Orders of the Day — Fuel and Power

Part of the debate – in the House of Commons at 12:00 am on 19th May 1949.

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Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South 12:00 am, 19th May 1949

I must, however, issue one further word of warning and damp down any feelings that hon. Members may have that as refinery output goes up here and in the Middle East we shall be able at a moment's notice to get rid of petrol rationing altogether. The reason is this. Even when output has gone up, we shall not altogether have got rid of the dollar element in oil. To begin with, even when British companies give up having to purchase petrol or other petroleum products from American companies, there is still the fact that we import direct from American companies quite a lot of oil both here and in the sterling area. Secondly, our own companies, as I have said, have a good deal of dollar expenditure as well.

What we hope is that steadily over the next few years as the new refineries are completed, we shall be able to achieve quite a substantial reduction in the net dollar deficit of the sterling area as a whole. That is still pretty large as far as we can make out, and it certainly imposes a very heavy burden on our dollar resources; but so long as there is a dollar shortage—and my right hon. and learned Friend the Chancellor of the Exchequer is tireless in his warnings to the people of this country that we must still face this extraordinarily difficult problem—we have to watch consumption here and we have to keep it under control. It is, therefore, not just a matter of whether we can produce more oil. It is a matter of whether we can afford the dollars or whether we can afford not to save dollars which may still be a very important issue for us even when our oil production has gone up.

The right hon. Member for Bournemouth referred to the coal-oil conversion question, and I must reply briefly to that. In 1946, the output of coal in this country was very low, although it had gone up a little from the lowest level of all, in 1945. The state of the coal industry when we came into power was extremely parlous, and we all know that as a result of that, and the steady decline in stocks during the last few years of the war, we were faced with, and eventually ran into, a fuel crisis. It was because of the prospect of that crisis that the Government decided to encourage industrial firms to convert from coal to oil. In that we had the full support of the Opposition. Yes, it is no good the right hon. Gentleman shaking his head, especially the right hon. Member for Southport (Mr. R. S. Hudson), who took part in many Debates at that time, when we were attacked for not going fast enough with coal-oil conversion.

Having left the coal industry in the condition in which they did leave it, and having supported the policy of coal-oil conversion, the Opposition now criticise us for carrying out that policy. It is true, of course, that conversion schemes did not go as smoothly as one would have liked. What was the reason? When the plan was first drawn up the oil companies were of the opinion, that they would be able to supply without difficulty an extra 5 or 6 million tons of fuel oil. At that time it was residual oil; they were unable to dispose of it, and it would have been comparatively easy to obtain. It is also true that they would have had to obtain some from the American companies because the Petroleum Board was still in existence, and pre-war quotas were still being maintained.