Fuel Situation

Part of the debate – in the House of Commons at 12:00 am on 9th January 1974.

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Photo of Mr Hugh Fraser Mr Hugh Fraser , Stafford and Stone 12:00 am, 9th January 1974

It is a pleasure to follow the constructive speech of the right hon. Member for Battersea, North (Mr. Jay). His views in this crisis approximate more to my own than do those of my right hon. Friend the Member for Wolverhampton, Southwest (Mr. Powell) or of some of the hon. Member's own Front Bench colleagues.

The question of dogma is no longer applicable in this serious crisis. The fact is that the seriousness of the crisis has not been sufficiently stressed. The steel problem is the greatest that we face. Because of that a short working week seems inevitable even if the situation in the mining industry is improved. But far more fundamental is the complete ending of cheap energy for the Western world. That is a fundamental situation that will affect us for generations and especially perhaps the poorer people of the world who depend so much on oil products, or fertilisers, and on other things which made the green revolution possible. That is why we are in a changed situation, and that is why I welcome the appointment of Ministers to deal solely with the energy problem. It is an idea that I have put forward many times in the House, and I am grateful that common sense and the tide of events have made the appointments essential and now accepted.

The effects of the energy situation will be devastating unless the situation is dealt with. I hope that the new Secretary of State for Energy will not let the sanctity of any such document as stage 3 become the albatross around his neck in the way that Clause Four has become an albatross around the neck of the Labour Party. I hope that thought will be given to the ways in which certain matters can be put right.

It is especially important to have regard to the price mechanism. One of the facts facing us today, and one of the dangers of the three-day week, is the over-consumption of domestic power. The only way to right that is to charge the proper price for domestic power. In that way there can be a diminution to meet what will be a real crisis unless there is some amelioration in the supply of electricity to industry. There has to be a disregard for the incomes policy just to get through, and the demand being made by the Central Electricity Generating Board for higher prices for domestic power will have to be met.

In the same way, if we are to get oil and natural gas out of the North Sea we shall have to face the question of the higher tariff that we are prepared to pay to get it out. That is the only way of getting it out fast. I hope that my right hon. and noble Friend will have regard to the things that make an economy move. Essentially, those are the price mechanisms, the price paid either to labour or for investment. That is the only way in which one can get the right movement going, and going fast.

Perhaps this is a matter for tomorrow's debate, but I hope that my right hon. and noble Friend will look at the orders that have been sent out to industry dealing with the control of fuel and electricity supplies. There is a surplus of coffins because many joiners find that as long as they are working in coffin shops they get electricity for five days a week. So many coffins are being made that one could almost bury the Government and the Opposition in them. I hope that the policy will be looked at. It is clear what happens when private ingenuity is applied to a Government order. There is also a demand for cash registers, because so long as they are used in a shop the premises can be kept going for 40 hours a week.

I now turn to a wider and more serious point, and that is the matter of oil supplies. It is important that my right hon. and noble Friend should consider the whole question to see whether we are pursuing the right policy. The French Government are pursuing entirely the wrong policy. They are trying to muck up international oil relations by getting in first, by paying far too high a price, and by offering arms to persons who should not be given arms at all.

I hope that my right hon. and noble Friend will ensure that the Government are steered off any course which involves pursuing the follies of M. Pompidou and M. Jobert. These were shown at their worst at the conference in Scandinavia when they went crawling after the Arab sheikhs. The result was that the price of oil was increased considerably.

The proper instrument for the purchase of oil is not Government to Government, but the oil companies. They understand the situation far better than Government Departments do, and the price which they pay is at least a world competitive price rather than a price fixed between Governments.

Perhaps I may dissertate for a moment on the oil problem. There is, historically, a tremendous oil shortage, and this is being exploited by various oil producers. But it is a political and historical shortage. Commercially there is a huge day-to-day surplus of oil, provided it is dealt with in an effective way. That is why it is important not to make long-term agreements with countries, which merely keep the oil price far too high, but, rather, to rely on the manipulation of the market by the oil companies, which is far more effective.

There is a grave danger that the French will find themselves tied to one source of supply which will mean that either their foreign policy is controlled by that source of supply or they are stuck with oil at far too high a price should there be a fall in the world price. it is fairly clear now that, with the danger of a world slump being forced upon us by the increased price of oil, there may be a sudden vast surplus of oil on the market. If, say, one Arab State wishes to make quick money to pay for a general project the oil supply could be overwhelming.

I hope, therefore, that when by noble Friend takes office he will not indulge in the sort of follies which are being perpetrated by the French Government—the follies of arming Abu Dhabi, of all places, with 30 Mystère aircraft for attacking God knows who, or propping up other tottering régimes in the Middle East, but will carry out proper commercial transactions through the oil companies. Above all, I hope that our oil policy will be kept in line not with the oil policy of the Europeans—who have been shameful in their lack of policy—but in line with the oil policy of the United States and with the Kissinger project.

I was very grateful to hear my right hon. Friend saying that the Government are giving full support to the Kissinger project. What I want to see is proper support, which does not mean doing shady deals on the side with Arab States. That is why it is so important that what my right hon. Friend the Prime Minister said today in this context should be fully developed by the new Secretary of State for Energy.

There is no question but that the problems which face us are of the gravest kind, and I am glad to know that my noble Friend has taken over the new Department and that he is supported by such able colleagues.