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Brown under fire on fuel as Nigeria attack lifts oil price

The Independent

Brown under fire on fuel as Nigeria attack lifts oil price


By Sarah Arnott

Tuesday, 27 May 2008

Gordon Brown will face renewed pressure this week to suspend the fuel duty rise due to come into force in October as an attack on an oil pipeline in Nigeria yesterday pushed up crude prices yet again.


No help is likely to come from Opec. The president of the cartel, which controls almost 40 per cent of the world’s supply of oil, denied responsibility yesterday for spiralling oil prices and ruled out an increase in production in the near future.

Although there was a dip from the record high of $135 a barrel at the start of last week, yesterday’s sabotage of a Royal Dutch Shell pipeline in the Niger Delta by an anti-government group pushed prices back up beyond $133. Shell confirmed the incident on the Nembe Creek trunkline, resulting in the closure of some of its production in the area. Sabotage is a growing problem for the production industry, and the oil price. Nigeria is the world’s eighth biggest exporter, but production has dropped by a quarter since 2006 due to problems caused by militants. Shell alone has seen production cut by up to 164,000 barrels per day this year due to sabotage of pipelines and pumping stations.

Opec is an even greater influence on prices. But the cartel has countered suggestions that it is to blame for oil prices which have doubled in the past 12 months. Chakib Khelil, the president of Opec and Algerian energy minister, said yesterday the group will not be taking any measures before the next official meeting scheduled for September, and even then it is unlikely to increase production, because there is no shortage in the oil market.

Prices will continue to rise because the falling US dollar is prompting traders to invest in commodities, particularly oil, instead, Mr Khelil said. But currency weaknesses and other issues – such as geopolitical problems – which push up the value of oil are beyond the the cartel’s control. “If Opec decides to raise production … these hikes will not really lower the price,” Mr Khelil told a Spanish national radio station.

Global demand for oil runs to around 87 million barrels per day, of which about a quarter is used by the US. Despite rising requirements, particularly in swiftly industrialising countries such as China, production has stagnated for the past two years. This month, the International Energy Agency revised its estimates of the future capacity of the oil industry downwards from 116 million barrels per day by 2030 to fewer than 100 million.

All of which offers little cheer to the Prime Minister. The planned fuel duty increases of 2p per litre have already brought hauliers out on the street once, in April. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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