Liberal Democrat Conference: Oil price could double in return to 1970s style ‘shocks’
Energy secretary Chris Huhne has ordered his officials to look at the impact of a 1970s-style oil price spike on the British economy.
Mr Huhne said the UK was having to prepare itself for “lots of shocks”, forcing the price of a barrel of oil to double, mirroring the volatility last seen in the 1970s.
The news came as Mr Huhne said he would only give the green light to more nuclear power stations if Chancellor George Osborne agreed to taking millions of the lowest paid out of income tax. “A deal is a deal,” he said.
Mr Huhne said he was concerned about the future fluctuations in the price of a barrel of oil, which would send the price of petrol soaring.
A 1970s-style doubling in the price of oil would drain £45billion from the UK economy in two years, hitting investment and jobs.
He told a meeting on the fringe of the party’s conference in Liverpool: “We will have a world where there may be lots of shocks, we may well have oil price rises which are similar to the ones that we had in the 1970s, a doubling.
“I have asked for some work to be done in the department about what the impact of that might be in terms of British business, businesses that have nothing to do with energy, with green growth, entirely outside.
“The corner shop is affected if we have an oil price shock because the economy is hit very seriously.”
In his keynote speech to delegates in the main conference hall he said his fears about the price of oil offered further justification for the Government’s push towards creating a greener economy.
He added: “So the low-carbon economy is also a premium which we pay to ensure ourselves against those sorts of oil price, fossil fuel price, shocks.”
As part of the switch to low-carbon energy, Mr Huhne said he backed the construction of giant wind farms around the coast of Britain.
A new wind farm at Gwynt y Mor off the north Wales coast will have the potential to power a third of Welsh homes. “I want to see this again and again round Britain’s coasts,” he said.
Turning to the contentious issue of nuclear power, Mr Huhne, a voluble critic in Opposition, said the Coalition agreement involved “give and take”.
“I expect George Osborne to take more millions of the low-paid out of income tax even though he is a Conservative minister implementing a Liberal Democrat pledge.
“And George Osborne expects me to deliver our agreement on nuclear power, which is that there is an important place for new nuclear stations in our energy mix as long as there is no public subsidy.
“A deal is a deal, and I will deliver.
Mr Huhne also announced a new “Government-wide carbon plan” setting out policies and deadlines for each department to “ensure real action on climate change”.
A plan to create almost 250,000 jobs in green industries will offset the economic “drag anchor” of budget cuts, he said.
Mr Huhne said: “Since there is no money left, my department is pioneering new ways of turning this Government into the greenest ever.”
British homes were responsible for a quarter of the UK’s carbon emissions, because they leak heat like a sieve.
He said: “We use more energy to heat our homes than Sweden, where it’s seven degrees colder in January. We might as well be standing outside burning £50 notes.”