Socialist Worker

Real issues behind the fuel debate

Issue No. 1720

As protesters' deadline approaches

Real issues behind the fuel debate

THE GIANT oil companies pushed up fuel prices last week. The move came amid a flurry of meetings involving government ministers, hauliers and farmers over the issue. The 60-day deadline for government action on fuel, set by leaders of the recent blockades, is 13 November. PAUL McGARR looks at the background.

OIL COMPANIES had the nerve to blame world oil prices for last week's increases. BP spokesperson Clare Bebbington argued that high oil prices had "cut our margins to the limit".

But who supplies BP petrol stations with fuel? BP refineries and BP oilfields. The company made almost �4.5 billion profit last year. Its own documents note the reason is "higher crude oil prices". The top five oil firms-ExxonMobil, Shell, Texaco-Chevron, BP and TotalFinaElf-are on course for profits of �35 billion this year.

The International Herald Tribune newspaper noted recently, "It might cost about $3 to $4 to pump out a barrel of oil that on the world market may sell for $35." The oil firms want people's anger and attention to be diverted so they can continue to rake in these vast profits.

Dirty deal

DURING THE fuel blockades the government and trade union leaders attacked the oil companies for not keeping fuel tankers moving. They have recently worked together on plans to beat any renewed protests. TGWU union leader Bill Morris is lining up with the oil bosses.

He called for the police, oil companies and government to use force and the anti-union laws to break any new protests. If the government gets away with breaking protests using such methods they will be used against any group of workers, including TGWU members, who fight in the future.

Well of profit in North Sea

"IT'S ABOUT tax, but not at the pump. It's about tax in the North Sea." That's how Greg Muttit and James Marriot of the Corporate Watch group accurately sum up what the oil companies are playing at.

It explains why they quietly encouraged the fuel blockades in September but are now prepared to work with the government to stop any repetition. Until 1993 the government used to take around 60 percent of all North Sea oil profits in tax.

The Tory government then slashed the main tax on such profits, Petroleum Revenue Tax, from 75 percent to 50 percent, and it scrapped it altogether on all new oilfields.

This gave the oil companies billions. New Labour pledged a review "to ensure the government is taking an appropriate share of North Sea profits". As Corporate Watch explains, "The subsequent lobbying campaign was one of the biggest the country has ever seen". The oil companies threatened to pull investment unless Gordon Brown left them alone. He backed off.

Since then oil prices have more than trebled, bringing an increase in profits. The oil companies are worried the government could be set to try and cream off a bigger share. They are prepared to fight, helping or punishing the government as necessary, to ensure they are left to pocket surging profits.

The oil companies helped out by pressuring the CBI bosses' organisation into withdrawing from a joint call with the hauliers' Freight Transport Association and National Farmers Union for a cut in fuel duty. "What happened during the last two days of the fuel crisis was a threat, a flexing of oil industry muscles in a strong warning to leave the North Sea alone," says the Corporate Watch group.

Battle amongst the blockaders

MANY SMALLER haulage firms have gravitated around the rival Road Haulage Association. This grouping was at the centre of the fuel blockades. The association has now linked up with Farmers For Action, also involved in the blockades, to form the Fuel Forum.

These smaller businessmen are being squeezed-mainly by competition from the big haulage firms and by cost-cutting by the giant supermarkets. Industry sources have admitted there is around 30 percent overcapacity in the haulage industry, "too many lorries are competing for the food trade, which is the core business of haulage.

"As a result the supermarkets can screw down lorry firms to margins that are cripplingly low." Some of those in bodies like the Fuel Forum are substantial businessmen. Others are either very small outfits, or former employees scrabbling for work after investing their redundancy money in a lorry.

Fuel is not really the central issue for the Farmers For Action people. Many have been hit by a wave of crises, from BSE to the profiteering of those who buy their produce. Dairy farmers in particular are being hammered by supermarkets and dairy firms like Express and Dairy Crest. Farmers For Action has organised protests outside these firms.

Some of these farmers talk of making common interest with ordinary people and attacking big business. But the Fuel Forum group has pulled away from such a message. It lines up with the big firms and refuses to target the oil companies. The splits between the oil companies, bodies like the Freight Transport Association and the Fuel Forum mean it is unclear what will happen on 13 November.

Some are threatening to renew the blockades. Others are talking of a London demonstration on 13 November instead.

A campaign is needed that shifts debate away from the narrow issue of fuel duty. The trade union leaders, instead of cosying up to the government and oil companies, should be at the forefront of such a fight. Its demands should be:

  • Tax the oil firms to renationalise rail and expand public transport.
  • Offer the smaller hauliers driven to the wall by cut-throat competition the chance to get jobs with decent pay and pensions running this expanded public transport.
  • Force the supermarkets to cut their profits and pay the small farmers a decent living.

Supermarket sweep

SUPERMARKETS also put up petrol prices last week. Safeway supply director Lawrence Christensen argued, "When the price of crude goes up we have no option but to put up petrol prices." He also happens to be chair of the hauliers' Freight Transport Association, which says the only issue that matters is fuel duty and is demanding a 15p a litre cut.

Christensen wants duty cut so Safeway can pocket more of the price in profit. The Freight Transport Association sympathised with but did not support the fuel blockades. It represents over 11,000 haulage firms. Its members run over half of all Britain's lorries and account for 70 percent of British lorry-borne exports. The big firms dominate the transport association.

  • Safeway made �341 million profit last year in Britain.
  • Asda made �422.9 million.
  • Tesco grabbed �842 million profit.
  • Sainsbury's pocketed �888 million.

Alongside the supermarkets, the Freight Transport Association delegation to the government on fuel duty included multinationals like Christian Salvesen, whose profits have risen by 25 percent in the last year. The hauliers Tibbet and Britten also attended. Its profits have jumped by 25 percent in the last year. The company employs over 32,000 people in 33 countries.

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Article information

Sat 28 Oct 2000, 00:00 BST
Issue No. 1720
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