Orders of the Day — Fuel and Power

Part of the debate – in the House of Commons at 12:00 am on 29th March 1950.

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Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale 12:00 am, 29th March 1950

It is my happy task to congratulate the hon. Member for Sedgefield (Mr. Slater) on his maiden speech. It can be said truthfully that we have all been impressed by what he has told us in such a frank and engaging style. I hope that we shall have the benefit of his remarks on many occasions in the future, and that he will not confine himself exclusively to the subject of mining.

We rarely have an opportunity to debate both coal and oil on the same day, both of which are watched over by the same Minister. In coal we have the old fuel, and in oil the new. There is a lot we can learn from the development of the new fuel that might be applied to the further development of the old. I am not one of those who suggests that oil can hope to replace coal as the staple fuel of this country, but we have to look ahead and envisage a much closer partnership between the two. When we survey the position, we can take some comfort from the fact that although there has been a reduction in coal exports since before the war, the sterling oil industry has expanded so much and is today making a valuable contribution to our balance of payments problem. What we have lost in coal we have more than gained in oil.

I hope that the Minister, when he has time to study the affairs of the oil industry, will consider its working methods and see whether he cannot apply them with benefit to the nationalised coal industry. We are going to see, as the oil industry of this country develops, a balance which must be drawn sooner or later between coal and fuel oil. We shall see an increasing quantity of fuel oil becoming available. It will be the price and calorific value of fuel oil that will ultimately set the ceiling for the price of coal. Coal will always be used much more in this country than oil, but there will soon be an opportunity afforded to the consumer to change over to fuel oil if he wishes, and this will ultimately decide the maximum price the Coal Board will be able to charge for coal of given calorific values.

I know that at present we have to import a good deal of fuel oil, but that position is changing. In the course of the next year or two we may expect to see large quantities of fuel oil, as a residue from the new British oil refineries, which must be disposed of inside this country. Therefore, sterling fuel oil will be available to those who wish to use it. It will be the presence of that marginal amount of fuel oil that will exercise an important influence on the prices of coal in the future.

I am sure we are all glad to see the immense development in British oil refineries since the war. I am also glad to observe that, according to the Economic Survey for 1950, the Government are prepared to approve a further important stage in the expansion of the British oil refinery programme. It is worth while remembering that this oil refinery programme is entirely handled by private enterprise. We have heard some very hard things said during the earlier part of today's Debate about the alleged failures of private enterprise before the war. Here is a world in which private enterprise is being very successful to all—to employees, to consumers and to shareholders. It is an expanding virile industry, which is well served by the best motives which we, on this side of the House, believe are represented in the phrase "private enterprise."

There is, however, one important matter which needs to be watched properly and that is a sphere for the Government to interest themselves in—the importance of ensuring that the refineries being constructed have a sufficient element of flexibility to be able to meet with the changing demands in the years to come. I know that these things very often can only be achieved by construction on the largest possible scale, and that involves the important element of capital expenditure. Flexibility is essential if we are not to fall behind in the race to produce refined petroleum products.

There is one particular sphere, that of defence, in which this matter is singularly important. In the aircraft industry we are witnessing a revolutionary change in the methods of propulsion. There is the move away from the use of the piston engines employing high quality aviation spirit to the use of jet engines, which employ paraffin or an oil derivative of a similar quality. It is not easy suddenly to produce a large amount of paraffin from an existing refinery, and I should like to get an assurance from the Minister that, in fact, we are going to be able to get all the requirements of jet fuel which can be procured from the British refineries when they are completed.

We know, too, that there is an exaggerated demand for paraffin by the farming community, for whom there is a very real advantage in using paraffin as opposed to petrol in their agricultural tractors and machines. I hope that the Minister will approach the Chancellor of the Exchequer with a view to removing an anomaly in that direction on a certain occasion about to take place very shortly. If the tax on petrol for agricultural tractors could be removed, it would eliminate the inducement which at present exists for farmers to use paraffin as fuel for tractors, instead of petrol. Paraffin is in short supply at present, and it is going to be a very great difficulty for the Minister of Fuel and Power when he has to produce ever larger quantities of paraffin fuel not only for jet aircraft for military purposes, but for the jet aircraft which shortly we are going to see in use for civilian flying.

There is one setback in the development of the oil refinery programme, and that is the cessation of American Aid for further refinery construction. I hope the Minister will tell us a little more what that means because, according to the newspaper reports, it would appear that the cessation of further Marshall Aid for this purpose is linked to that unfortunate episode at the beginning of this year, when the correspondence between the former Secretary of State for the Colonies and Kenya was revealed. We seem to have lost a good deal of ground in our otherwise harmonious relations between the American oil interests and the British oil interests through that unfortunate indiscretion on his part. I understand that negotiations are still proceeding, and it may not be possible for the Minister to say as much as he would like. However, I hope he will take the House into his confidence as much as possible, because it would be most unfortunate if our relations with the American oil interests were to deteriorate as a result of that unfortunate indiscretion.

From what the Minister said in answer to Parliamentary Questions and from what his predecessor said in the last Parliament, it is the use of dollars for oil which restricts fuller and freer consumption in this country. It is very proper for us to consider just how one can reduce the dollar element in such oil. It would seem that the most immediate practical way of reducing that element would be to take into our use the great Haifa refinery which at present is lying immobilised because it is receiving no crude oil from Iraq. The loss of Haifa represents, I believe, something of the order of four million tons of petroleum products a year. On previous occasions we have been told that His Majesty's Government are doing everything possible to induce the Arab States to permit the resumption of a flow of crude oil to this refinery, but the Government have not so far resorted to the most effective way of all—to make these countries concerned realise how dependent they are upon us for their present supplies of refined products.

Before the war Egypt, Lebanon, Syria, to a certain extent Saudi Arabia, and perhaps even Irak itself were obtaining their refined products from Haifa. As Haifa is at present closed down, the refined products must come from other countries in the sterling area, or must be paid for in dollars supplied in some cases from the sterling area dollar pool. I suggest in the case of Egypt that she should now be invited to pay in dollars for all her refined petroleum products and not be allowed to get them by the simple process of running down her sterling balances. If it could be brought home to these countries what it means at the present time to prevent a refinery from operating, we should soon succeed in inducing those countries to permit the refinery to start up again.

There is another refinery which should have been operating, and that is the not inconsiderable refinery at Syriam, in Burma, which used to supply not only the needs of Burma but also large areas of India and other adjacent countries. It is a tragedy that that refinery should be closed, and that refined oil products, presumably from the sterling area, should have to go into Burma instead of there being oil exports from that country.

If we could have Haifa, we could reduce very considerably the dollar element in petroleum products. I would still like to have from the Minister a clear statement as to what the dollar element in petrol really is at the present time. I accept in general terms the soundness of his argument, but we are very rarely given any accurate figures of what that element represents in terms of gallons of fuel in this country. It would also be interesting to learn what the extra dollar cost would be of doubling the domestic petrol ration. Let us know what is the cost of a particular concession and not just be given some over-all, omnibus figures which, though valuable in themselves, still leave us very much in the dark as to the cost of extra concessions or the saving of additional refinery capacity.

I mentioned rationing briefly, but I want, in my concluding remarks, to turn to it, as I believe it to be a matter of great importance in Britain today. I was sorry that the Minister said that he could not remove diesel fuel oil from rationing, for the very flimsy reason that it would not be fair to the users of petrol vehicles. That seems to be a most extraordinary argument—the sort of argument that his predecessor used during the fuel crisis, that it was not fair to have an electric light on in Fort William if you could not have an electric light on in London, despite the fact that the light in Fort William was provided by hydro-electric power. If there is enough diesel oil, why should not the diesel lorries have it and why should it not be taken off the ration as soon as possible? Would it lead to an increased use of diesel vehicles? That is hardly likely.

There is little evidence to show that there is a shortage of red petrol for commercial vehicles. One never hears any complaint about commercial vehicles not being able to get what petrol they require. If they should run short, they send a note round to the Ministry of Fuel's regional office and they get some more. Maybe that is right, but my point is that there is no shortage of petrol for commercial vehicles. I think it is a sound policy, but if it is true, why continue with the rationing of diesel fuel? Coupled with that is the query: why is it necessary to continue the rationing of red petrol at all?

There is one considerable administrative difficulty. It is that if there were no control over red petrol, even more red petrol would find its way into the tanks of private vehicles than does so at present. Members of Parliament on all sides feel that the red petrol rationing scheme has been a success and that the black market has been stamped out, but I am sure that if a further Vick Committee were to investigate the present position they would find it very nearly as unsatisfactory as the old. There may not be the same gallonage of illicit transactions, but all these transactions are far more lucrative now because the risk is so much higher.

I ventured to mention this subject in a Debate in the House on 8th November last, when I drew particular attention to the temptation which was put in the way of employees of petrol distributing companies. By just failing to put the red dye into a particular consignment of petrol, they could automatically increase its value three or four times and thus be able to obtain the extra money from one of the distributors. I was sorry that hon. Members opposite disliked my remarks so much. I put them forward in all good faith and with some knowledge of the facts. I was also sorry particularly that the junior Minister should have said what he did. I will quote him. He said: The hon. Member has made some very dangerous allegations against the honesty of a body of very hardworking men. He was quite unjustified."—[OFFICIAL REPORT, 8th November, 1949; Vol. 469, c. 1159.] Only six weeks later the Ministry of Fuel and Power were running a full-scale prosecution in the Number 1 Criminal Court in Birmingham in which a number of petroleum distributing employees were convicted. The Minister must have known perfectly well on 8th November that investigations were in hand by his Department, because the prosecution referred to investigations which had been going on for months. He did me less than justice when he regarded my remarks as unjustified and when he asked me to present evidence. The evidence was there, and it was in his own Department.