Security of Supply Agreement

Part of Orders of the Day — Oil and Pipelines Bill – in the House of Commons at 7:45 pm on 15th July 1985.

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Photo of Mr Michael Portillo Mr Michael Portillo , Enfield, Southgate 7:45 pm, 15th July 1985

The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) sometimes worries me. Although some clear lessons are to be learned from the last 10 years, he does not appear to want to learn them. One is that, between 1974 and 1979, Britain and other western countries responded to the 1974 oil crisis by attempting to restrain oil prices. The result was that we had high inflation, we continued to be heavily dependent on oil and we went through a period of world recession.

In 1979, Britain again tried to restrain the prices of oil products. The result was that in Britain there was a shortage of those products, with queues at petrol stations, whereas other European countries which did not operate restraint had plentiful supplies of petrol—and we were a producer of oil, while those other countries were not.

Since 1979, countries have by and large responded to the second oil shock in a completely different way. They have not attempted to restrain oil prices. Hence, since 1979 our dependence on oil has decreased. We have shown greater efficiency in the use of energy, with the result that in the intervening years we have had falling inflation and enjoyed a period of substantial growth. Today, there is a substantial oil surplus throughout the world, and that is attributable to the fact that countries are less dependent on oil. Even the price of oil has fallen considerably because we have not made the error of trying to restrain prices.

The hon. Member for Merthyr Tydfil and Rhymney wishes to lead us back to the bad old days when we tried to put the lid on prices and when, ironically, we suffered from precisely what we thought we were avoiding—inflation in general and high oil prices.