Government Should Act To Calm Oil Price Fears

2.33.11pm BST (GMT +0100) Tue 1st Jun 2004

The Government should indicate that if prices are still very high in September, it would be willing to postpone the increase in fuel duty until world oil markets have settled, LibDem Shadow Chancellor Dr Vince Cable said today.

He said: "This situation has arisen out of sheer complacency from the Government which, preoccupied with Iraq, has taken its eye off the ball elsewhere.

"The Government has not taken account of the fact that there is no spare capacity in oil supply - all of which is accounted for by Saudi Arabia, which is very unstable.

"The war in Iraq and the continuing chaos there, instability in the Middle East between the Palestinians and the Israelis, and attempts by Al Qaida to destabilise the Saudi Regime, could have a serious effect on oil prices.

"The rise in the price of oil now underlines the need for long-term policies that will strengthen energy conservation - both for environmental reasons and for security of supply.

"There is no need to panic just yet - the current high prices may just be a short-term spike. However, the Government should indicate that if prices are still very high in September, it would be willing to postpone the increase in fuel duty until markets have settled."