Oil Supplies

– in the House of Commons at 12:00 am on 24 October 1973.

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Photo of Mr Peter Walker Mr Peter Walker , Worcester 12:00, 24 October 1973

During recent months we have increased our stocks of oil. We now have stocks of 79 days on forward consumption basis and there are in addition some 30 days supply on the ocean. We are now in a position to meet requirements for some months ahead if there were an emergency.

As to future supplies, there have been some losses through the pipelines to the Mediterranean; and the Arab States announced last week their intention to make cumulative cuts in their oil production. It would appear that there will be some variations between countries as to the extent and the manner in which such cuts will be applied and the future impact is uncertain. The effect of these various restrictions on United Kingdom oil supplies is so far slight.

On prices the OPEC countries have announced a steep and immediate increase in oil costs equivalent to 2p a gallon in breach of agreements. The Government are discussing these increases with other consumer nations.

Given the uncertainties overall, the Government consider that it would be prudent that certain measures should be taken. It is naturally a time when we must ask the public to do everything in their power to avoid any wastage not only of oil but also of our total energy resources. I would ask that motorists should endeavour to cut down on petrol consumption and to use public transport to a greater extent where that is available. I would also hope that industrial and commercial users of energy would carefully examine any areas where they can make useful savings.

I would ask domestic users to make all the savings that are possible in their homes, particularly with regard to heating appliances.

In urging economy at home we clearly cannot permit exports to be uncontrolled. The Government will therefore take such powers as appropriate to control the export of oil and oil products beyond the Community.

The Government do not consider it necessary to introduce a rationing scheme. In case we do ever need such a scheme, contingency plans have been brought to a state of readiness. There will of course be full prior consultations with industry, the oil companies and the motoring organisations should the Government decide that the implementation of these schemes is necessary. We shall, if required, bring before the House an enabling Bill that will grant us the powers to introduce these controls.

Long before the recent announcements on the cost and supply of Middle East oil, the Government have been pursuing policies to develop our alternative energy supplies swiftly.

We shall continue to do everything possible to speed up the development of our oil and gas resources in the North Sea and we have asked the oil companies concerned to inform us of any delays that occur in developing their projects, and any matters that hamper them from proceeding as fast as possible with new schemes.

The Coal Industry Act has had an important impact in arresting the decline in our coal production that had been allowed to take place in previous years, and we are in the course of discussing with the National Coal Board its long-range plans for further development of the industry.

We have reorganised the nuclear power industry and we shall be making important decisions as to the development of nuclear power stations during the next few months.

I will keep the House informed of further developments.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

The House is very well aware of the reasons that led to the statement being made. I should like to ask the Secretary of State some questions. First, will the 2p a gallon increase which he mentioned be applied across the board as a flat rate to all users of oil? Secondly, do the Government intend to take charge of the negotiations with the supplying countries, in view of the obviously political nature of these arrangements, which can no longer be regarded as commercial deals to be left in the hands of the oil companies?

Thirdly, although the whole House will obviously support the appeal for economy and sensible contingency plans, is the Secretary of State aware that public transport, particularly in London where there are also staff shortages, is in no condition to take on board the additional burden of car users who might be induced to shift from one to the other? Will he look at this problem in conjunction with the Secretary of State for the Environment? Will he also watch to see that the oil companies do not discriminate against independent distributors and independent garages—as has happened in America—and the firms which rely upon them?

while welcoming the decision on exports so far as they go, why are exports of oil to the Community to be allowed to continue and what powers does the Commission have over the disposition of our own oil reserves, in view of the fact that we must now protect our own oil?

May I also ask, in view of the long-term nature of the problem, what steps the Government are taking to implement the recommendations of the Select Committee on Public Accounts published earlier this year, calling for a stiffening of the terms of licences for North Sea oil to protect our national interest by a bigger take for the Government and the taxpayer, and greater public participation?

As regards coal, can the Secretary of State tell the House whether he would be ready to play a very much larger part in bringing about a re-examination of the policy pursued by the CEGB on different types of firing of power stations, in view of the relative changes in the prices of the fuels?

On nuclear power, will he give an absolutely categorical assurance that there will be no purchase of American reactors for the nuclear power programme at home until the House has had a chance to debate the whole issue in the light of the Select Committee's report?

Finally, I hope that the Secretary of State will keep Parliament and the public fully informed, and will understand if we feel it necessary to ask for a major debate on these very important matters.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I agree that it is necessary to keep Parliament fully informed on developments, which can change very rapidly. As regards the price increase, I do not think there is any need to consider the detailed application and what will happen, because at the moment we have large stocks of oil in the country which have been brought in at previous prices, and the full nature of the price increase and the manner in which it will be applied to different types of fuels is not yet clear.

As regards the Government's position in any negotiations, I agree with the right hon. Gentleman that, given a unilateral breach of agreements affecting vital national interests, Governments will inevitably have to play a major and continuing part in negotiations in this sphere.

I recognise that in many parts of the country there are problems of public transport, and that is why I am pleased that in past years this Government have injected so much more capital into public transport than was previously done.

As to the Community position, there is no problem about exports. The Community is in agreement on the general nature of exports outside the Community. There is an interchange of oil products constantly taking place which is very much to this country's advantage, and for many reasons it would be absurd to stop that.

The future take from North Sea oil is a matter which the Government have under consideration. It is, in fact, for the Chancellor of the Exchequer, and appropriate announcements will be made.

I must point out that after the very big drop in coal production which took place—50 million tons in the six years of the last Government—we have reviewed the situation and have changed the trend.

I was asked about CEGB policies. In the current year it is consuming 67 million to 69 million tons of coal. It has a capacity to burn 75 million tons a year if it were available. The National Coal Board has said that it estimates the availability of coal for the CEGB by the early 1980s to be about 65 million to 75 million tons. By that time the CEGB's capacity to burn coal will be about 90 million tons, without the additional coal-fired station for which a design programme has been authorised.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

Can my right hon. Friend say whether supplies from Iran, Kuwait and Nigeria are continuing to the United Kingdom without the 5–10 per cent. cuts? Will he also say what will be the future position if the war is terminated in the Middle East? Shall we have a continuation of the cuts?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

It is only the Arab States which have announced cuts. The other members of OPEC have not announced cuts. One presumes that there will not be cuts in supplies from those sources. It is difficult to make an interpretation of the statement from the Arab States. The statement referred to action to be directed particularly against those countries which had supported Israel. It is not clear exactly at what time after the termination of the war they would change their policy. This is a matter on which the Government are in contact with overseas Governments.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

Would the right hon. Gentleman not accept that his statement shows the foolishness of successive Governments who decimated public transport, not only railways but rural bus services in particular? Would he accept that in places where public transport still exists. such as London, the Government might think of introducing for an experimental period in an emergency free transport in off-peak periods?

Will he also bear in mind in planning petrol rationing that in rural areas the motor car is not a luxury but a necessity? A formula of 50, 100 or 200 miles a month is unworkable in Cornwall.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The present Government have stopped the policy of railway closures which was in operation previously, as the hon. Gentleman will be aware. Not only that, but they have injected substantial amounts into the railway system on an unparalleled scale. To take the London Transport system, there have been massive injections into the Underground in the form of rolling stock on a scale in excess of anything done by previous Governments.

Full consultations on any petrol rationing scheme will take place in respect of the details of the scheme, and obviously the problems of rural areas will be taken into account.

Photo of Mr Geoffrey Lloyd Mr Geoffrey Lloyd , Sutton Coldfield

Is my right hon. Friend aware that the size of the stocks which he has announced is impressive and, indeed, compares favourably even with those which we built up against the outbreak of war in 1939? Is he aware that the care and forethought involved in arranging for these satisfactory stocks deserves the appreciation of the House and the country?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I am grateful to my right hon. Friend. I only hope that, unlike his duties in the past, I do not have to introduce petrol rationing.

Photo of Dr David Owen Dr David Owen , Plymouth, Sutton

How can the right hon. Gentleman justify the recent decision to have oil-fired power stations? Will he consider the whole question of the Gov- ernment's national energy supply and change the decision on oil-fired power stations? The cost implications on which that decision has been based must now have been totally altered, and the supply situation is likely to get worse.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I must repeat these basic facts. In the current year the CEGB is consuming between 67 million and 69 million tons of coal. It has the capacity to burn 75 million tons. The National Coal Board states that by the early 1980s it expects to be able to provide coal to the CEGB in the range of 65 million to 75 million tons. At that time the capacity, without the new station for which I have agreed that design contracts should be placed, will be about 90 million tons. There is considerable capacity along the lines which the hon. Gentleman suggests.

Photo of Mr Angus Maude Mr Angus Maude , Stratford-on-Avon

Following what the hon. Member for Cornwall, North (Mr. Pardoe) said, will my right hon. Friend bear in mind that if the worst comes to the worst and a petrol rationing scheme has to be introduced, the situation in rural areas is now totally different from that when the last petrol rationing scheme was introduced? Whatever the situation in London, rural bus services are now virtually non-existent in parts of the country. Since the distances are longer and there is a higher dependence on the private motor car in all income groups, if rural areas are not given special concessions a high proportion of the rural population will not get to work at all.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Yes, I agree with my hon. Friend that considerable changes have taken place in the pattern of transport in rural areas, and consultations will take place before the scheme is introduced.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

Would not the right hon. Gentleman agree that the Government should take out insurance cover on behalf of the people of, the country and show an example? Will he give an assurance that he will examine the question of oil-fired power stations in prospect? Secondly, will he reverse his decision to convert two coal-fired power stations to oil? Is he aware that the National Union of Mineworkers objects to the statement which has been made that it was consulted about this? It was consulted, but it opposed the suggestion.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

As to the two stations which the hon. Gentleman is talking about, there were particular difficulties in the supply of coal. I repeat that the capacity within the system could take more coal if it were available.

With regard to the review of future projects, I have already announced a decision whereby we shall have greater flexibility to decide in favour of coal if it can be developed. As the hon. Gentleman knows, with his knowledge of the industry, there was a rundown—I repeat, 50 million tons a year during the lifetime of the last Government. He knows the difficulties of opening new mines and sinking new pits in the time scale involved.

Photo of Miss Joan Quennell Miss Joan Quennell , Petersfield

If the worst comes to the worst, will my right hon. Friend bear in mind that not only will people living in rural areas be seriously handicapped but that handicapped persons depending upon invalid cars and similar vehicles will require special consideration because they will be absolutely stuck?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I accept the valid point made by my hon. Friend.

Photo of Mr Edmund Dell Mr Edmund Dell , Birkenhead

Does the Minister's reference to the development of alternative resources mean that he contemplates a fifth round of licensing in the North Sea, and, if so, on what terms? Does he realise that the licensing terms are for him and not for the Chancellor of the Exchequer? When does he intend to reply to the part of the Report of the Public Accounts Committee dealing with licensing terms?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

We shall soon be replying to the Public Accounts Committee on this point. I cannot give an exact date when we shall do so. Transport plays a role in any taxation policies, of course. For that reason, my right hon. Friend the Chancellor of the Exchequer is involved in any licensing arrangements.

Regarding any future rounds of licensing, we have announced that we are reviewing the terms. I am not contemplating any immediate rounds of licensing for reasons of wanting more speedily to develop resources available at present. Before any future terms of licensing were made I would announce the terms which we had in mind for future licensing arrangements.

Photo of Peter Tapsell Peter Tapsell , Horncastle

Would my right hon. Friend agree that it would make a contribution to fuel conservation if we abandoned our system of flat-rate vehicle licensing and charged a much higher licence for those people with large and expensive motor cars which consume much more petrol?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I will convey that suggestion to the Chancellor of the Exchequer.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Would the right hon. Gentleman, in appealing for the conservation of fuel, consider appealing to road hauliers to get a lot of their haulage back on to the railways and, if necessary, give a subsidy for that purpose?

May I ask about the EEC? Did the right hon. Gentleman say that we could, if we wished, ban exports and that there is nothing in the Rome Treaty to prevent us from doing so? Can we do this unilaterally?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I said that there was no need to do so because there is agreement on the overall policy between the Community countries on fuel exports. There is agreement across the boundaries of the various countries. As for the hon. Gentleman's other suggestion, there have been considerable developments in terms of trains and one of the long-term hopes is that rail travel will be developed to link up our rail system with that of the Continent.

But I remind the hon. Gentleman that virtually every rail journey demands two lorry journeys.

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , West Derbyshire

Now that there is agreement on the export policy of the Community, is not it time that the Community of Nine got together to agree on an importing policy and put forward a common front when negotiating with the Arab producing countries?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Talks are due to begin tomorrow in Paris between the OECD countries. In talks between consumer countries it is important to join with the major consuming countries such as the United States and Japan. Important talks will be taking place tomorrow on that topic. I welcome the Minister's views on the future round of licences. Ought not he now to review all the Ministerial framework and structures related to getting maximum benefits to British industry from the present North Sea explorations? Will the right hon. Gentleman consult the Chancellor of the Exchequer to review the basic position in the light of the new price structure which has been brought about by the OPEC countries' new terms for oil?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

That will be a matter for the Chancellor of the Exchequer.

I very much agree that it is vital to ensure that the organisation of Government is perfect in getting the maximum pace of development in the North Sea.

Photo of Mr Idris Owen Mr Idris Owen , Stockport North

Is my right hon. Friend aware that not far from the House, at Earls Court, there is currently an exhibition of the products of the motor industry. Manufacturers from all over the world are displaying their products and are proudly announcing in many cases that they have cars with speeds in excess of 150 miles an hour, which involves maximum fuel consumption. Is it not desirable to launch massive research and development projects to create motor engines which will do more than 50 miles to the gallon rather than those which will do more than 150 miles an hour?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I am in favour of that suggestion. Much research is already taking place in these spheres. My hon. Friend is right in drawing the public's attention to the higher fuel use which results from higher speed.

Photo of Mr Laurie Pavitt Mr Laurie Pavitt , Willesden West

In view of the wish of 8 million people in London for public transport, has the Minister studied a statement last week by Sir Richard Way about the problems of London Transport? In making any contingency plans for conserving fuel, will the right hon. Gentleman make immediate representations to the Prime Minister to exclude London Transport from the provisions of stage 3?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Stage 3 is vital to the national economy. It would be wrong to begin making exceptions to it.

Photo of Mr Laurance Reed Mr Laurance Reed , Bolton East

Did not the Government accept the recommendation of OECD that there should be fuel reserves to last 90 days? Why, therefore, are there reserves to last only 79 days?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

On the basis of the OECD formula we already have reserves to last 90 days. The figure which I gave was for forward consumption whereas the OECD's is a comparison with past consumption. The target of the OECD was set for 1975 but we have more than achieved this already.

Photo of Mr David Stoddart Mr David Stoddart , Swindon

Is the right hon. Gentleman aware that the appeal which he has just made for people to travel by public transport will be treated with derision by the travelling public? In spite of the right hon. Gentleman's answer to my hon. Friend the Member for Willesden, West (Mr. Pavitt) does he realise that stage 2 and stage 3 will have a disastrous effect on recruiting? Will the right hon. Gentleman have a further word with the Prime Minister about this matter? Secondly, will the right hon. Gentleman approach !he Central Electricity Generating Board and ask it to consider at this stage, in the interests of preserving oil in the short term, the possibility of indulging in a lot more out-of-merit running of coal-fired stations which could make an immediate saving in oil stocks?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I will take up the hon. Gentleman's latter point. Dealing with his first point, I remind him that if it is treated with derision it may be due to the fast cutting back of the public transport system. But in the case of a Government who introduced bus grants and capital investment allowances for trains and who massively extended the public transport system, it should not be so treated.

Photo of Mr David Stoddart Mr David Stoddart , Swindon

On a point of order. Mr. Speaker. The second point was very important, and the right hon. Gentleman did not deal with it. I referred to the possibility of out-of-merit running of power stations burning coal.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I said that that was a matter which would be taken into account.

Photo of Mr David Crouch Mr David Crouch , Canterbury

Reverting to my right hon. Friend's answer to my hon. Friend the Member for Derbyshire, West (Mr Scott-Hopkins), does my right hon Friend accept that the oil crisis, unfortunately, is not likely to be a nine-day wonder? Does not my right hon. Friend feel that there is a real danger of Britain being squeezed out in the Middle East oil auction between Japan and the United States? Does not that emphasise the importance of our getting together in Europe so that we speak with a European demand and a stronger voice?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

There has been a meeting of European energy Ministers and, as I said earlier, important talks will be taking place tomorrow in the OECD. I agree that it is vital to get the major consuming countries to collaborate in the problems facing them.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

Does the right hon. Gentleman recognise from the matters which have been raised in supplementary questions that there is a wide desire in the House for a proper debate on the many issues involved, whether they be individual fuels, the transport side or the international implications? Are the Government prepared to make time available for such debate? Alternatively, will the enabling Bill to permit rationing come forward early enough to make the Second Reading of that measure the opportunity for a wide-ranging energy debate?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The enabling Bill is prepared, but it will be introduced only if matters make it necessary to take such enabling powers. I recognise the anxieties on both sides of the House, and I am sure that my right hon. Friend the Leader of the House will have noted the widespread interest in the topic. No doubt there can be discussions through the usual channels.