British Prime Minister Gordon Brown warned on Wednesday there was no easy answer to spiralling oil price rises without co-ordinated global action, before meeting senior oil executives to discuss supply and demand. Hundreds of British truck drivers protesting against rising fuel bills caused road chaos in London on Tuesday.
Brown said he understood the impact on families across the country, but that only an international strategy could help bring oil prices down. "A global shock on this scale requires global solutions," Brown wrote in the Guardian newspaper, pledging to put international action on oil prices at the top of the agenda at the Group of Eight (G8) summit in Japan in July.
"In advance of the G8 summit, I will be proposing further work internationally to achieve a better dialogue on supply possibilities and trends in demand," he wrote. Britons hit by rising fuel and food prices are punishing Brown's government for failing to do more to help. The government plans to announce further measures to aid Britain's most vulnerable groups with rising home fuel bills on Friday.
The fuel protests are a fresh headache for Brown, whose Labour Party suffered huge losses in recent local council elections and a mid-term vote for a parliamentary seat. The truckers' protest, echoing similar demonstrations which threatened to bring down former Prime Minister Tony Blair's government in 2000, began in France with fishermen blockading ports to demand cheaper fuel. French President Nicolas Sarkozy called on Tuesday for an EU cap on fuel sales tax.
French truckers have also threatened action across France if Sarkozy fails to respond to their demands that industry diesel prices should return to average levels seen in January. Asked about Sarkozy's tax proposal, Brown's spokesman said tax policy would remain a matter for Britain although oil prices would also be discussed at the upcoming EU summit.
British ministers hinted on Tuesday the government may back down on plans to increase road tax on higher-polluting cars. There was also speculation it may delay planned fuel tax rises.
MORE NORTH SEA OIL: Diesel is about 130 pence ($2.57) a litre in Britain, more than double the price in the United States. Hauliers want a cut in fuel duty of 20 to 25 pence (40-50 cents) a litre. Britain levies the highest fuel duty in the European Union with nearly 65 percent of the pump price of petrol due to tax.
Brown was meeting oil industry executives in Scotland on Wednesday to discuss ways to maximise production from the UK's dwindling North Sea fields. "The issue for us is how we can maintain supply in the next few years - how we can use what everybody recognises are very substantial reserves still available in the North Sea," he said before the meeting. "Everybody knows that we are going to have to diversify supply in future years."
A spokeswoman for Shell said tax was likely to be discussed. As finance minister, Brown raised taxes on North Sea oil production and the industry has since argued tax breaks are needed to encourage exploitation of older reserves.
But any suggestion that oil companies may get tax breaks is unlikely to go down well with a public already angry at having to pay higher prices while oil firms register record profits. Brown's spokesman said efforts to promote exploitation of less economically viable sites would be looked at but stressed the focus was more on licensing, rather than tax.