Japan Urges Effort to Combat `Abnormal' Oil Prices

Megumi Yamanaka
Bloomberg
Sunday, June 8, 2008

Japan said five of the world's major energy consumers, led by the U.S. and China, must work together to tackle oil prices that have risen to ``abnormal'' levels.

Crude oil becomes ``a risk to energy security and the global economy'' when the price exceeds $130 a barrel, Trade Minister Akira Amari said in his opening speech to a G-8 energy ministers meeting in Japan's northern prefecture of Aomori today.

Oil prices more than doubled over the past year to a record $139.12 a barrel yesterday, sparking concern energy costs will fuel inflation and retard economic growth. The U.S., China, Japan, South Korea and India, which together account for half the world's energy consumption, will this weekend probably urge the Organization of Petroleum Exporting Countries to increase supplies and expand capacity.

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``It's very important that we issue a unified message to the world,'' Amari said. ``Global energy security will be enhanced through collaborative effort among nations.''

Amari, with U.S. Energy Secretary Samuel Bodman, Zhang Guobao, head of China's State Energy Bureau, South Korean Knowledge Economy Minister Lee Youn-Ho and Indian ambassador Hemant Krishan Singh, will sign a joint statement at the end of their meeting today. The inaugural gathering of energy ministers from the five countries took place in Beijing in December 2006, when oil prices were around $60 a barrel.

Oil Prices

The five nations agreed at that time that ``open, transparent, efficient and competitive'' energy markets would boost investment in petroleum exploration, expanding supply. Energy prices set by market forces can ``set the appropriate signals'' to prompt conservation and efficient use of fuel, and provide better incentives for increasing investment in alternative resources, they said.

Oil rose $10.75, or 8.4 percent, yesterday to settle at $138.54 a barrel in New York after the U.S. unemployment rate grew the most in two decades and Morgan Stanley said prices may reach $150 within a month. It was the biggest gain in dollar terms ever and the largest on a percentage basis since June 1996.

The record crude oil prices are a ``shock'' caused by a lack of investment in production capacity and rising energy demand, U.S. Energy Secretary Samuel Bodman said today.

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