms of world energy consumption per head. The world average is 1.65 tonnes of oil equivalent; in Western Europe it is 3.11 tonnes of oil equivalent; in the United States of America it is 8.55 tonnes of oil equivalent, which gives a picture of the gross increase above the world average of a factor of eight in the consumption per head of energy in the United States. Until now there has been no need for citizens of the United States to cut back, but it must be remembered that every barrel of oil they consume from an imported source means less for the rest of the world and particularly for the developing world.

To return to this country, it would appear, from the answers given to date in another place, that Her Majesty's Government are not at this stage prepared to give a lead on this issue but prefer to be led by events. What is more, there seems to be no definite programme of energy conservation from the new Government and it would appear that the energy supply policy in this country is being left to the oil companies to resolve.

The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie)

Not at all, my Lords.

Lord TANLAW

My Lords, I do not think that is satisfactory. I heard the noble Earl opposite say, "Not at all", but if I interpreted correctly what the Minister said in another place he has passed the buck to the oil companies to ensure satisfactory supplies. I hope they will not rely on market forces and a sudden increase in prices to cut back on demand. If I may refer again to the agricultural industry, whatever the price, there is no option, but to buy diesel in order to keep the tractors running during the critical few weeks that lie ahead of us.

Today is not the time to do this but I hope at some later date to be able to discuss energy conservation policy in a debate and to try to extract from Her Majesty's Government information on the measures they are taking to satisfy the IEA recommendation for a 5 per cent. cutback in energy consumption. This does not apply just to this country but to all industrial nations throughout the world. This cannot be left for the months ahead. It is a matter of weeks because if the consumption is not cut back in the short term we shall be left with very serious long-term energy problems and world economic recession will follow inevitably.

To take our own case in this country, as we all know, the Central Electricity Generating Board is using oil to make electricity and it appears from the information they have given me that they have made some impressive cutbacks; from 4¼ million tonnes of oil they have cut back to 2¼ million tonnes for the summer months. That is their anticipated cutback in oil burn. The question I wish to ask the noble Earl is whether that is enough. Can there be a greater cutback than that? Secondly, what longer term measures are being taken to increase the coal burn, which I know has already been increased by 6 million tonnes? I am very pleased to hear that but in another context, as I and other noble Lords have said from these Benches, if there is to he a future in the coal industry it must lie with electricity generation. We should like to hear something of the immediate plans which the Government have in that direction.

Are we going to have another "Save it" campaign? It was very well intentioned, but I feel that there was no incentive to save energy. Exhortation is not enough; there must be some incentive to save and, when one comes back to the wider question of conservation, I hope that there may be a method whereby the pricing structure of energy could be made to encourage people to save by allowing a basic load at a very reasonable price guaranteed for 12 months ahead, with a steep increase in price if those loads are exceeded. I will not go into that further now but I want to hear that the Government are working towards an energy-efficient society. So far, no definite views have been put forward to encourage me to believe that they intend to make this one of their prime objectives in the near future.

I should also like to hear the Government's views on alternative energy strategies—something which I am personally closely connected with in the Parliamentary liaison group for alternative energy strategies. These things cannot be left much longer. This is an opportunity for the noble Earl to give us a hint of things to come but I hope there will be something more definite in the more precise questions which have been asked, not only today but also by my right honourable friend in another place yesterday. I personally feel that it is an act of bravado to terminate this Session of Parliament while these questions remain unanswered. All farmers would like a very clear definition as to where and to whom they should apply as well as how they should apply for immediate diesel supplies if there are shortages during the period which I outlined earlier.

My Lords, to conclude, being the last day before the Recess of this session, I think one might be allowed a slightly more whimsical note than usual. Some noble Lords have heard that NASA's space lab is about to fall back to earth. I think this will be in the month of June at about the time Parliament reassembles. Noble Lords may also have seen in the newspapers that there are about one million thoughtful Americans intending to keep it in orbit by counteracting the laws of gravity through mind power. In view of the fact that the Government appear to have no definite energy policy, I am speculating whether they are considering harnessing similar powers to counteract the laws of supply and demand as they arise during the Recess in the hope that the shortfall in energy may be solved before Parliament reassembles.

12.32 p.m.

Lord STRABOLGI

My Lords, I am very glad that the noble Lord, Lord Tanlaw, has put down this Unstarred Question on this very important matter, which I think it is vital that Parliament should debate before we go into Recess. I agree, if I may say so, with a great deal of what the noble Lord has said. I must first congratulate the noble Earl, Lord Gowrie, on his appointment as Minister of State for Employment. I am glad that the noble Earl will also act, as I understand as a spokesman for the Department of Energy, although I am sorry that there will be no actual departmental Minister in this House. This is, of course, no reflection on the noble Earl. Lord Gowrie, who indeed used to say the same sort of thing to me as an energy spokesman when he was in opposition. But then the last Labour Government had a much smaller team, although this did include an Energy Minister at one time. The new Government now number 20 noble Lords in this House, including seven Ministers of State and three Parliamentary Under-Secretaries. But, my Lords, in spite of this galaxy of rank and talent there is no departmental spokesman for what is basically one of the most important departments of all, since energy resources are surely fundamental to the future of any advanced country. Moreover, there is a great deal of technical knowledge and expertise on the Back Benches of your Lordships' House, as I found when I was the Government spokesman. I hope, therefore, that this omission will be rectified before long.

My Lords, after these general remarks, I should like now to turn briefly to the more specific subjects of this debate. I should like to support the noble Lord, Lord Tanlaw, and to ask the Government what steps they are taking to deal with the present threat to our oil supplies resulting from the cut-back in Iranian exports and from the self-imposed restrictions on Saudi Arabian production. This is an opportunity, I think, to ask them about their general energy policy, if they have one. According to newspaper reports the Government are showing some complacency. I hope this is not true, and we wish them well, although I must deplore that there is no mention of energy in the gracious Speech, and, as the noble Lord, Lord Tanlow, said, the Government's replies yesterday in another place were rather vague.

It appears that petrol in some garages is already costing nearly £1 a gallon and that further rises are on the way. I must ask the noble Earl if it is proposed to offset this rise by cutting petrol VAT, or, on the contrary, will VAT, with excise duty, have to be further increased to offset the promised reductions in income tax. Perhaps the noble Earl will enlighten us. What also are the Government doing to encourage some self-restraint in consumption and some reduction in demand?

I see that according to the Commission's figures Britain has the best record in energy saving among all our EEC partners, but more may be required. What also will be the position over the problems of petrol pump conversion if petrol goes up to over £1 a gallon, since most pumps at present cannot manage prices of more than 99.9p? The price of oil in Rotterdam is now reported to be double the OPEC recommended price. Is it the Government's policy to support our French and Belgian partners in pressing for a price ceiling on the international market or do they prefer to see this left to market forces?

May I also ask the Government about their attitude to the suggestion by Sweden in the current ministerial meeting of the International Energy Agency for an emergency oil supply sharing scheme within the Agency. This would require us to increase our exports of North Sea crude to balance the fall in normal supplies, and could mean early Government measures to reduce demand. In the long term it is now clear that the consumption of oil in the Free World is growing faster than production, as the noble Lord, Lord Tanlaw, reminded us. Unless some action is taken soon it will not be possible to have even moderate industrial growth.

North Sea oil and our coal are, of course, very important in this critical situation. We are indeed most fortunate to be so richly endowed with these. When natural gas and North Sea oil, and indeed world oil supplies, run out in a few decades we shall have to rely, apart from nuclear power, on our coal for conversion to synthetic liquid fuels. We have, luckily enough, coal under ground for 300 years' consumption at current extraction rates, and there is still more deeper down, as well as under the sea. The British coal industry is the only one in Europe with a strategy for expansion. The Labour Government agreed on a recommendation by the National Coal Board to provide up to £20 million for the development of coal gasification and liquefaction in the period to March 1983. The total spending on energy R and D by the public sector in 1977/78, when we were in office, was about £250 million. This is vitally important research, I submit, on which this country's future depends, and I hope it will not be reduced by the present Administration as part of their policy of reducing public expenditure, as this, in my view, would be extremely foolish and shortsighted.

I must also ask the noble Earl to confirm that the Energy Commission set up by the Labour Government a couple of years ago, which has a broadly based membership covering workers and management in the energy industries as well as consumer interests, will not be disbanded. Above all, I hope that the Government are going to respond to the call by Sir Derek Ezra, the NCB chairman, and Mr. Joe Gormley, the president of the miners' union, to back expansion in the coal industry and to endorse the previous Government's tripartite Plan for Coal. As Sir Derek said: If extra coal is to be available when the real energy shortage develops at the end of the century, the exploration, research and investment decisions need to be taken now". I hope the Government will also note the constructive words of Mr. Gormley when he said the other day that the miners are prepared to work for a greater Britain, which would bring them greater security and higher living standards. Therefore, I trust that, unlike the last Conservative Government, the new Government will work with the miners and not against them.

I must ask the Government to confirm that the rather ominous words in the gracious Speech about denationalisation and the selling off of parts of the nationalised industries do not apply to our coal industry. Such a policy, adopted for doctrinal and ideological reasons, would be the utmost folly, because in the long-term a great industry—such as the coal industry—must be run on national lines so that it can command the resources needed for investment in new mining capacity, and for the vital research to ensure that we have all the coal to meet our needs in the ever-gathering energy crisis.

12.41 p.m.

Lord DE CLIFFORD

My Lords, I am grateful to the noble Lord, Lord Tanlaw, for raising this matter. I raised it myself on the debate on the gracious Speech. Today I shall not go into the policies of who does what to the coal industry, or anything like that. I want to ask my noble friend the Minister whether he can state in clear words—words which can be understood by people in the country—what will happen over the course of the next few months?

In the rural area where I live—and no doubt noble Lords are not surprised that I address myself to rural areas—we have reached a very serious situation. The farmer is not only short of fuel for his tractors and other equipment, but is not getting it. If he cannot obtain fuel to plough his fields or harrow them, or roll his grass, it is no good referring him to my noble friend's right honourable friend's statement made yesterday that we should approach this through: calm and careful policies of greater … efficiency, demand restraint and conservation".—[Official Report, Commons, 23/5/79; col. 1051.] He has no fuel to conserve. He cannot restrain his crops from growing; when they are growing he cannot say, "Please do not grow any further because my combine harvester will not work for three weeks".

When the Government present their case they must explain to the people on the ground exactly where they stand. It is no good talking about people being able to obtain oil from Rotterdam. In fact, one of my friends has had to obtain oil from Rotterdam in order to finish his spring sowing and harrowing. As a result he has had to pay for his fuel 12p a gallon more than the proper price. He quite rightly said to me, "If this continues, we shall be going back to wartime and will build up a nice black market". Please will the Government issue a statement which the people can understand to ensure that we do not reach a situation where a black market can start?—for once we get one, it will be extremely difficult to break.

I should also like my noble friend to pay attention to the people who live in rural areas, who have either no bus services or very minimal bus services, and have to travel five or six miles to the shops. It has now become uneconomic for tradesmen to deliver so these people have to collect the food for their small-holdings, which they are unable to store in the bulk quantities in which people are prepared to deliver to them. Such smallholders have to fetch those goods in their own transport. I know of one man who was told this week that he could have only £2 worth of petrol. What good is that to him? He has to collect the food for his animals on his small-holding; his wife's mother may be taken ill and have to go to hospital 35 or 40 miles away. He would have to get her there because there are no bus services in the area. What good is there in saying that to panic is to be chickenheaded'? There will not be any chickens, we will all have chicken heads! However, that does not allow him to do what he has to do. Therefore, it is essential that if the Government are to retain the goodwill of the country, which they have at this moment, they must convey to the people exactly what their day-to-day situation is, and not the fact that there is enough coal underground for 300 years. The people want to know where their petrol, diesel oil and fuel for their tractors will come from tomorrow. That is quite essential.

Yesterday in my area we saw cars going from Wolverhampton and Birmingham to the races. Yet a man came to me and said that he could only get £2 worth of petrol. He said, "How on earth am I going to get my wife's shopping, because she is sick?" When the Government can give the answer to that and convey it to the people, they will get the people's goodwill. But until they do that, I hope they will realise that they are slipping and sliding into a great deal of dissatisfaction and probably the start of a very had black market.

12.47 p.m.

Baroness ELLIOT of HARWOOD

My Lords, I should like to support every word that has been said by the noble Lord, Lord Tanlaw, and others. However, I should like to make one point which so far no one has raised. There are certain areas in Scotland and Wales—and I think in parts of England too—where there are no railways, no buses and where only one form of transport can be used: namely, the motor car. Those areas must he looked at by any Government. I sympathise with the present Government in suddenly finding that this crisis has come upon us, because it is extremely difficult.

During the last war—and I live in an area where there are no railways—we were given extra coupons for petrol for living in an area where transport was so difficult. I do not suggest that rationing or anything of that kind should be introduced now, but there are parts of Scotland—and the noble Lord, Lord Tanlaw, spoke of the Borders—which are 50 miles from any form of public transport. Every time I come to your Lordships' House I have to motor 50 miles, which entails a motor-car travelling 100 miles, to Carlisle, Berwick or Newcastle. Of course, I am only one, but I entirely endorse everything that has been said. I plead that those areas—and there are more in Scotland than in any other part of the country—which have no railways and where buses are non-existent should be considered, because we shall be completely marooned if there is a real petrol shortage.

12.49 p.m.

Lord COLLISON

My Lords, I ask for the forgiveness of the House for rising, not having put my name on the list of speakers. However, not only do I want to endorse what the noble Lord, Lord de Clifford, and the noble Baroness, Lady Elliot of Harwood, have said, but I want to ask the noble Earl to consider and give us an answer on one further point. As your Lordships know, I am the chairman of the Land Settlement Association. Our people of course operate a lot of glass. They grow horticultural crops—cucumbers, lettuce, tomatoes, and that kind of thing. They are absolutely dependent on the supply of oil in order to heat their glass. Fears have been expressed to me that, if there is a shortage of oil, which seems to be pretty certain, then priorities will have to be determined. I sincerely hope that the noble Earl will be able to reassure me that, in those circumstances where priorities have to be established, the Government will make sure that the agricultural people (I agree with the other points, too), and in mycase the horticultural people, get a continuing supply. It would damage the country's interests if we could not go on producing the commodities we produce. It would certainly damage horticultural people, the large ones and the small ones. Mine are the small ones, and I think one should accept that there is a concern for them which ought to be understood and ought to be met.

12.52 p.m.

Lord ROBERTHALL

My Lords, I too apologise for joining in this debate after not having put down my name. The Question refers to the next 12 months. I was encouraged to join in because the noble Lords, Lord Tanlaw and Lord Strabolgi, looked rather further, and I just want to say a brief word on that. Everybody knows that the world is running into an extremely serious position about energy and that the steps being taken at present are far from adequate. In general, you can deal with problems of this kind in only two ways: either by using the market mechanism, or by some form of planning, which in this case would be rationing. As it is an international problem it seems to me that an individual country which is willing to use rationing is likely to lose unless other countries are doing the same thing.

The point I want to commend to Her Majesty's Government is that a great deal that they have said indicates that they believe in the market system, and I hope that they will not forget in their consideration of these problems that over a longish period the price system enlists an enormous set of forces on your side, both in forcing reductions in consumption and in stimulating the work of finding substitutes, which we have to do. At the moment our only friends are the OPEC countries because they at least keep on putting up the price of oil—a thing which should have been done a long time ago. We are in a lucky position, because what the world needs now—that oil should be made very expensive—happens at the moment to be a painless thing to us.

I would only close by saying how nice that the noble Lord, Lord Tanlaw, raised this point, when one thinks that a very short time ago the Liberal Party in another place stopped the Government from a most desirable thing that they were trying to do, and that was to put up the tax on petrol. I commend to the Government, in accordance with their own principle, that they do not forget about the effect of the market system in bringing these great forces to work towards solving the problem.

12.54 p.m.

The Earl of GOWRIE

My Lords, it does of course take a Cross-Bencher with the experience and knowledge of the noble Lord, Lord Roberthall, to pull a real Party political squib out of the bag to hurl at the noble Lord, Lord Tanlaw, and so I will not get into this battle on the last point between the Liberal Party and the Cross-Benches. I would say, seriously, that it is of course entirely right and proper that noble Lords should express, as they have done, a great concern at the prospect of shortage of oil supplies both now and in the immediate future. I think that many of the remarks of concern and anxiety which we have heard this afternoon in your Lordships' House are in fact a reflection of a general world anxiety, and indeed an anxiety which is certainly—as I think my remarks will make clear—shared by the Government.

The loss of Iranian supplies at a time when world trade conditions were already difficult, as your Lordships are aware, and the consequent renewed pressure on prices, is extremely worrying for all countries, whether the developed nations or those many developing nations who are hoping to improve their own economic positions. The importance of oil as a current source of energy cannot be overstated; although much research has been devoted to the development of alternative energy sources—and the noble Lord, Lord Tanlaw, made mention of these—that we might try to investigate to replace those in which oil is at present in demand. Despite the interesting debate which is taking place generally in energy fields about alternative sources, it seems to me that it would be silly not to say very definitely that there is going to be no short-term radical change in our dependence upon oil. I am all for the debate continuing, and as I learn my lessons in the energy field I shall certainly try to learn about alternative energy supplies. But I think the House will agree that we have to deal with the situation as we see it mainly in respect of oil.

It may be argued that despite the world shortage we, in the United Kingdom, are fortunately placed in that we have large offshore production and reserves; so large that we expect to be self-sufficient in oil by next year. Indeed, that is a stroke of good fortune; and since these are secure supplies under our own control, and since any increase in the price of oil must increase the value of our own production and reserves, to that extent of course we must count ourselves extremely lucky.

But, as noble Lords have pointed out, this is far from the whole story, and we cannot in any way afford to be complacent about recent developments. I think that three weeks after a change of Government—if indeed it is yet three weeks—is a little early to be accused of any complacency. There will be none on this issue from the Government, which surely, in the nature of things, takes a lot more time to develop.

Continued shortage of oil and real price increases must have a restrictive effect upon world trading conditions on which we depend, and upon the prospects of the developing nations as well as ourselves to achieve their economic aims. To a country such as ours, which is so greatly dependent upon world trading conditions for its own continued growth and prosperity, this prospect is one which we must do everything we can to improve. It is for that reason that we have joined with other signatories to the International Energy Agreement, and with other members of the European Community, in agreeing to reduce our internal use of oil and our imports from world markets. This action, wholeheartedly applied, will do more than anything else could to stabilise price by more nearly equating world demand with world supply.

May I just spell out what we are committed to trying to do. Within the European Economic Community we are committed to reducing United Kingdom demand by rather over 4½ million tonnes in 1979—a somewhat more rigorous reduction than that entailed by voluntary action to reduce demand by 5 per cent. within the countries of the International Energy Agreement. If we do succeed in this reduction in demand there is no reason to suppose that supply within the United Kingdom will be unable to meet the reduced demand in full.

But, as I said earlier, I do not wish to minimise the difficulty with which we shall be faced in attaining such a reduction. The scale of the reduction at which we are aiming is in fact greater than the overall reduction in world supplies. This it must be, of course, if it is to have a significant effect in discouraging movement to higher real prices. Yet in achieving this reduction we have still to aim at recovery within the United Kingdom from the present almost stagnant economic position—and I think the noble Lord, Lord Strabolgi, made that point—and to get on to a path of economic growth. That is the only way in which we can hope to remedy the serious short-comings in our social provisions and in defence; and of bringing national living standards up to those of our continental neighbours.

Before going further I will deal briefly with some of the points put to me in the debate. We, of course, recognise the need for the Government to take the lead in getting the message across to all users of oil products that their use of oil must be reduced, and I shall say a little more about the implications of that shortly. At the moment we are trying to consider the best means by which to get this message across. I want to convey our sense of urgency, our sense of anxiety, about the situation, but I also want to convey, particularly to the noble Lord, Lord Tanlaw, and others who complained that we did not have an instant energy policy, as it were, that it takes quite a lot of looking at.

We all have experience, as readers of the newspapers, of the situation in, say, California or the Republic of Ireland and know that if you get the message across wrongly, people panic and there are great bottlenecks in supply and demand, queues at petrol stations and the like, so we really want to get it right and spell out the real conditions, as I shall try to do. I am sure the House will agree, as suggested by Lord Tanlaw, that any campaign must be carefully thought out; we do not want to create panic when all that is needed is reasonable care and economy. Subject to this, we shall lose no unnecessary time in putting the general public fully into the picture.

Several noble Lords raised the question of the supply of diesel fuel to farmers. Farmers are, of course, heavily dependent on supplies of gas and oil diesel fuel for their sowing and harvesting programmes. They are also entirely dependent on the weather for getting on with such work. Allocations of oil based on the corresponding month of the previous year and because of the differences in weather, leave a farmer without adequate supplies just when he needs them, and noble Lords will be aware of that. That is obviously unacceptable to farmers. The Department of Energy has made this point forcefully to the oil industry, who recognise the problem; I can give that assurance. They have agreed to give special attention to the needs of farmers. This does not of course mean that there will be no problems at all or that farmers can altogether escape the problems which exist in energy supplies generally. But it means that they will not be left without supplies because of the unfortunately but necessarily arbitrary nature of the allocations system at present.

I would say to the noble Lord, Lord de Clifford, that the Department of Energy has dealt with a large number of cases of individual farmers who were worried about oil supplies. Although oil companies are reluctant to give assurances to any specific individual customer on future supplies, and this is naturally worrying to farmers, the Department knows of no case in which spring sowing or other essential agricultural or horticultural purposes have been delayed or prevented by lack of oil. Farmers who are in difficulty are advised by the Department to put their position in writing to their immediate supplier, but I would say to the House, knowing the great body of expertise we have in agricultural matters in this area, that if noble Lords know of bottlenecks or difficulties in individual cases, perhaps they would write to me and, while I cannot promise anything, I will see what I can do about it.

Reference was made to no mention being made in the gracious Speech of energy policy and I wish to comment on the point made at the beginning of his remarks by the noble Lord, Lord Strabolgi, about our not having a Minister for Energy in this House. This is a problem we have all had to live with. I am feeling a slight glow of triumph because I was an agitator for many years in Opposition in the cause of having a full Treasury Minister in this House, and at least that has been achieved under the present Administration. It is a remarkable step forward, and we have some Ministers at senior level in economic Departments in this House, and that too is a step forward.

Of course no Minister involved in economic affairs—as I know already after even a few days at the Department of Employment—can isolate himself from energy questions. I do not know whether this will be of any assurance to the House because I am learning my lessons and I have just got to do as well as I can as fast as I can, but I shall take my position as energy spokesman extremely seriously. I have the advantage, though perhaps he might not welcome my saying so, of being a very old friend of my right honourable friend the Secretary of State and I shall bully him if he shows the slightest signs of neglect of the very great expertise that he knows all too well exists in this House. For instance, we have the noble Lords, Lord Balogh, Lord Strabolgi and Lord Kearton; we are not a House that can be taken lightly on energy issues.

The noble Lord, Lord Strabolgi, is an old hand and I think he must have been teasing when he asked me poker-faced about changes in VAT. I do not mind sticking my neck out with my right honourable friend the Secretary of State for Energy, but I am not going to anticipate Budget changes in the House of Lords of all places. However, what the noble Lord said will of course be taken into account. I would say to the noble Lord, Lord Roberthall, on the question of Rotterdam, that, as a commodity market, it supplies only 5 per cent. of our supplies, 95 per cent. being our own contractual arrangements, but I will look at what he said and if it needs a reply, or if he feels it does, I shall be happy to research the matter with officials and write to him.

I do not want to minimise the difficulties we face. It is not an easy task. As Lord Strabolgi will know, one measure taken by the previous Administration was to obtain the agreement of the electricity generating boards to reduce oil burn in favour of increased coal burn. This is not of course without some economic cost, but it is not a cost so high as seriously to interfere with our overall economic objectives, and I believe we should look seriously at developments along those lines.

Nevertheless, we come back to the painful lesson that the one means of achieving demand restraint without any economic costs at all—perhaps even with economic benefits in the long run—is by economy in the use of oil, and I wish to spend the few minutes left to me talking about that. In spite of determined efforts within much of the public sector, and indeed in a great deal of the private sector, it is true to say that unnecessarily wasteful use of oil products persists. I do not think we are wasteful in the sense that America is, and I agree with the noble Lord, Lord Tanlaw, that the President is having considerable difficulty persuading Americans to cut their wastefulness, but nevertheless we are not wholly innocent here.

Every motorist, every householder and every industry should look at ways in which oil could be saved. It will be a rare case indeed if, on any given consumer carefully considering his use of oil, he cannot identify means of reducing his total use, even in some cases very considerably reducing it. Impressive reductions in fuel use have already been achieved by the Property Services Agency in the last few years by their specific attention to this aim. I would not pretend that this represents a considerable saving, but it represents something by way of giving a lead in the matter.

Under an initiative, which I acknowledge was introduced by the previous Administration, all authorities in the public sector are now being asked to concentrate on further savings. We have no intentions of going back on that and we might even strengthen the provisions that have been made. Local authorities in the public sector have to report to us on the savings they achieve on a continuing basis. These economies in the public sector will themselves make a significant contribution to the reduction in demand we are aiming at, but they cannot be expected, even with the additional coal burn for electricity generation, to be sufficient to meet our full international commitments. For this we must look to the public more generally.

I must spell it out clearly and in simple language, as my noble friend Lord de Clifford urged me to do. It is, I am afraid, inevitable that the public generally will not get all the oil they need in the ensuing months. The oil coming on to the United Kingdom market from all sources is sufficient to meet only 96 to 97 per cent. of total demands. This need not cause any real problem if—but only if—consumers themselves take reasonable steps to economise in its use. Unless they do so, however, there will inevitably be continuing difficulties and internal price pressure. To try to meet this real situation, the oil companies in the United Kingdom have imposed informal allocation systems upon their customers and much of the debate today has been about some of the problems which the informal allocation systems are causing. The quantities of oil they allow to customers are calculated as a percentage of the quantities those customers took in a corresponding period of last year. In most cases it will be 100 per cent. of that quantity, but in the case of some companies and of some products it will be less than this.

The system of using a base period corresponding to the present is normally fair, and makes due allowance for seasonality of demand. In some cases, such as where a consumer's business has expanded, it clearly is not. In discussions between the Department of Energy and the Petroleum Industry Advisory Committee, the companies have agreed to consider representations from consumers who can show that the base period bears unduly hardly upon them. Of course there remain some problems. Some 15 per cent, of consumers were supplied by independent distributors, who customarily bought some of their supplies from the international market. As has been said, prices in that market have soared in recent months to twice or more their pre-crisis levels. As a result, traders have been unwilling, or indeed unable, to buy in that market, and have had had to reduce inland deliveries according to such allocations as they received from the major oil companies. Their customers have accordingly been worried by considerable reductions in their normal supplies. In most cases they have been able to manage by securing additional supplies from elsewhere, but this must often be at higher prices more or less closely related to those obtaining in the international market—the Rotterdam market, if one is to use a shorthand term.

The Department of Energy has been active in piloting consumers through the oil companies' "appeals" procedure, interceding with oil companies where an appeal seems not to have been so carefully considered as it could have been, and suggesting alternative sources for oil when this was the only remedy. Clearly the fact that oil companies are allocating oil will in itself bring about some reduction in internal use, and therefore help us to meet to some degree our demand restraint objectives. But this effect is bound to be arbitrary as between customers of one company as against another, according to the individual company's capacity to supply. Our job in government is at present to keep a close watch on the effect of allocation schemes, since if they result in unacceptable difficulties for some consumers we shall have to consider means of bringing about a more equitable distribution. It would be wrong to anticipate doing that until we have firmer evidence that the allocation schemes are not working. I am grateful for the evidence of difficulties that has been brought before me today, and I shall investigate those difficulties.

If all consumers do what they can to reduce demands for oil, the result will be that all consumers, whoever their suppliers happen to be, will be able to get sufficient oil for their slightly reduced needs. Therefore, I most strongly hope and urge that all consumers take action to reduce their demands. Only a slight reduction, desirable in itself on both economy and price grounds, will be enough to bring about the effect we want. It would be a pity if, in default of this action by consumers, the Government were constrained to invoke the emergency powers of the 1976 Act and impose a Government allocation scheme or other compulsory demand restraint measures. I can assure the noble Lord, Lord Collison, that if we had to do that the needs of horticultural producers, as indeed of the agricultural sector generally, would of course be kept very high. Such a scheme, although it could correct the more severe cases of deprivation and be ostensibly fair, could not in fact be altogether fair, since it could not make allowance for the good fuel conservationist as against the consumer who has made little effort to economise. Finally, it would also entail a considerable administrative effort which could be wholly avoided—with better results, surely—if consumers will themselves make the effort to economise.

To sum up, my Lords, it is clear that the days of plentiful oil are past, and that, even though this nation is fortunately placed in having producing fields which will soon meet total demand, it behoves us, for our own self-interest as well as in the interests of the associations of nations to which we belong, to seek actively to economise in our use of oil without thereby injuring our productive capabilities. This is something which can certainly be done and we must make up our minds to do it.