Britain’s Brown urges global action on oil prices
Britain sought a slight increase in oil production from its North Sea fields on Wednesday, but Prime Minister Gordon Brown warned that only coordinated global action could help rein in spiralling oil prices.
A day after British truck drivers caused road chaos with protests against rising fuel bills, Brown said he understood the impact on families across the country but that only an international strategy could help bring oil prices down.
“A global shock on this scale requires global solutions,” Brown wrote in the Guardian newspaper, pledging to put international action on oil prices at the top of the agenda at the Group of Eight (G8) summit in Japan in July.
“In advance of the G8 summit, I will be proposing further work internationally to achieve a better dialogue on supply possibilities and trends in demand,” he wrote.
Britons hit by rising fuel and food prices punished Brown’s Labour government in recent local council elections and in a mid-term vote for a parliamentary seat. Labour’s huge losses have sparked speculation about Brown’s future as leader.
The government said on Wednesday it would tweak the taxation regime for North Sea oil and gas to encourage exploitation of less economically viable parts of existing oil blocks, a move intended to increase supply by an extra 20,000 barrels per day.
British oil consumption is about 1.8 million barrels a day according to the International Energy Agency. Total production of oil and gas in the UK is running at 2.8 million barrels of oil equivalent per day (beopd), 5 percent down on 2006, according to industry body UK Oil and Gas.
Ministers will also announce further measures to aid vulnerable people hit by rising home fuel bills on Friday.
TRUCK DRIVERS TAKE ACTION
The truckers’ protest, echoing similar demonstrations which put former Prime Minister Tony Blair’s government under huge pressure in 2000, began in France with fishermen blockading ports to demand cheaper fuel.
French truckers have also threatened action across France if President Nicolas Sarkozy fails to respond to their demands that industry diesel prices should return to January’s average level. On Tuesday Sarkozy called for an EU cap on fuel sales tax.
Asked about Sarkozy’s tax proposal, Brown’s spokesman said tax policy would remain a matter for Britain.
With his government’s popularity at record lows, Brown is under pressure from Labour lawmakers to back down on plans to increase road tax on higher-polluting cars and to further postpone a fuel tax rise due in October.
Finance minister Alistair Darling said he would review the planned fuel tax rise before October but he showed no sign of backing down on the road tax measure, due to be rolled out fully in 2010, or of giving in to truck drivers.
Diesel is about 130 pence ($2.57, 165 euro cents) a litre in Britain, more than double the price in the United States. Diesel in the European Union averaged around 140 euro cents a litre according to EU figures from May 19. Hauliers want a cut in fuel duty of 20 to 25 pence (40-50 cents) a litre.
Britain levies the highest fuel duty in the European Union with nearly 65 percent of the pump price of petrol due to tax.
Analysts said the North Sea oil tax regime change would have minimal impact but Darling said every little helps.
The oil and gas sector believes that a tax hike announced in 2005 and soaring production costs have made it less attractive to squeeze the remaining barrels out of the North Sea.
Brown, who met oil industry executives in Scotland, said: “The issue for us is … how we can use what everybody recognises are very substantial reserves still available in the North Sea. Everybody knows that we are going to have to diversify supply in future years.”
Struggling British voters are unlikely to welcome tax breaks for oil firms that are registering record profits.
Source: guardian.co.uk
Tags: Eu, fuel costs, price rising, UK