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G8 energy ministers highlight oil fears and seek investment boost

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G8 energy ministers highlight oil fears and seek investment boost

By David Pilling in Aomori

Published: June 9 2008 03:00 | Last updated: June 9 2008 03:00

Energy ministers of advanced nations yesterday expressed “serious concerns” about soaring oil prices and urged producers to lift production through greater investment and provide more transparency on oil supply data.

A joint communiqué by the Group of Eight ministers, also signed by China, India and South Korea, stopped short of the tough language demanded by Kevin Rudd, Australia’s prime minister. He urged G8 leaders to “apply the blowtorch to Opec”, which he blamed for the rise in crude oil prices to a record $138.54, after a $10.75 jump on the New York Mercantile Exchange on Friday.

Ministers meeting in Aomori, northern Japan, said: “Current high oil prices are unprecedented and against the interest of either consuming or producing nations.” The producers among the G8 said they would seek to raise production and called on “other producing countries to increase investment to keep markets well supplied”. Akira Amari, Japan’s trade and industry minister, went further, calling oil prices “abnormal” and blaming lack of investment for the fact that “production levels have hardly increased over several years”.

The meeting placed more emphasis on raising efficiency in consumer countries, with nations promising to form a partnership for energy co-operation. The idea, said participants, was to promote best practice by sharing technologies and monitoring progress. Ministers strongly backed the increased use of nuclear power, with only Germany dissenting.

John Hutton, Britain’s secretary of state for business and enterprise, said: “The most effective intervention is to ensure that markets are working as efficiently as possible. Clearly, they are not doing so at the moment.”

Mr Hutton said making unrealistic demands of producers was not helpful: “We are not in the camp of pointing fingers or apportioning blame.” He said there should be dialogue between producers and consumers.

On the consumer side, Mr Hutton said China and India should “not be demonised” for using fossil fuels as it was inevitable that growing economies such as theirs would do so.

The meeting’s consensus that markets should be allowed to send appropriate “price signals” to consumers was partially undermined by signs that some countries remained cautious of forgoing subsidies. Zhang Guobao, China’s delegate, said: “We are taking very precise and delicate measures so we will not destabilise the government.”

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