Don't blame developing economies for oil hikes

(Xinhua/China Daily)

Updated: 2008-06-09 09:32

The fluctuation of crude oil prices is closely related to the global financial market and the surge in oil prices should not only be ascribed to the rising energy demands of rapidly developing economies, a Chinese energy official has said.

A huge amount of oil trade is conducted in the financial market and oil prices are no longer up to the traditional marginal utility but have become a financial concept under the influence of many factors, said Zhang Guobao, vice-minister of the country's National Development and Reform Commission.

Zhang dismissed the idea that rising demands in developing countries such as China and India should be blamed for the surge of oil prices.

"This is an incomprehensive idea, because decisive factors for oil prices have run beyond the concept of supply and demand," Zhang said on Saturday in a speech at the energy ministers' meeting between India, China, the United States, Japan and South Korea.

He suggested that his counterparts put rising oil prices into the context of the global financial market, which could be affected by a wide range of factors such as the exchange rate fluctuations, geopolitics, political instabilities and natural disasters.

"All these may turn to be reasons for speculation ... and from this way of thinking, an answer to the current record-high oil price could be found," Zhang said.

Zhang and his counterparts agreed on Saturday to adopt comprehensive measures to deal with the current rocketing crude oil prices.

The measures include improving the investment environment, strengthening energy saving, expanding oil stockpiles for emergency use and developing alternative energy forms, according to a press conference following their one-day meeting.

In a speech in an afternoon session on energy security, Zhang said that to safeguard the global oil market and resolve the issue of surging and fluctuating oil prices, major countries have to boost investment in oil exploitation, preserve global political stability and minimize geopolitical impacts on oil markets.

At the joint press conference, Japanese Economy, Trade and Industry Minister Akira Amari said the current "abnormally high" oil price damages the interests of both the producing and the consuming nations.

US Energy Secretary Samuel Bodman said the rise in the crude oil price, which doubled in the past 18 months, was an accumulated consequence, since the international community had not paid enough attention to the market in the past 30 years.

International Energy Agency Executive Director Nobuo Tanaka, who was invited to attend the meeting, stressed the need to keep transparent the oil market, calling for more reliable data and information for the construction of a healthier and better-balanced market.

The five-party energy ministers meeting, initiated by China, was the second of its kind following the first one in Beijing in December 2006.