Sam Coates, Chief Political Correspondent, in Jeddah
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Gordon Brown clashed with the world’s leading oil producers yesterday when he flew to an emergency meeting in the Middle East to tell them to increase output and invest in renewable energy projects in Britain.
In a 6,000-mile (9,650km) day trip to Jedda, Saudi Arabia, the Prime Minister told oil-exporting nations they had a responsibility to increase production to avoid “uncertainty and unpredictability for years ahead”.
This put him at odds with the head of Opec, which represents 13 oilexporting countries. Chakib Khelil, the Algerian Oil Minister and president of Opec, said that demand for oil was dropping. “We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply,” he said.
In an apparent snub to the Prime Minister’s demand, Mr Khelil said he “didn’t hear anything” to suggest that Opec members other than Saudi Arabia were planning to increase supply.
Mr Brown’s visit also attracted criticism at home. Alan Duncan, the Shadow Secretary of State for Business, said: “Gordon Brown grand-standing about a new deal will not solve the problem. [This] is becoming a humiliating begging mission which will not work.
“The Prime Minister does not appear to appreciate that, with oil production already up to capacity, there is very little Opec countries can do.”
Attending the meeting organised by King Abdullah of Saudi Arabia, Mr Brown said that the world was going through “the third great oil shock in as many decades”, which is having a severe impact on standards of living around the globe. The price of oil closed on Friday close to $140 (£70) a barrel — £1.20 for a litre of unleaded — with many analysts predicting further increases.
Mr Brown said that the solutions to the oil crisis lay in strengthening the global free market, ending “short-term market distortions”.
He attacked subsidies offered by countries including China and India which were worth $200 billion a year and “hurt the poor”.
He told delegates: “We need to do all this in a way that is not the old zero-sum game where we hurt producers if we benefit consumers and vice versa, but a new win-win for both oil producers and consumers.”
Mr Brown was careful to play down suggestions of immediate benefits from the summit and refused to predict when oil prices might drop. The 200,000 barrels a day increase in oil production announced by Saudi Arabia before the summit was offset by a drop in Nigerian production of 120,000 barrels after attacks by militants on Friday.
Mr Brown, the only foreign head of government at the conference, said that much of the world was determined to reduce its dependence on oil.
He said that by 2050 the world would need 1,000 nuclear power stations, 700,000 new large wind turbines, and a 600 per cent increase in solar, biomass and hydro-power. In what he described as a “new deal” for oil producers, Mr Brown offered the opportunity for the countries to use some of $3 trillion generated by oil revenues to invest in renewable energy projects worldwide.
Mr Brown revealed that Britain was in talks with the Abu Dhabi Investment Authority and the Qatari Government to explore investment opportunities in British energy projects.
He also gave his strongest hint to date that he will approve the Scira wind farm project off the British coast with an £800 million investment by the StatoilHydro, the Norwegian energy company.
Britain will examine incentives for greater oil production, doing more to exploit the 25 billion barrels of reserves in the North Sea, including smaller fields, he said.
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With over 60% tax he can cut our petrol bill by half. I presume he thinks we are stupid!
The sad thing is the opposition isn't bringing this up
The government must be earning a fortune on the extra increase.
Al, Omaha, USA
From eia.doe.gov (a US gov site):
World oil consumption is projected to grow by 1 million barrels per day (bbl/d) in 2008. Adjusting for increased ethanol use, U.S. petroleum consumption is projected to fall by 440,000 bbl/d in 2008.
greg, Eugene, USA
Brown is pathetic. Cut fuel duty, and raise the lost taxes by charging foreign vehicles that enter our country. They use our roads without contributing to any maintenance at present, as do cyclists.
Chris, Birmingham,
I'd like to know what Mr Brown promised the Saudis in return? Knowing his lack of care for all things British, i suspect he probably sold us down the river as per usual..
john, london,
Brown should have been investing in renewables years ago. After prevaricating for all of this time, why is it down to another country, who is in a 'lose, lose' situation be expected to invest in renewables?
David Leslie, Perth, Scotland
We have 350 YEARS of coal reserves in the UK.
Petrol can be made from coal.
As an example; 60% of Sth Africa's petrol is from coal, the Fischer Tropp process, and has been for 60 years.
This Government is totally against selection by ability, just look at the PM and the cabinet !!.
Chris Adams, Doncaster,
Looking objectively at all that is happening with the whole energy markets do we really want our prime minister putting our future alternative energy supplies into the hands of the Arab nations and once again becoming dependent on them in the future . Long term best interests ?
Brian Hill, Bridlington, ENGLAND
The man's an embarrassment. He's also set to gain £50bn from Fuel Duty this year, £10bn more than he expected.
Can it be a coincidence that we're facing record oil prices when the EU is intent on hiking taxes on oil products to massive levels and the US/Israel is poised to strike Iran?
Paul, London,
Surely the major problem with the high price of auto fuel and heating oil in the UK is TAX. Last week I bought diesel fuel for my car in Northern Ireland at 130.4 p/litre. I then drove into the Republic of Ireland and bought it for 112.0 p/litre. Who is fooling who?
Raymond Atkinson, Belfast, Northern Ireland
Oil has risen in price because the dollar has fallen in value. Additionally, we have increased demand and an increase in speculation since the smart money has left property (at least in the West); a perfect storm. But you know, as someone else pointed out, the price is 75% tax!
Dr Robert Laundon, London, UK
Does brown remind anyone else of a poodle without a master, scampering round the world looking for scraps of food? I was an adamant Brownite, but am man enough to know when i've been proved wrong. Change is needed before irretreivable damage is done...
Hugh Hutchison, Aberdeen, Scotland
"Pump more oil and spend the profit on renewables."
Sounds good if you dont think about it. The best way to encourage things other than oil is to raise prices, then it makes it more profitable to deliver alternative energy solutions such as renewables.
why so few chars in commnts?
Dave, Bristol,
The Saudis are right to tell Brown that he should lower taxes on fuel before they increase production. If Brown want us to be greener he should actually do something to encourage us to save fuel such as lowering VAT on new, fuel saving, domestic boilers. This Government does nothing to help.
Richard, Effingham, UK
Calamity Brown and his catastrophic economic and political policies are destroying the UK by the hour. There may be a global problem but everything he does exacerbates that problem.
He says he will stand in only one more GE. Does this mean he appreciates the reality that he will lose his seat?
M. Cawdery, Craigavon, Co. UK, EU
UK is currently dependent on West-hating countries for oil energy supplies until it runs out. Brown's scheme will make these countries major stake-holders in other energy sources and so make West dependent upon them long term.
They won't do it. They will lose power and influence.
Revolting Peasant, Brentwood, England SSR
Instead of asking Saudi Arabia to invest in renewable energy, why doesn't Brown does it himself? Shame on him for taking his begging bowl to Middle east.
C G, New malden, U K
You don't get it peter. In the thirld word, only rich people have cars. When a country like India subsidizes oil it benefits the car owners, that is India must be rich, in detriment of the poor who have seen rice prices go up.
Do You have any idea of how many people have to survive on $1 a day?
Rui, Lisbon, Portugal
Brown and his economists will destroy Britain.
C Smith, Norwich, UK
When Mr Brown stated that Subsidies in China and India hurt the poor. Who's poor did he mean? China's India's or Britain If it is the latter, Since when did Britain worry about China's poor or India's poor China has to do its best for its own economy and likewise India. And so must Mr Brown.
Peter, Vancouver BC., Canada
If China and India won't stop subsidizing oil, and OPEC won't increase production. The only answer is for western nations to subsidize our oil too. It's the only short term answer while we are getting long-term alternative energy solutions off the ground.
Jean, Austin, Texas, USA
Gesture politics. A "new deal" indeed. When are LABOUR going to cut taxes?
steve tea, manchester, cheshire
It's the 'smart' money leaving property and appearing in commodities. Gordon is more than a little responsible for the property boom that contributed to this wall of cash, and the ensuing bailouts that allowed the bubble to transfer.
I don't think Gordon even knows what inflation is.
Dave Hall, Stafford, UK
Gordon Brown put his international economic reputation on the line today. ??
Maybe he did in your little world, but not from the perspective of where I live. Or may I suggest, the rest of Europe
Tom Mein, Chorafakia, Crete
If I owned an oilfield, I wouldn't increase production since it would drive down the current prices. Demand and price could fall some time in the future. So I'd ruin my future to earn a little more now. And if I already had lots of cash and nothing to do with it, I'd have no reason for doing that!
Michael, London,
Start a scietific result program which is on the same scale as the space race was and then hopefully have something in 25 years. Oil will not last forever.
GK, London,
Cut the tax on petrol
Charlie, Barnsley, uk
The arrogance of Brown asking OPEC to increase production! In UK the tax on fuel in 75%! The greatest lever is to lower tax, which is in the control of the UK government. This won't happen as Brown and his socialists require all the money they can get to fund their left wing policies.
Alasdair, Canterbury,
What a ridiculous charade. Low US interest rates have caused the spike in the price of oil - check the correlation. The rest of the World is paying to prop up the balance sheets of irresponsible US bankers. You can't cure a problem if you are not addressing the real underlying cause.
Simon, London, UK
So Brown wants OPEC to get less for their oil whilst he continues to take the lions share by taxing it as we buy it. Typical greedy thinking on his part, just like when he stole from our pensions and charities, snaffled lottery money for the olympics and abolished the 10p tax rate.
Peter Ryder, Middlewich, UK
This is Brown hypocrisy and gesture politics at its worst! If UK oil resources were comparable to Saudi, Brown would not tolerate others telling him how best to exploit it. The Saudis should tell him to reduce his 70% petrol tax and other taxes that make development of new UK oilfields uneconomic.
Melchet, Edinburgh, UK
Oh dear, yet more wooly thinking from policy makers.
having seriously damaged the technology base and become so risk averse we avoid iinvesting in our own industries and building anything, we are now asking middle eastern Governments to finance our nuclear stations. How they must be laughing at us.
Dave, Chorley,
I have an idea. Why doesn't Gordo ask the US to use less energy?
That could easily have the net effect of 2 million barrels of oil a day.
Oh right, it's always someone elses fault.
Tim, Toronto,
When one has an unelected Prime Minister, who has not been tested in debate, during a General Election, it is inevitable we will have all these problems.
Chris, Romsey,
One way to reduce the cost of fuel in the UK is to reduce the VAT and fuel tax imposed by McBroon. The UK has a huge North Sea oil/gas facility yet we still pay substantially more for fuel than any other EU country. Why should OPEC reduce the cost of oil, Brown would only use it to raise more tax!!.
pete, Banstead, uk
We need more power and energy ?
Doing nothing will, although quite harshly, solve the problem.
The problem??
Too many people sucking the earth dry of resources
Too bad the green lobby never mention this unpalatable truth
cap, Lincoln, UK
Hmmm...he's even more dunb than I thought.
Mike Carr, Oslo, Norway