Brown Meets Oil Industry Leaders Amid Fuel Fears Chancellor Joins PM for Scots Visit

By GRAEME SMITH and ROBBIE DINWOODIE

THE Prime Minister, accompanied by the Chancellor, made an unscheduled visit to Scotland yesterday to meet oil industry leaders amid growing fears of a fuel crisis.

The aim was to discuss how North Sea production could be ramped up to allow the UK to take a global lead in curbing the oil price.

Gordon Brown and Alistair Darling admitted the move would have little immediate impact but said it was one strand of an international effort required to resolve the crisis. Mr Brown indicated an increase in nuclear power was another strand.

Their trip north was made as MSPs debated the impact of rising fuel prices. The two leaders travelled to Banchory, Aberdeenshire, to discuss the situation at a scheduled meeting of the board of Oil & Gas UK, the industry organisation, and their commitment to help maximise production from the North Sea left the board members “extremely impressed”.

As they met, John Hutton, the business secretary, was outlining plans for increased production as he gave the green light for two new fields and announced changes which will allow new oil-andgas fields to be created out of the unprofitable parts of existing fields, thus avoiding Petroleum Revenue Tax.

Mr Brown told The Herald: “This is basically the third big oil shock in recent decades. The oil price of Dollar130 a barrel is obviously putting pressure on family budgets and petrol prices, and also gas and electricity prices in every part of the world.

“The issue is what we can do globally and what we can do nationally. Globally, the G8 and the European Union have got to make it a priority at their meetings in June and July to discuss what we can do about getting a better balance between supply and demand in the energy markets.

“I do believe there are global actions we could take that could help diversify the supply of energy and encourage production in areas where gas and oil has been slow to be produced, and do more about the demand side as well – create greater energy efficiency. These are decisions you can make internationally.”

Mr Darling said the government wanted to make sure the North Sea was an attractive place for oil companies to operate. “One of the reasons oil prices are so high is because of people’s expectations, ” he said. “People can see demand is growing faster than supply with what’s happening in China and India, and if people can see there is more oil literally coming down the pipeline that will help ease the pressure.

“The more people can see we are planning to take action to increase oil and gas, the better it is.” At Holyrood, MSPs were told the current fuel price crisis was the “best illustration yet” why Scotland needed an independent parliament with full powers.

Environment Minister Michael Russell was responding to cross- party anger about petrol and diesel prices across Scotland, said to be among the highest in Europe in areas such as the Western Isles.

The chamber also heard from sland MSPs who hit out at the rising cost of fuel. Nationalist Kenny Gibson, whose Cunninghame North constituency includes Arran, said prices had reached 123.3 pence per litre and diesel had reached 140.6 pence per litre.

Shetland MSP Tavish Scott, former transport minister, called on Mr Russell to back calls for an Office of Fair Trading investigation into the distribution system for fuel.

Originally published by Newsquest Media Group.

(c) 2008 Herald, The; Glasgow (UK). Provided by ProQuest Information and Learning. All rights Reserved.