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Crude Oil Prices

Volume 892: debated on Monday 12 May 1975

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asked the Secretary of State for Energy whether Her Majesty's Government subscribe to the policy of the International Energy Agency that there should be a floor price for crude oil.

Her Majesty's Government subscribe to the objective of present IEA policy, which is to devise a means of protecting new energy sources in the event of a big fall in the world price of oil.

Is the hon. Gentleman aware that international price-fixing has never been very successful? What is the point of seeking to achieve it when we are constantly told that part of our economic problem is produced by the high price of imported crude? Why do we seek to keep it up?

I wonder whether the hon. Gentleman has taken into account the activities of OPEC in coming to his conclusion about international price-fixing. He should bear in mind that while this country may have an interest in cheaper sources of oil, it also has an interest in preserving its energy investment as a potential oil producer.

Has my hon. Friend taken into account rumours which are going around that if OPEC and Middle East countries reduce the price of their oil below the cost of North Sea oil, this will affect our income from oil in the North Sea? Will he take into account that the other day the Shah of Iran said that profits on oil from the Middle East are not now sufficient and that the price will be increased later this year?

There are conflicting statements and assessments about the future price of oil, which is effectively determined by the policy of OPEC. Whether the price rises or falls, there are sound reasons for developing our North Sea resources, if for no other reasons than security of supply.

Why is the hon. Gentleman trying to do an OPEC on this House and sustain the price of oil at a high level? Will he say what floor price he will accept—$6 to $8 a barrel?—and would the United Kingdom be allowed to buy oil if it had the opportunity at a lower price?

I do not know whether the hon. Gentleman is trying to be complimentary in suggesting that my activities are like those of OPEC. The question of a common minimum price for oil is being considered by the International Energy Agreement countries. These discussions are proceeding, and Her Majesty's Government are taking a full part in them.