Grangemouth MP Leads Oil Fight.

Grangemouth MP Michael Connarty leads the fight for UK oil refineries.

GRANGEMOUTH MP LEADS FIGHT FOR UK OIL REFINERIES

Michael Connarty, whose constituency of Linlithgow and East Falkirk includes Scotland’s only oil refinery at Grangemouth, now jointly owned by Ineos and PetroChina, led a debate in the Commons today on ‘Competitiveness of the UK Oil Refining Industry’.

Mr Connarty voiced the concerns of the Grangemouth management , the trade association UKPIA and the trade union Unite, which represents the refining workforce, regarding:

The competitiveness of UK oil refineries weighed down by proposed new tax rises
A reduction in the number of UK refineries from 12 to 8 over the last decade
All remaining refineries already sold off or put up for sale by oil companies
Possible job losses among the 150,000 employed by refining and its suppliers
The effect of a lack of UK refining capacity on pump prices and security of supply

Michael Connarty began by saying, “The refining industry is a vital part of life for the people of central Scotland and makes a huge contribution to the Scottish economy and the exchequer.”

But, quoting research undertaken on the government’s proposed new carbon taxes, he said that these measures, “go far beyond modifying behaviour to tackle climate change; they are clearly aimed at revenue raising. They demonstrate the blindness of a predatory Chancellor to the impact of high taxes on the competitiveness and survival of the UK refining industry.” And this is on top of the £2 billion hit on the offshore oil and gas industry announced without warning in the Chancellor’s recent Budget which is already having the effect of, “frightening off any new investment in the oil industry.”

Mr Connarty said that refining was once the downstream part of the major oil companies’ commitment to exploration and production in the North Sea, but now the oil majors have sold or are trying to sell off all Britain’s refineries.

There is currently a shortage in home refining capacity for diesel and jet fuel, resulting in reliance on imports. “If investment was put into Grangemouth, it could supply enough of these products to meet all UK and EU demand,” he said. “But we can only get the necessary investment in this country if we get the incentives and tax structures right.”

UKPIA has calculated that new government proposals for a UK carbon floor price/tax much higher than the rest of Europe will make UK refining 10% less competitive than the rest of the EU, and this is on top of a scheme that makes Europe 15% more costly than the rest of the world. That is a 25% disadvantage.

“It is planned to ship diesel into Britain from India where environmental standards are much lower, so there is actually an overall global loss on carbon reduction measures to tackle climate change.”

Michael Connarty challenged Energy Minister, Charles Hendry – “Does he want a UK industry capable of competing in the world? Will he protect it from a predatory Chancellor? This is an industry that we don’t want to sell out to anyone.”

In reply, the Minister admitted, “It would be disastrous” if we lost our refining industry to overseas competition and spoke of joint work between his department, BIS and the Treasury, but offered no policy to combat this and no timetable for this study to report. He admitted that, “It is likely that the UK will continue to rely on imports for diesel and jet fuel.”

Afterwards, both UKPIA and Unite were disappointed by the Minister’s response to the crisis facing the UK oil refining industry.

Mr Connarty described the Minister’s speech as “mostly waffle”, with no real commitments for Grangemouth or the UK refining industry. He said, “I know the management at Grangemouth are bidding for investment to expand the diesel and aviation fuel capacity. I just hope they can secure this investment despite the Chancellor’s unjustified additions of new taxes.”