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Alistair Darling: Oil price rises could prevent early end to recession
Joe Murphy, Political Editor12.06.09
Alistair Darling warned that the stirring economic recovery could be held back by soaring oil prices.
Telling families and firms that recent optimism on growth might prove premature, the Chancellor said: "I think it is important that people should not become complacent."
Oil this week reached an eight-month high above $73 a barrel. It had "the potential to be a huge problem as far as the recovery is concerned", continued Mr Darling.
"We've got to convince everyone, including some of the Gulf states, who really have been badly affected by this downturn in their broader economies, it is in no one's interest that we allow high oil prices to impede recovery."
It also emerged that Mr Darling is likely to postpone the three-yearly spending review because of uncertainty.
A comprehensive spending review was expected this autumn to map out plans for the start of a fourth Labour term in office.
The last review was held in 2007 and set out plans from 2008-09 to 2010-11. But he said: "No matter how tempting, it would not be sensible to try and nail down how much we would be spending, say, on nursery education in 2014, now."
He stressed his priority was to make public spending more efficient and said officials have yet to begin the detailed work needed for a CSR. "We've got massive uncertainty, to try to write a detailed budget... doesn't make sense."
The political battle on spending has heated up in recent days and both the Conservatives and ministers admit there will be painful cuts in some areas.
The respected Institute for Fiscal Studies said the choice for voters was now "between Labour cuts and Tory cuts".
Delaying the spending review to the last moment before the election would put the Conservaives on the spot to match fresh Labour commitments.
Philip Hammond, the Tory Treasury spokesman, said: "What's happening here is that the process of good government is giving way to Gordon Brown's political machinations.
"He is timing the CSR for purely political reasons."
Mr Darling also said getting banks lending again remained a problem. "If you don't fix the banking problem, you'll never fix the wider economy," he added.
Reader views (31)
Mr Darling, if oil prices don't rise then perhaps you can give some support to those honest National Insurance Fund contributors who now find that their state pensions are not uprated. Unlike UK state pension retirees who live in places such as the US, Israel and the Philippines who receive upratings, people who live in places such as Australia, Canada, South Africa, Nepal (for your information where Gurkhas originate), India, Pakistan and a host of others do not receive increases each 6 April. They are still receiving the state pension rate prevailing when they retired, e.g. an 85 year old lady living in Australia receives whatever the basic pension rate was in 1984 but one in the USA gets the current 2009 rate. There is no justification for this discriminatory policy. What about including this in the "Equality" Bill? No wonder the National Insurance Fund is 50 billion pounds in surplus. Are there any political parties left to support this view? If not please state your alternative policy for the state pension. Remember that this has been funded by contributions to the National Insurance Fund. It does not come out of current taxation, e.g. for politicians' salaries and pensions. We are advised that public service pensions are "fully costed and fully affordable".
These pensions have already been paid for.
- Richard Lane, Kariong, NSW, Australia
If Darling was unaware that oil prices would inevitably go up again then he is dangerously out of touch with his job's realities. If he WAS aware, then his platitudes about all they were doing to save the economy were an outright lie designed only to placate the public while they carried on with their free spending agenda.
Can't have it both ways.
- Rogan, Irving
Next high on the list is raging inflation. All the signs are there if you look. I am looking forward to it and the million or so I will make overnight.
- Albert Hall, hove england
Better that he accept the inevitable, that he has cocked up and resign, with his govt and letter better people tackle the mountain of debt he and his have left us with.
Election now, but keep Balls up out of the picture, otherwise the trouble will only get worse.
- Hugh, Middx
Val Daniels - Your boy Darling is already buttering us up to find excuses why he will not make his growth predictions this year. This makes you assertion that his growth predictions would be accurate even funnier. Even he knows they are rubbish.
- David Davies, Basingstoke, Hants
No Darling, you arrogant pleb, its the DUTY and TAX that YOU levy on the fuel that will prevent an early end to the recession.
Oil prices my arse - ask Thailand how much they pay per litre for their petrol.
- Bristol Dave, Bristol, UK
Mr Darling is likely to postpone the three-yearly spending review because of uncertainty. "No matter how tempting, it would not be sensible to try and nail down how much we would be spending, say, on nursery education in 2014, now."
So much for Gordon Browns promise to be transparent & listen to the electorate. This decision to delay the CSR is purely for political expediancy and typical Bordon Brown/Nu Labour. As Chancellor, Brown kept changing the dates of the economic cycle so that he could keep within his so-called 'golden rules'. Until we have a general election, Brown will continue to take decision based on what's best for his political survival, NOT what's best for the UK economy.
- Malcolm, London
John, London that means they have lost 86.6% of our money, in other words a MINUS 86.6% RETURN. If you think that is good then you must be off your head.
- Richard K, Nottingham
Gary in London,
My father always hoped for better things from me!..and besides everyone knows there's no training required to be a member of this cabinet - just a fleeting perception of who to be loyal to, a convenient denial of economic truths and a distinct lack of talent at anything else they have turned their hand to. Has any of the current cabinet ever had a job in industry or finance for example where budgets have to be met and performance is measurable? (The answer is no, by-the-way)
- Elmo, Barnet
Looking for someone to blame "Darling"?
- Brian Hughes, Llandudno. North Wales. U.K.
Here we go - what energy group has Mr Darling got a seat as a non-executive Director on?
- Paul, London, UK
Could money be made from a Laurel and Hardy -type film starring Brown and Darling and directed by Michael O'Leary of Ryanair?
- Peter Seekings-Foster, Mildenhall, Suffolk.
Elmo, I assume you are reading into Richards remarks some interpratation of what he was trying to convey ?
The literal reading of the paragraph was not clear but thanks for the help,although I believe John's calculation would be correct on a different reading of the comments.
Perhaps you are training to be a politician Elmo ?
- Gary, London
Demented caterpillar eyebrows has spouted more twaddle.
I am very surprised Dizzy Darling has time to churn out pure spin and waffle - he must be terribly occupied counting all the obscene tax revenue swindled from motorists.
- Reuben Camara, Morecambe UK
Bluff as usual. Brown and Darling are desperate for oil prices to be as high as possible, to maximise their tax from the North Sea. It's about the only good source of tax they've got right now, but they don't like to remind voters of that fact.
The 2008-09 Budget assumed oil prices of $83.80 - you'd like the oil price to be at least as much as that, wouldn't you Mr Darling?
- Sid, London
Once the Tories get in, prices at the pump will drop within a year to much more sensible levels like 60p a litre.
Sorry for writing in crayon, but I'm not allowed any sharp objects in here.
- Anthony, Esher, Surrey
Now that our politicians have stopped navel-gazing about their expenses and jobs, perhaps they can turn their attention to rising food bills and utility costs, as well as the reported rises in petrol and diesel.
In all the excitement of flipping, bath plugs, duck houses and free porn, the government has been quietly getting on with completely ignoring the real problems facing the UK.
Well done to old caterpillar-eyebrows for damping down the enthusiasm about an early end to the recession.
- Nobby Clark, Perth, the Scottish one
John from London - I cant substantiate the claims of £500 billion and £67 billion - but I think your point would be correct if you were getting the £67 billion AND your £500 billion back. What Richard K is saying is that you are getting £67bn and your not getting your £500 bn back. Your mathematical genius makes you worthy of a job in Gordon's cabinet old son!
- Elmo, Barnet
Haha - two days ago he said that UK was saved and that the economy was growing!! Come on Derling go away!
- Peteo, London NW1
Well then, drop your tax .....
- With Smoke Coming Out Of My Ears, London NW11
YES 500 BILLION TO GENERATE JUST 67 BILLION!!!
Thats a 13% return - if I got that in a bank account I would be diliriously happy!
- John, London
Why is that that Crash Gordon and co. always have everyone else to blame for the recession?! They are losers and should go so that the professionals can sort something out for our country.
- Georgie, Islington, London
AT LAST DARLING HAS FOUND SOMETHING TO BLAME FOR THE FAILURE OF HIS POLICES.
QUITE SIMPLY A GOVERNMENT HAS TO LIVE WITHIN ITS MEANS JUST LIKE THE REST OF US.
STANDY FOR A RUN ON STERLING . REMEMBER THAT OTHER LABOUR CHANCELLOR DENIS HEALEY. WHAT PRICE A VISIT FROM IMF.
- Alan Green, Woodford Green
More lies from Labour, they have thrown 500 BILLION of more debt at the economy to create a mini-boom in the middle of the recession. The effect will be to give a short term stimulus that generates only 67 billion extra in the economy. YES 500 BILLION TO GENERATE JUST 67 BILLION!!! They have done this to create a temporary feel good effect up to the next election. People will think things are getting better and if it goes wrong Darling conveniently will blame it on oil prices which he is laying the ground for here.
They are doing this to save as many Labour seats as they can at the next election and can really be described as THE NASTY PARTY as they are prepared to ensure our future over the next few years is considerably worsened just to save their jobs and pensions. This is the type of behaviour that they condemned bankers for using money to create a completely false picture of the real situation.
- Richard K, Nottingham
How about fuel duty being cut, then maybe we could end the recession early then
- Sukh, london
why cant brown do the right thing and just resign hes an embaressment to the country and has squandered all our extra tax money and bankrupted the country labour always mess things up
- Dave Summers, london
Unfortunately for us consumers, oil prices are being manipulated by oil traders and oil companies intent on cashing in by storing oil on tankers to create an artificial shortage. About a third of the large clean tanker fleet is engaged in floating storage in Europe and the Med.
Scores and scores of very large crude carriers (VLCCs) are storing crude oil. Shell is reported to have one of the largest ships in the world, the 464,000 tonne deadweight TI Europe on crude oil storage duties since April. It is costing the oil company about two US cents per barrel per day to store this cargo of about 3M barrels.
The 297,974 deadweght Front Queen has been reported as chartered for up to nine month’s employment by JP Morgan for $41,000 per day. The vessel which is brand new, will load a full cargo of refined products and sit at anchor off Malta. It will store the cargo until prices have been forced up to a point when it is profitable to sell the product into the market. If this particular VLCC is employed for the full nine months, costs of storage will only amount to about $6 per barrel.
The world is awash with oil. It is the greedy oil traders and oil companies which are forcing prices up.
As the meerkats say "Simple"
- Andrew Lansdale, Thames Ditton, Surrey.
In the same way that the high oil price didnt cause the recession, an oil price at $70 (half the peak price) isnt going to mean a slower recovery. Ill-judged decisions and policies throughout the past 10 years from Gordon Brown and then Gordon Brown (pulling Darling's puppet strings) are what will cripple this country long after Labour have been voted out. As a higher rate tax payer, I have no problem paying 5 times more tax than the guy earning £20,000 a year - but I do have a problem watching Labour squander these tax receipts on bloated government and inefficient use of the money. Time for a change.
- D.C, London
Globalism died when oil prices peaked a year ago. It caused the global economy to overheat. There is not enough oil being produced & that means the global economy can never recover. IT IS OVER!
- Christy, aldershot uk
Like they care 90% of the price of petrol is tax.
The sage does speak with forked tongue
- Jones, Ealing
All our fuel prices are increasing but the Labour Party retain 70% of all our costs.
About a year ago they claimed that fuel prices would be reduced to 83p but now through the roof and they still keep taking 70% of our fuel charges.
Why do they not reduce their charges from 70% to 50% and this would still be a con to all fuel users.
They take our money and give it to the Banks who then make payments to their staff and now we have an idiot who claims £700,000 a year on pensions and collapsed his Banking business
The Labour Party are likely to be eliminated and we would all like that
- Brian Challis, Southend-on-Sea, UK
