Business | Oil & Gas
US energy chief asseses oil prices amid biggest single-day surge
Nations should fight rising oil prices by cutting subsidies and vastly increasing investment in energy, while oil-producing countries need to ramp up output, the US energy secretary said on Saturday.
- AP
- Published: 09:25 June 7, 2008
- Image Credit: AP
- US Energy Secretary Samuel Bodman said the surge in world oil prices is largely a simple problem of supply and demand.
Aomori: Nations should fight rising oil prices by cutting subsidies and vastly increasing investment in energy, while oil-producing countries need to ramp up output, the US energy secretary said on Saturday.
Samuel Bodman said the surge in world oil prices is largely a simple problem of supply and demand. Production has stalled since 2005 at 85 million barrels a day, while economic growth, particularly in China and India, has pushed demand ever higher, he said.
Bodman was in northern Japan for meetings with energy chiefs from Group of Eight industrialised countries and other top economies, including South Korea, India and China.
He said, "We're in a difficult position where we have a lid on production and we have increasing demand in the world."
Bodman dismissed the idea that speculation and unclear inventory levels are causing the soaring oil prices.
"I would devoutly hope we ... see a reduction of the use of oil in the world on the one hand, and an increase in the supply so we can see some mitigation in the pressure on price," Bodman said.
Oil prices made their biggest single-day surge on Friday, soaring $11 to $138.54 on the New York Mercantile Exchange, an 8 per cent increase. That followed a $5.50 increase the day before, taking oil futures more than 13 per cent higher in just two days.
While demand has increased as supply has stalled, analysts have also cited the decline of the US dollar, fears about the long-term supply of oil and aggressive speculation as factors in rising prices.
Bodman said he would likely urge China and other countries at the Japan meetings to slash fuel subsidies, which make gasoline cheaper for consumers, thereby giving them no reason to reduce consumption and allow prices to level off or drop.
Business Editor's choice
-
‘Wrong Way' Krugman
The source of our economic malfunction lies with government-mandated bank regulations
-
Greek exit could make Eurozone stronger
Departure will show limits of bailouts and allow remaining members to act much more like a unit
-
UAE upholds values of free trade
Recently released statistics confirm an established fact, namely that of the UAE embracing the free trade principle in general and imports in particular
