[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Sunday, 11 September 2005, 17:24 GMT 18:24 UK
Brown blames fuel costs on Opec
Gordon Brown at Ecofin meeting in Manchester
Brown wants oil producers to take action by the end of this month
Chancellor Gordon Brown has blamed higher fuel prices on oil cartel Opec, but has ruled out tax cuts to ease forecourt prices.

The chancellor told the BBC's Andrew Marr that Opec had failed to respond quickly enough to the surging demand for oil from China.

He called on Opec to increase supplies and relieve pressure on prices.

But he refused to say whether he would freeze the duty on fuel in the UK in this autumn's pre-Budget report.

His tax take goes up as the prices goes up and we believe that he should consider bringing that tax down
Matthew Carrington
Petrol Retailers' Association

Dismissing the idea of government intervention to cut prices at the pump, Mr Brown said that the current price spike was a global problem.

"I understand the frustration, particularly of hauliers where competitiveness is affected by rising petrol and diesel prices," Mr Brown said on the BBC's first edition of Sunday AM.

"But I think most British people understand that its a global problem, a global challenge and it's got to be met by global measures."

Matthew Carrington, chief executive of the Petrol Retailers' Association, called for Mr Brown to moderate the tax take.

"His tax take goes up as the prices goes up and we believe that he should consider bringing that tax down.

"Clearly the world price of fuel is outside the chancellor's control... but 70% of the price of the fuel at the pump is tax.

Progress?

"For the good of the economy, for the good of motorists, he should be ensuring he only takes the same amount of tax from when fuel was at a lower price."

Gordon Brown said he believes that oil prices can be reduced and expects to see progress by the end of the month.

"I spoke to the Saudi Arabian finance minister yesterday and will speak to their Opec members in the next few days; I will meet them very soon - they have responsibilities as well," Mr Brown said.

But he blamed Opec for the doubling of crude oil prices over the past 18 months.

"You have got a cartel that has limited production in the past and has been slow to respond to rising demand," he said.

You have got a cartel that has limited production in the past and has been slow to respond to rising demand
Gordon Brown, Chancellor of the Exchequer

Acknowledging that the current crisis was as big as the oil shock of the 1970s, Mr Brown said that an economic slump would be averted this time thanks to the UK's low-inflation economy.

"We can deal with this shock in a stable and effective way by taking the right measures," he said.

But shadow transport secretary Alan Duncan said Mr Brown was to blame for the crisis.

"This problem is entirely of the chancellor's own making, and with the deteriorating public finances in this country the chancellor has left himself no elbow room.

"Gordon Brown should stop trying to distort the issue by claiming it is a problem caused by OPEC and global oil prices. The key issue is the differential prices for filling up tanks on the continent and in Britain."

EU pressure

European Union finance ministers, meeting in Manchester on Friday and Saturday, also called on oil companies in step up their output.

At the end of the two-day Ecofin talks, they urged oil firms to invest more in production, exploration and refining capacity.

They also called on Opec states to raise production by half a million barrels a day ahead of its 19 September meeting.

Crude oil prices reached more than 70 dollars a barrel following the disruption caused to the US industry by Hurricane Katrina.

Despite his efforts at Ecofin Gordon Brown still has to face the wrath of the UK's fuel protestors this week.

Demonstrations are planned on Wednesday unless ministers agree to meet them and discuss their concerns.

Fuel Lobby spokesman Andrew Spence said it would have been "common sense" for EU ministers to have agreed fuel tax cuts to ease the burden on motorists and hauliers, rather than relying on the oil-producing states to solve their problems.





SEE ALSO:
EU ministers urge oil output rise
10 Sep 05 |  Business
EU faces Katrina economic effect
09 Sep 05 |  Business
Vaccine plan 'will save millions'
09 Sep 05 |  UK Politics
Oil shock threatens world growth
06 Sep 05 |  Business
Is Germany's economy recovering?
05 Sep 05 |  Business
French economy grinds to a halt
12 Aug 05 |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific