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Dáil
‹ Ceisteanna—Questions. Oral Answers. - Oil Companies.

Burmah home heating oil price increase

Summary

Members challenged Burmah’s proposed 50–60 per cent increase for some home-heating oil customers and said consumers could not switch suppliers. O’Malley said contracts with price-variation clauses fell outside price controls and he could not prevent the increase under existing law; he expected it to be temporary as the company resumed normal supplies. He reported that some customers had left, while alternative supplies would remain scarce in the short term.

asked the Minister for Industry, Commerce and Energy if his attention has been drawn to a letter from an oil company (details supplied) requesting their clients to accept an increase of 50 to 60 per cent in the price of home heating oil to ensure delivery and if this increase has the approval of the NPC.

Comment on this

I have seen the letter the Deputy has referred to. I have been advised that the company in question have contracts with the majority of their customers and, as the Deputy is probably aware, contracts between a company and their customers which contain a price variation clause, remain outside the scope of the Prices Acts. I think that it is reasonable to assume that contracts of this kind contain a price variation clause acceptable to both supplier and consumer. Where no contract exists, the company are subject to the provisions of the Maximum Prices (Petroleum Products) Order.

Comment on this

Is the Minister aware that people who cannot afford to avail of this are necessarily deprived now of a supplier because no other supplier of home heating oil will supply them? The company in question will relieve them of their contract but they cannot get another supplier and that is happening to thousands of people.

Comment on this

If the Deputy is concerned about people who are looking for home heating oil I should like to tell him that they will not get it, irrespective of their suppliers.

Comment on this

I am talking about the letter that was received.

Comment on this

Since that letter was sent out the order was made which gives priority to users other than those for home heating. The question of supply will not arise for some time.

Comment on this

Is the Minister suggesting that there will not be any home heating oil in the next 12 months?

Comment on this

I am not so suggesting.

Comment on this

Then surely the Minister should be concerned at the evident patent exploitation of the public? In view of the loophole in the Prices Acts through which people are exploiting the public would the Minister not take steps to deal with this matter? Surely no consumer in signing such a contract would have been conscious or aware of the possibility of a price variation clause leading to a 50 to 60 per cent increase? Has the Minister not a duty to deal with this in the public interest?

Comment on this

This has been the law since 1958 and it was frequently used by suppliers and consumers since then. It is open, as that letter made clear, to consumers who have contracts of this kind which allows this sort of variation, to decline to take further supplies. Some of them have done so.

Comment on this

There is no opportunity for them to enter into contracts with anybody else at present. They are prisoners of the particular company who are exploiting them in the most blatant way and the Minister has a duty to protect people against that exploitation because the price of oil has not gone up by 50 to 60 per cent. That is sheer profiteering and if the Minister was doing his job he would deal with the company no matter what their political affiliations.

Comment on this

The ordinary consumers of small quantities are not affected by this because they do not have contracts of that kind. This concerns larger consumers who have contracts.

Comment on this

Why should they or industry be exploited?

Comment on this

The company, I am so advised, are within the law in contracts of this kind.

Comment on this

Change the law in that case to stop exploitation.

Comment on this

The Deputy should calm down because shouting and banging the table will not reduce the price.

Comment on this
Ray Burke Mr. R. Burke Fianna Fáil

The multi-nationals were the darlings of the Deputy beside Deputy FitzGerald before he came in.

Comment on this
Peter Barry Mr. P. Barry Fine Gael

The Minister of State should talk about the company who have been mentioned.

Comment on this

We all know who the affiliations are with.

Comment on this

In respect of the customers for small amounts from Burmah Oil can the Minister do anything to ensure that they can become customers of other oil companies? Those consumers require home heating oil for convents and so on and they cannot afford to pay the high price. In view of the fact that the Minister cannot do anything about the contract can he arrange for alternative suppliers for them?

Comment on this

We have already made arrangements in respect of customers, particularly the commercial customers, of a certain company which had special difficulties. Those arrangements have worked out pretty well. While there was a large volume of complaints up to two weeks ago from customers of that company I understand that no complaints have been received since.

Comment on this

When may these people expect to get home heating oil from alternative suppliers?

Comment on this

In the very short-term I would think that non-priority users of home heating oil will not get supplies. I do not know how long that will be; it may be a month or two. It depends on the ability of the companies to supply the priority users.

Comment on this

When will the Minister be in a position to make a statement about the matter?

Comment on this

I do not know.

Comment on this

Does the Minister regard the quotation by Burmah Oil to the many thousands of domestic heating oil consumers of an increase of 60 per cent—I saw hundreds of letters to that effect—as justified or coming within the ordinary ambit of approval by the National Prices Commission? Will he introduce amending legislation to bring that kind of outrageous increase within the ambit of the NPC?

Comment on this

I regret very much that this company are attempting to impose increases on some of their customers, not their small customers, of this order of magnitude. Under the existing law, which has been the law for 21 years, I am powerless to stop it. I believe that market forces will stop it. I have had a discussion with some executives of that particular company. They told me, as I expected, that they had lost a great deal of business among people to whom they made that sort of offer. They regard it as purely a temporary expedient but they had to buy a couple of shiploads of oil at a very special price in order to try to supply some of their priority people. They will revert as soon as they possibly can to buying oil at normal levels and selling it at normal levels.

Comment on this

Does the 60 per cent increase no longer operate? Do the letters no longer operate?

Comment on this

That question should be addressed to the company not to me.

Comment on this

No. It is the Government who are responsible for price control.

Comment on this

Does the Minister recall that he spent long hours huffing and puffing in the House in relation to the seven-day outer zone agreement and he indicated—it is in his party's manifesto—that it would be abolished. Now we have a situation where the Minister is not only not prepared to do that but is prepared to stand over an increase of 60 per cent.

Comment on this

I am not prepared to stand over an increase of 60 per cent.

Comment on this

The Minister is not prepared to do anything about it.

Comment on this
Joseph Brennan An Ceann Comhairle Fianna Fáil

Order. We are getting into argument now.

Comment on this

In the light of that situation what can a consumer——

Comment on this

The Deputy will not allow me to answer the previous question.

Comment on this

Apparently the Minister has not an answer to it. I will willingly give way if he has any answer. What does a consumer do in that situation?

Comment on this

How in God's name can I answer the Deputy. The Deputy is trying to shout down his two colleagues beside him in case they get in to ask a supplementary, so he will not let me in with the answer.

Comment on this

What does a consumer of Burmah oil do when Texaco and other companies have said in relation to supplies from them that they are sorry, that they are stopping the supply of oil and they cannot supply oil to them for another three months. They are told by those companies that if they wanted to change over to them they could not possibly be supplied with oil. I would like to hear the Minister's answer to that because a lot of consumers are very irate about the matter.

Comment on this

As I tried to point out to the Deputy, who possibly did not hear me between his own further supplementaries and those around him, this company have had to do this, they informed me, in respect of two relatively small shiploads of oil which they had to buy in circumstances of great difficulty for them. They expect shortly to be back in the more normal situation where they will be getting supplies of oil at normal prices from their normal suppliers and then they will be selling at normal prices. The company in their own interests could not continue, for other than a short period of extreme difficulty, at price levels of this kind because they would lose virtually all their customers.

Comment on this

Could the Minister say what was the result of this meeting with the company? Were there any concrete results?

Comment on this

I have informed the Deputy what they told me.

Comment on this

That the letters would be withdrawn?

Comment on this

No. They are likely to have oil available at normal prices soon.

Comment on this
Jim O'Keeffe Mr. O'Keeffe Fine Gael

May I ask the Minister a question?

Comment on this
Joseph Brennan An Ceann Comhairle Fianna Fáil

It is now 25 minutes past three and we have had a lot of supplementaries on this one.

Comment on this