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Oil: Prices

Volume 464: debated on Tuesday 9 October 2007

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what the average price of oil was in each of the last 15 years; and what assessment he has made of the effect of trends in oil prices on business. (154093)

Oil is a globally traded commodity and the rise in oil prices over recent years has affected all countries, not just the UK. Moreover, while the Government recognise that in recent years higher and more volatile oil prices have created problems for UK businesses, by increasing production costs and adding pressure to profit margins, several factors have helped limit the impact. Firstly, in real terms (current prices), oil prices have remained below the peak levels reached in the late-1970s and early 1980s. Secondly, the rise in oil prices has in part been driven by strong global economic growth. Thirdly, UK businesses typically now have a lower intensity to use oil, given improvements in energy efficiency and the shift in the structure of the economy towards services. Finally, developments in financial markets have allowed businesses to hedge against the risks associated with fluctuations in oil prices more effectively.

The 2007 Energy White Paper (http://www.berr.gov.uk/energy/whitepaper/) sets out the measures the Government are putting in place to help improve the functioning of the global oil market, and to ensure that the UK's domestic market framework and supply infrastructure continue to deliver reliable supplies of oil-based energy at competitive prices, as they have done over the last 15 years.

Average price of oil acquired by UK refineries in nominal ($/bbl and £/bbl) and real(£/bbl) prices

Nominal prices $/bbl

Nominal prices £/bbl

Real 2006 prices £/bbl

1992

19.5

10.9

15.4

1993

17.1

11.4

15.6

1994

15.8

10.3

14.1

1995

17.3

11.0

14.5

1996

21.0

13.4

17.2

1997

19.3

11.8

14.7

1998

12.8

7.7

9.3

1999

17.9

11.0

13.1

2000

28.6

18.9

22.1

2001

24.5

17.0

19.4

2002

24.7

16.4

18.2

2003

29.1

17.8

19.1

2004

37.8

20.6

21.6

2005

53.8

29.7

30.4

2006

64.7

35.2

35.2

YTD 2007

65.5

33.0

Notes:

1. Prices for supplies received by refineries in the UK from both indigenous and imported sources.

2. Real 2006 prices calculated using the GDP deflator.

Source:

BERR