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Supplies blamed for high oil prices

telegraph.co.uk

Supplies blamed for high oil prices

By Russell Hotten

Last Updated: 1:20am BST 01/07/2008

Oil prices raced to another high last night as the world’s energy companies and the Opec producers’ cartel became polarised over the reasons behind the rise.

The chief executives of Royal Dutch Shell, BP and Repsol disputed Opec’s claim that speculators were driving up the price, blaming instead a shortage of supplies that could take years to cure.

The comments suggest there will be no immediate respite from oil’s long bull run and undermines claims that the alleged speculative bubble was about to burst.

Tony Hayward, BP’s chief executive, described suggestions that the price was driven by financial investors as a “myth”.

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  • He was speaking at the World Petroleum Congress, in Madrid, where industry leaders were joined by EU officials and energy experts at a four-day conference on ways of calming the market.

    As US light crude hit $143.67 a barrel, Mr Hayward said the problem was that supplies were not keeping pace with demand.

    “Supply is not responding adequately to rising demand,” he said.

    Governments should “keep markets liquid and accessible” instead of keeping high import tariffs. Taxes on production were also too high and should be lowered to release funds for investment, Mr Hayward said.

    He blamed geopolitics rather than geology for the poor growth in supply. “The problems are above ground, not below it,” he said.

    Shell’s chief executive, Jeroen van der Veer, said: “We don’t think that the financial markets are leading the speculation, Probably they follow what other people fear as long-term fundamentals.”

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