ENERGY ministers from the Group of Eight (G8) industrialised nations looked inward for solutions to record oil prices yesterday, emphasising the need for domestic efficiency rather than piling pressure on a resistant Organisation of the Petroleum Exporting Countries (Opec) to pump more crude.
Oil prices posted their biggest ever one-day surge on Friday, leaping more than $10 to a record high above $139 a barrel; and yesterday, petrol prices hit a record high in the US.
Caught between mounting popular discontent at home and the need
to invest billions in greener energy to cut world carbon emissions, the G8 ministers offered few new ideas for heads of state to consider at their summit next month.
"(On] energy efficiency and energy diversification, we all recognise tremendous progress is being made but more has to be done," said Gary Lunn, Canada's natural resources minister.
In a group ranging from top oil consumer the US to the second-largest exporter Russia, few had expected the meeting to result in measures that could stem oil's six-year rally, which has gathered pace this year as investors fear the world will struggle to produce enough crude to meet future demand.
But their message appeared to reflect a growing acceptance that consumer nations must find ways to temper demand by focusing on technology, conservation and diversification.
The G8 ministers from the US, Britain, Canada, France, Germany, Italy, Russia and Japan, plus non-G8 guests from China, India and South Korea – which together consume two-thirds of the world's energy – said they shared "serious concerns" over the cost of oil.
Analysts said they were on the right track. "This is the right development and will... improve the supply and demand balance in the medium and long-term, but it won't have an immediate impact on prices," said Toshinori Ito, of UBS Securities Japan.
"Oil prices are surging not because of a supply shortage, but because of massive liquidity," he added, referring to the influx of financial funds into markets, helped by low interest rates.
The price of oil has doubled in one year and risen 44 per cent since January, forcing developing countries such as Indonesia and India into extremely unpopular fuel-price rises, while richer nations ponder how to soften the blow of soaring energy costs for the vulnerable.
The issue is certain to hang over G8 leaders when they meet in Japan early next month, a summit where host Japan hopes to win backing for a target to halve carbon emissions by 2050.
Yesterday, the energy ministers agreed on the need for more large-scale carbon capture and storage (CCS) projects that bury emissions from power plants, a cornerstone of the call by the International Energy Agency (IEA) for a $45 trillion energy "revolution". "The time for talking is over – we have to implement this," said John Hutton, the UK Business Minister, referring to the IEA's goals.
But Opec officials said yesterday that they saw no need to pump more oil in response to last week's double-digit surge in oil prices.
"I think there is enough oil in the market," Shokri Ghanem, head of Opec member Libya's National Oil Corporation, said.
Opec's stance drew an angry response from Kevin Rudd, the Australian prime minister, who called on the G8 to "apply the blowtorch" to the organisation.
Top oil exporter Saudi Arabia is the only OPEC member with capacity to boost output quickly and significantly.
But Saudi oil minister Ali al-Naimi and his Pakistani counterpart met yesterday and agreed that the price rise was unjustified and unrelated to market fundamentals, the official Saudi Press Agency reported.
The full article contains 615 words and appears in The Scotsman newspaper.
