'The State It's In' - Squall Editorial

Pumped And Dumped On?

(AKA Petrol Pariahs)

November 2000

There must have been a few residual socialists in the Labour Party who wished their government could have taken a leaf out of the Cuban Book of Decisive Government when the so called ''petrol crisis'' cut a wound in New Labour's public image.

In the years immediately following the triumph of the Cuban revolution in 1959, transnational oil corporations like Esso and Texaco attempted to bring Cuba's fledgling revolutionary government to its knees by refusing to refine oil in Cuban refineries. The Cuban government tried to negotiate but, when the oil giants refused to temper the demands of their ultra-capitalism, the Cubans simply kicked them off the island; lock, stock and corporate barrel. Putting the refineries under state control, Cuba then stridently asserted that multinationals would never again hold the country to ransom.

Contrary to popular portrayal, the recent paralysis of oil deliveries in the UK did not arise from a spontaneous expression of public dissent. The oil corps may have pretended not to send out drivers because of picket line intimidation, but it is now widely acknowledged that they didn't want to. At some refineries the thin smattering of picketers who were supposedly holding the country to ransom were receiving refreshments courtesy of the oil companies themselves.

Seemingly forgotten in the mayhem was the fact that on August 1 - just over a month previously - a 'dump the pump' protest, co-ordinated by the Association of British Drivers and backed by both The Sun and the Daily Mail, had fingered the oil industry itself as the culprit for high petrol prices. How quickly was this forgotten? How adroitly did the corporations manoeuvre themselves out of the dock and into the seat of innocence. Under the guise of spontaneous public insurrection, the oil companies helped harness popular animosity over high petrol taxes and redirect it against the government. It was a coup of corporate cleverness. But why now?

The oil industry didn't complain back in 1993 when the Conservative government increased petrol duty paid by British motorists by 10% and set up the 'fuel duty regulator' which increased petrol duty by 3% above inflation each year thereafter. At the same time, Thatcher's government sliced petroleum revenue tax (PRT) from 75% to 50% for oil fields currently in service, and abolished it altogether for fields developed after the 1993 budget. PRT is the UK's version of an oil extraction tax which every oil producing country in the world levies to compensate for the removal of their mineral resource. The removal of this tax by the Conservative government back in 1993 was a staggering gift to those oil corporations mining British oil. In answer to a parliamentary question, the Financial Secretary to the Treasury at the time, Stephen Dorrell, said the move was "a direct response to an industry request" and would "double the investors marginal share of the profit." BP's share price rose by 6.4% immediately.

After Eire, the UK's oil fields are now the cheapest in the world for oil companies to drain. It is a situation the oil leviathans wish to maintain.

Finance analysts, UBS Warburg, predict that the world's top ten oil companies are set to weigh in a cool $75 billion dollar profit by the end of this year. Shell's third quarter profits announced on November 2 were up a staggering 80 per cent on last years figure reaching a record $3.254 billion. BP are expected to report a 77 per cent increase on their figures. These mammoth profit swells are all due to the high price of crude oil. However, none of this gargantuan profit margin, will be passed onto drivers at the pump. Instead Esso, Total and Jet had the audacity to raise petrol prices by four pence just after the petrol crisis came to an end.

In 1997, New Labour chancellor Gordon Brown, muted the idea of reintroducing petroleum revenue tax; a plan which the oil industry were voraciously keen to scotch. Brown abandoned the plan after the oil giants argued that the extremely low price of oil at the time ($8) already meant that profits were being hit. However, even this dubious argument collapsed when the price of crude oil went skyward and now stands at over $30 a barrel. Keen to warn the government away from the notion of reintroducing petroleum revenue tax, the oil corporations flexed their political muscle.

The second motivation for their attack on New Labour is the imminent imposition of a climate change levy. This proposed levy was planned as a way of making the oil corporations contribute a sum of money specifically for environmental projects which might help counter the global warming caused by petrochemical omissions. The actual amount has yet to be set and the oil industry is evidently warning the government to keep it low.

After the September petrol crisis the New Labour government belatedly realised that oil companies had been complicit in the fuel shortage. And what's more there was little that could be done about the way they had executed their involvement. Strict anti-union legislation brought in by Thatcher means that police have a legal right to wade in if a picket line blocks company gates. However, if the company themselves are secretly in support of the picket and refuse to send vehicles out the gate then the police are powerless.

So it was to the oil companies that the New Labour government went first to secure a pledge that guaranteed a certain degree of fuel distribution in the event of more picketing. What the government offered the oil companies behind closed doors we may never know, but it was more than likely to be some respite from the petroleum revenue tax and/or climate change levy.

The other vested business interests behind the petrol crisis were the road haulage industry and farmers. The large land-owner dominated Country Landowner's Association (CLA), the National Farmer's Union (NFU) and the Road Hauliers' Association (RHA) were among a posse of lobbying organisations who saw opportunities to further their profit-making causes.

Having exclusive access to' red diesel' with a minimal levy of 3p a litre tax, British farmers are only really affected by fuel tax indirectly via produce distribution haulage costs. The involvement of farmers in the dispute was more a reflection of a general disaffection amongst Britain's ailing conventional agricultural industry than it was about fuel prices.

This general disaffection has already been harnessed to such significant affect by the right wing pro-hunting lobby group, the Countryside Alliance, which has gone to often farcical lengths - including their so called peoples march through London in 1998 - to spread their message that New Labour are urbanites with no sense of countryside issues.

Organisations like the Road Hauliers' Association (RHA) and Freight Transport Association (FTA) on the other hand are obviously directly affected by fuel taxes and have campaigned on the issue for a number of years. As director general of the RHA from 1997 to 1999, Tory MP and failed candidate for London mayor, Steven Norris, regularly used his position to have a go at Labour. However, there was relatively little to pin a party political issue on given that it was a Conservative government that had facilitated steep rises in petrol prices by introducing the petrol tax escalator. In fact it was Gordon Brown who got rid of the escalator in 1999 slowing rises on petrol excise immediately and earning a Country Landowner Association (CLA) press release headline which sighed: "Fuel Tax Declaration a welcome respite". Within a year however, the CLA were keen to be one of the right wing vested business interests jumping on the diesel bandwagon and thrusting its finger at the New Labour government.

It is not SQUALL's position to let this government off the hook totally by pointing up the role of the oil companies in this charade. The excuse that tax on fuel is an environmentally friendly disincentive to car use is highly fallacious. No significant number of people stop using their cars because of petrol prices. Indeed any use of tax as a disincentive - like that levied on cigarette sales - merely places a heavier burden on those who can least afford to continue doing what they will inevitably continue doing. Persuasions not to use cars require other incentives such as improvements in public transport, and using environmental excuses to keep petrol taxes high is devious.

In orchestrating the recent so called 'direct action' a cabal of interlocking profit-interests succeeded in precipitating panic buying, inducing a petrol drought and fooling the rest of the population into blaming the government for the whole lot. In so doing they were carrying on a recent trend for reactionary organisations to play out their politics under the guise of public dissent; attempting to steal a march on the kind of direct action normally associated with human rights and environmental activists. Indeed when the so called committee of fuel protestors - telling misnamed the Peoples Fuel Lobby - met in Cheshire in late October, the car-park was full of Mercedes, BMW's and new Volvo's. The committee asserted that the 'people' were going to organise a mass vehicle go-slow from Jarrow to London in a larger scale reenactment of the Jarrow March of 1936. The now legendary Jarrow March was conducted entirely by destitute people living below the poverty line.

Among the richly endowed leaders of the so called People's Fuel Lobby are Road Haulage Unite spokesperson, Nigel Kime the owner of a £2 million haulage firm and Derek Mead, owner of a massive 1,600 acre dairy farm. The appropriation of the Jarrow March imagery was audacious in the extreme.

With weird weather, global warming and petrochemical emissions all around us, it is a matter of some farce that we are expending so much debating time on the issue of petrol prices. But it is in the interest of the oil industry and other big business to keep us occupied with such trivialities.

One of the favourite videos doing the SQUALL editorial rounds at present depicts black and white footage of post-revolutionary Cuban citizens kicking down neon logo's from the roofs of oil corporation headquatres. How sweet the sight of just comeuppance.