Business Notes Energy

Like the Organization of Petroleum Exporting Countries, Britain has long tried, with varying degrees of success, to prop up the cost of oil. Since its formation in 1975, the state-owned British National Oil Corp. has set an "official" price for Britain's North Sea crude: currently $28.65 per bbl. But in recent months BNOC has had few takers at that price and has sold some oil at discounts of about 8% on the spot market, where oil shipments that are not part of long-term contracts are traded.

Last week the British government revealed plans to abolish BNOC, probably by October, and thus end efforts to control the cost of North Sea crude. Oil experts speculated that the move might put pressure on OPEC to lower its official prices, which range up to $30.50 per bbl. for Algeria's Saharan Blend.

The decision to dismantle BNOC was in line with Prime Minister Margaret Thatcher's philosophy that a government should not interfere with free markets. It also stemmed from the realization that BNOC was having little effect on prices. Commented London's Financial Times: "If BNOC had never existed, it would have been quite unnecessary to establish it."