§ Mr. Allen McKayasked the Chancellor of the Exchequer what has been the contribution from offshore oil and gas activities to the Exchequer in each year since 1970–71 to date; and what is his forecast of the contributions for each year from 1980–81 to 1990–91.
§ Mr. Peter ReesI shall let the hon. Member have a reply as soon as possible.
§ Mr. Austin Mitchellasked the Chancellor of the Exchequer whether, further to his reply dated 15 November 1979 concerning North Sea oil and gas, he will circulate figures in the Official Report showing (a) the oil prices on which his calculations were based, (b) the existing forecast for 1979 and the current year, with the relevant oil price assumptions, (c) a revised forecast based on the current price of North Sea oil and (d) an estimate of the net addition to the balance of payments of each increase of one dollar in the price of a barrel of oil from a given base.
§ Mr. LawsonThe information is as follows: (a) the 1977 and 1978 calculations were based on the actual oil prices in these years. They were £60.91p per ton in 1977 and £53.32p per ton in 1978.
(b) The existing forecasts for the effect of North Sea oil and gas on the balance 644W of payments in 1979 and 1980 were set out in the Treasury economic progress report for August 1979, a copy of which is in the Library.
The oil prices for these years were set at levels that seemed plausible at the time the calculations were prepared. They assumed a real sterling oil price constant for the rest of 1979 at the levels prevailing after the 28 June 1979 OPEC price increases, some fall in the real sterling price in 1980, and a real sterling price constant at this level up to 1985.
(c) Such a forecast is not available.
(d) An increase in the world price of oil does not benefit the balance of payments current account. At present we still consume more oil than we produce. As we approach self-sufficiency in oil the direct adverse impact of an oil price rise on the current account will become small, although even when supply and demand for oil are in balance there will be some loss to the current account since some of the extra North Sea revenues will accrue to overseas oil companies operating in the North Sea. The indirect effects of price rises on the current account are likely to be negative. Sharp rises in world oil prices depress world economic activity and trade, thereby reducing United Kingdom exports. The United Kingdom's favourable position as an oil producer could also encourage capital inflows which would tend to be offset by a corresponding deterioration in the current account.