Gordon Brown has called for a “new deal” on energy at talks in Saudi Arabia on the high price of oil.
The prime minister wants oil producers to invest in a £100bn drive towards long-term energy projects in Britain, such as wind farms and nuclear power.
At the Jeddah Energy Meeting, Mr Brown also pressed for an increase in oil production to help bring down prices.
The Conservatives said Mr Brown did not understand the oil market. The Lib Dems accused him of a “futile gesture”…
Mr Brown said the world is experiencing “the third great oil shock in as many decades”, hitting living standards.
Oil prices touched close to $140 a barrel in New York last week.
Mr Brown’s four-point plan, as discussed with EU leaders in Brussels, included:
- Making the market work better to reduce volatility in oil prices
- Making the most of the world’s existing oil reserves
- Accelerating the switch to alternative sources of energy
- Enabling oil producers to invest in alternative energy supplies
And he called for action to make sure the international oil market functioned more efficiently.
“Wherever there are shortages and gaps, they are addressed,” he said.
“Wherever there are investment bottlenecks they are dealt with. Whenever there is protectionism it is tackled. So that instead of uncertainty and unpredictability there is greater certainty. And instead of instability there is greater stability.”
He also said that the UK would host a follow-up oil conference following the G8 meetings later this year.
Mr Brown said the current crisis was worse than the one of the 1970s, and called for a “more balanced energy market”.
“We’re living through the third big oil shock in 30 years. This is probably the most difficult one. Oil prices have trebled in every country of the world,” Mr Brown said.
He also said he wanted to reduce UK dependence on oil by investing in nuclear and renewables.
“I want the oil-producing countries also to diversify out of oil and I want us to get a more balanced energy market, which will mean that all of us will be reducing our dependence on oil in the years to come.”
The prime minister said that the effect of the oil crisis was being felt by “everybody who’s a consumer of oil, whether they are a driver with a car, or whether they have gas and electricity bills coming in”.
Mr Brown is facing public anger over the cripplingly high price of fuel, largely due to the cost of oil from the producers’ cartel, the Organisation of Petroleum Exporting Countries (Opec).
The UK, US and other consumers have urged Opec to boost supply, blaming lack of capacity for the recent price surge.
However King Abdullah of Saudi Arabia has blamed price increases on speculators, a point he made when opening the Jeddah conference.
And shadow Secretary of State for business Alan Duncan told BBC One’s Andrew Marr Show that Saudi Arabia could only increase production of a kind of oil which refineries did not have the capacity to deal with.
“So the idea that Opec can just go like that and flood the market with oil and bring the price down, just shows that Gordon Brown does not understand global markets.”
Liberal Democrat treasury spokesman Vince Cable suggested Mr Brown’s trip was “designed to persuade the British public that he can do something about world oil prices”.
Mr Cable added that the only alternative view was that Mr Brown genuinely believed – “a little bit like King Canute ordering the tides” – he could bring down oil prices.
He added, on the BBC News Channel, that Mr Brown’s call for Opec to increase oil production was a “futile gesture”.
But Chancellor Alistair Darling told the Andrew Marr Show: “If the markets think that production will increase that will bring downward pressure on prices.
“I think secondly we need to reduce our dependence in the long term on oil and gas, and we need to encourage some of the oil producing [countries] like the Saudis, like Abu Dhabi, to invest in those new sources because in the long term that’s as much in their interests as it is in ours.”
Saudi Arabia, the top world supplier, has made slight increases but says market speculation, not lack of supply, has driven prices to there current highs.
Mr Brown said he wanted his Saudi hosts and the other big oil producers to consider putting some of the estimated $3 trillion they have made out of the recent “oil shock” into new nuclear technology.
In Jeddah, Mr Brown urged joint ventures between Gulf states – the United Arab Emirates, Qatar, and others – and UK firms to invest in UK energy, including the next wave of nuclear power plants.
Funding could either come directly or from the sovereign wealth funds of oil-rich Gulf states.