Chancellor calls for oil market reform
Gordon Brown has called for changes to the global oil market to tackle the problem of high petrol prices, but has made no commitment to reduce fuel levies.
As petrol prices hit a pound a litre, the government faces the threat of refinery blockades from protestors angered by the level of duty imposed on fuel.
And business leaders have joined hauliers in calling for the government to immediately cut fuel duty.
The Institute of Directors’ chief economist Graeme Leach said people running business were being “badly hit by the dramatic rise in their fuel bills”, both in terms of transport and fuel costs.
In a speech to the TUC conference in Brighton, Mr Brown today told delegates that he understands the plight of hauliers, farmers and motorists.
But the chancellor has no plans to reduce fuel duties and instead intends to promote co-ordinated global action to stabilise world oil prices.
He outlined three main elements, firstly the oil producing nations, Opec, must respond by raising production levels, he said.
Secondly, “the world must call on Opec to become more open and more transparent”, he said, to increase stability and reduce speculation.
And thirdly, there must be “additional new investment” in production and in refining capacity, to increase future levels of supply.
Since the start of the year a string of natural disasters and international instability have driven up the price of oil from around $40 a barrel to over $60.
However, the recent rapid rises in the cost of petrol come after Hurricane Katrina heavily reduced the United States’ refining capacity, rather than from increases in the cost of crude oil – which has actually become cheaper over the last month.
But the Liberal Democrats branded Mr Brown’s decision to blame oil producers for price problems “pathetic and transparently dishonest”.
The real problem was “very rapid growth in demand coming from China and the United States”, Treasury spokesman Vince Cable said.
Environmental groups have said there should be no cut in fuel duty, and instead money should be invested in public transport and in searching for alternative fuel sources.
Currently around two thirds of the price of petrol is due to taxation.
In 2000 blockades of Britain’s key refineries caused panic buying and widespread shortages.
With a renewed threat of protests petrol stations are calling on motorists to avoid filling vehicles unnecessarily.
