Gordon Brown and Alistair Darling met the oil industry yesterday to see what they could do to boost production of oil. They reasoned that if they could help the industry pump more, the price would fall and alleviate some of the pressure. I have no objection to such discussions, but wonder why they have left them so late, and wonder what they made of all the industry representations before recent budgets. These sent a consistent and simple message. The North Sea now offers only expensive and marginal new prospects compared with opportunities elsewhere in the world. The way to encourage oil companies to do more here is to lower taxation on new exploration, development and production. In recent budgets, the government decided to ignore that advice.
Part of the reason for the meeting seemed to be the wish to divert attention from the governmentâ€™s tax take at the petrol pump and highlight the part played by higher crude oil prices. Unfortunately for the government, this technique will no longer work. Their greed at the pumps has made most people aware that the majority of what they now pay for their petrol is tax on fuel levied by the UK government. Their wish to raise it another 2p a litre after such a big rise just underlines how high the tax already is.
It also illustrates just how much time the government has wasted in consulting and dithering on energy strategy. Eleven years have gone by without a government lead on whether to replace nuclear stations with more nuclear or not. Eleven years have passed without a proper lead on the role of renewables, eleven years without a strong programme of energy reduction measures throughout the public sector, and eleven years without major new power projects in the UK. An island of coal, sitting in a sea of oil and gas, has been left strangely vulnerable to the fact that the main oil and gas reserves are heavily concentrated in the world, and supply is far from perfect. It is better to do something late than never, but the government really has left this one extraordinarily late. It puts in context all those fine words about how this government works for the long term and is prepared to make the tough decisions. There was no sign of that in the energy field. As a result we are now short of energy, and caught with ageing power stations that are not up to modern standards of fuel efficiency in some cases. This is not a problem that can be solved by a tweak on North Sea oil output. This requires some immediate decisions, granting planning permission and other permits to all those who want to build the next generation of energy-producing plants, and energy-supply facilities.