§ Mr. David StewartTo ask the Chancellor of the Exchequer if he will assess the impact on the United Kingdom economy and(a) domestic and (b) business consumers of oil prices of (i) $30 a barrel, (ii) $35 a barrel and (iii) $38 a barrel for over 12 months' duration; and if he will make a statement on the implications for the economy of higher prices for oil produced on the UK Continental Shelf. [45158]
§ Ruth KellyAs detailed in the Pre-Budget Report 2000 (Cm 4917, Box A3, page 153) higher oil prices would, all else equal, tend to reduce GDP growth and increase inflation. However, the UK differs from most other major industrialised economies in that it is a small net exporter of oil, so potential GDP losses may be partly offset by increased North Sea production.
§ Mr. David StewartTo ask the Chancellor of the Exchequer what risk assessment he has made of the effect on the(a) price of oil, (b) availability of oil and (c) UK economy of UK military action in Iraq. [45160]
749W
§ Ruth KellyAs the Prime Minister has made clear, most recently on 11 March, no decision has been made on whether to take military action against Iraq. Iraq currently contributes supplies of oil equivalent to about three per cent. of world production. Spare oil production capacity worldwide is currently several times this amount. Moreover, there are also International Energy Agency and international agreements on holding stocks of oil, and procedures to deal with any oil supply disruptions. Oil markets are, however, volatile and to some extent driven by expectations, as well as responding to the near-term actual balance of supply and demand. It is therefore difficult to predict the impact on oil prices from any supply disruptions, and the question of military action against Iraq is only one of a wide range of influences. The Government will publish an updated forecast for the UK economy in the Budget on April 17, taking account of all relevant economic factors.