Having been brought up against a Welsh nonconformist background, I shall not follow the hon. Member for Aberdeen, South (Mr. Malone) in the habits he so vividly described in Latin terms. But I shall follow him in one other sense; that is to convey my congratulations and thanks to the Chairman and members of the Select Committee for producing this short and sharp report.
It is sharp in more ways than one. I am too gentle a soul to draw too much attention to some of the things that the Committee says about the Government's policy and their attitude and approach. The Minister will have read it and the strictures are there. However, it was invaluable in helping us to concentrate our minds.
I felt a nostalgia for our debates on the Oil and Gas (Enterprise) Bill. There are few survivors of those Committees. The hon. Member for Bedfordshire, North (Mr. Skeet) and I spent many an hour debating the problems that would arise in BNOC once it was shorn from the mainstream exploration and development side which was hived off in the form of Britoil.
Between us we made a number of forecasts about the potential vulnerability of a national oil corporation left to trade in the way that it was. No hon. Members, despite our perception, forecasting and crystal ball gazing, quite foresaw the way in which the financial crisis would hit BNOC. Why we did not has been brought out by several hon. Members who have spoken. We spent our time thinking that BNOC (Trading) had only one objective, and that was to secure supplies.
I cannot recall debating the other objectives at any length in Committee. The then Secretary of State for Energy, who is now Chancellor, and his Ministers, did not produce any argument in favour of a BNOC trading organisation other than to ensure the security of supply.
Clearly, in doing that, the corporation would become involved in pricing, but it would, in a sense, always be reacting to pricing and not in any way trying to shape up.
It is clear that in recent months, for reasons which await a more elaborate account from the Minister, BNOC and the Government have been trying to do something rather different from what was traditionally seen to be the role of BNOC (Trading). It would be easy to heap blame on a state organisation that has lost £45 million. But, as the report and the evidence clearly show, the decision was taken by the Government and BNOC after consultation. We should not try to blame BNOC. It was arrived at by a joint process.
Let me underline that point. In paragraph 93 of the evidence the Minister gave the striking testimony:
I believe the BNOC has scope to act in the short term to influence what may happen in the oil market.
That was a straightforward admission that the Government supported and were involved in the process of trying to do something, albeit in the short term, about oil prices.
Mr. Goskirk, in his evidence at paragraph 9, underlined that point even more strongly. He said:
we felt that it was worthwhile as far as both our commercial interest and—following discussion with the Secretary of State for Energy—the national interest were concerned to seek a pause. That pause took place and the pause was achieved".
Again, that is a clear statement of a deliberate endeavour. We do not say that the Government have acted surreptitiously. At least in the evidence there is a confession that there was a joint operation of a kind and character which, when we debated the notion and nature of the BNOC, I cannot recall ever envisaging.
Therefore, we have every right to say that there is not just a change in degree but a qualitative change in the way in which the BNOC and the Government tried to do something about oil prices in the summer of this year. We must ask why they did it, what has been the consequence and where we go from here. Those are the three questions posed in one way or another by the Select Committee's report.
I should like to have a shot at trying to answer some of those questions. Let me try to offer a slightly different interpretation of events from that produced by the right hon. Member for Guildford (Mr. Howell) and one or two other hon. Members who have spoken critically of the attitude of Government and BNOC to oil prices.
I do not think for one moment that either BNOC or the Government chose to become involved. It was not some sort of great voluntary act. The missing ingredient in the otherwise excellent Select Committee's report is some sort of analysis of how events unfolded over the 18 months leading up to the events of this summer. If we look back at those 18 months and at the role oil plays in our economy, we can anticipate some of the answers that the Minister might wish to give as to why we became involved in the way that we did this summer.
I have discussed the matter with various people and I believe that part of the answer lies in the events of February and March 1983. Until then, BNOC (Trading) and the Government had managed to stay out of the price argument in international terms. BNOC did what we all thought it was doing — reacted to prices. When the market shifted its price moved.
There was a vigorous reaction by OPEC and, particularly, the Nigerians, in February and March 1983 when they trumped the BNOC alteration in price and therefore deliberately involved BNOC and the Government in the whole argument about pricing policy. Until then we had stayed out of the turmoil of OPEC arguments and the problems of the various conflicting interests within OPEC. From that time on BNOC, the Government and North sea oil prices were caught up in the commercial and political swirl of OPEC and the problems of some of its members. Therefore, we did not have much choice. We did not volunteer—I hope that the Minister did not volunteer—to get involved in those arguments. There was a reaction from OPEC to the situation.
If one agrees with that assessment and interpretation, it helps us to try to understand what followed. Once such a situation occurs, North sea oil prices become a politically sensitive issue. They become part and parcel of an argument with OPEC. I cannot recall Sheikh Yamani or the chairman of OPEC making statements of the kind that we have seen today on the tapes or in the last few days and weeks about North sea oil prices. It is not our position but OPEC's that is the reason for our sudden involvement. OPEC's whole ramshackle effort to sustain a price and to balance and juggle its position is in trouble.
The ultimate absurdity was when the Norwegians managed to create the last oil crisis. Who, in the name of heaven, would have thought that the Norwegians could create an oil crisis? The only reason why the Norwegians have managed to create an oil crisis and North sea oil prices have become politically sensitive is that OPEC cannot square the situation. OPEC cannot balance the books. It cannot balance the relationship between production price and demand. It is trying to do so, and I understand the reasons for that, but the problem is with OPEC. We have been caught up in the swirl. That is one of the reasons why British and Norwegian North sea oil prices, BNOC and Statoil are now causing not so much a ripple as a shudder throughout the system. It is because the system itself is now unstable.
In one sense, Sheikh Yamani has a point. Throughout his evidence to the Select Committee the Minister defended the short-term intervention on the ground that it was an attempt to stabilise the situation. He does not seem to mind which way prices go, so long as they go quietly. Whether they go up or down he seems not to have a view, although we shall try to tease one out of him today. Because he wanted them to go quietly, he was interested in stability. I suspect, however, that the only people who can provide some kind of stability are the members of OPEC.