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Oil prices are world’s biggest worry, Gordon Brown warns

Telegraph.co.uk

Oil prices are world’s biggest worry, Gordon Brown warns

Gordon Brown has warned that the sharply rising oil price is “the most worrying situation in the world” after it hit a new record high.

Gordon Brown and George Bush met in London
AFP/GETTY
Following talks with President Bush, Gordon Brown has said he wants to travel to Saudi Arabia to talk with the King about the oil crisis

As the oil price reached almost $140 a barrel, motorists across Britain faced growing fuel shortages caused by the weekend’s fuel-tanker drivers’ strike.

Hundreds of garages ran out of petrol and some were accused of cashing in on the growing fuel shortage by charging up to £1.99 per litre or £9 a gallon.

The Governor of the Bank of England is expected to be forced to write a formal letter to the Chancellor disclosing that rising fuel prices have helped to push inflation well above the target level.

Inflation last month is thought to have surged above three per cent – one percentage point above the official Treasury target – after petrol rose from an average of 110.4p to 115.9p for a litre of unleaded, according to petrolprices.com.

Ministers are growing increasingly alarmed about the impact of both the soaring world oil price and the threat to supplies in this country from the ongoing industrial action.

Today, the price of a barrel of oil rose to a new high of $139.89. The rise surprised many experts as it followed reports that Saudi Arabia was to increase production of oil by up to 500,000 barrels a day.

However, a fall in the value of the American dollar and fears over future supplies combined to push the oil price higher.

The Prime Minister will this weekend travel to Jeddah, the capital of Saudi Arabia, for urgent talks over both increasing short term oil production and on long-term plans to invest in alternative energy sources. The rising fuel price has triggered protests in Britain and across Europe.

Following private talks with American President George Bush, Mr Brown said: “President Bush has just been in Saudi Arabia, I have not been there recently. I want to go and talk to the King and talk to others there about what I believe should be a process whereby we understand what are the pressures on demand in future years as well as we understand the pressures on supply.

“I believe that long term debate about the future can have an effect on today’s markets now.”

He added: “That is part of a process that I hope will continue, if necessary with a meeting in London later… so there is a genuine dialogue between producers and consumers about what is the most worrying situation in the world at the moment and that is the trebling in the price of oil.”

David Cameron, the Conservative leader, has said that the rising cost of oil underlined the need for Britain to adopt environmentally-friendly measures and switch to other sources of energy.

“We can’t afford not to go green. When oil is moving towards $140 a barrel, when families are being hit hard every time they pay their gas bill, fill up their cars or do the weekly shop, are you telling me we shouldn’t – we can’t – go green? We’ve got to,” he said.

“The era of cheap oil is well and truly over. So whether we need to cut our carbon or not – which we do. Whether you believe in climate change or not – which you should. For the sake of our future prosperity and our current cost of living, we must wean ourselves off our dependence on fossil fuels and go green.”

Tomorrow, more than 600 fuel tanker drivers who supply Shell petrol stations were due to return to work following a four-day strike. It could take until the end of the week for supplies to return to normal by which time another strike is threatened.

Today, there was anecdotal evidence that some garages were beginning to ration fuel after large queues formed. Others sharply increased petrol prices.

“The impact of the strike is really being felt particularly in Wales and the South West. In some localised areas motorists are struggling to find fuel,” said Edmund King, the AA’s president.

In the South West the fuel situation was described as “dire” by Ray Holloway, president of the Petrol Retailers Association.

This led several independent retailers to impose limits as low as £10 as they wait for new stocks to arrive, according to the UK Petroleum Industry Association.

The problem has been exacerbated by action at a Plymouth refinery which meant that supplies were not only being blocked to Shell forecourts, but other garages were getting embroiled in the dispute.

According to the latest Government figures 647 garages – including 249 Shell outlets – have either run dry completely or had to turn away motorists looking for diesel or petrol.

This weekend could be even worse unless a deal is reached between the drivers’ union, Unite and the Shell’s contractors: Hoyer UK and Suckling Transport.

The two sides have restarted talks raising hopes that the dispute, in which the union has submitted a 13 per cent pay claim, could be settled before the next four-day walkout on Friday.

If agreement is not reached, there are fears that next weekend could be even more difficult because of an overtime ban which will run between the walkouts.

http://www.telegraph.co.uk/news/majornews/2141046/Oil-prices-are-world%27s-biggest-worry%2C-Gordon-Brown-warns.html

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