Policy-makers from nearly 70 countries attended the 8th International Energy Forum in Osaka Sept. 21-23.
Policy-makers from nearly 70 countries attended the 8th International Energy Forum in Osaka Sept. 21-23. Organizers planned the meeting 2 years ago, but the timing of the discussions between oil producing and consuming countries could not have come at a more critical time.
World oil prices skirted $30/bbl in late September, a 19-month high, spurred partially by market concerns that a conflict in Iraq may throw the entire oil-rich Middle East into chaos.
On the eve of the summit, the Organization of Petroleum Exporting Countries decided to keep its production quotas at current levels, despite fears from the US and other big customers that high oil prices may retard global economic growth.
"Artificially high energy prices have a doubly negative effect on the world's developing countries," said US Energy Sec. Spencer Abraham shortly after OPEC's decision.
"First, high prices make the purchase of adequate oil supplies too expensive for fragile economies, retarding their growth. They also slow the rise in standards of living that allow people in developing countries to realistically invest the resources necessary to improve the environment in which they live.
"And second, high prices could produce an undesirable ripple effect on the economies of the world.
"If the industrialized world experiences an economic slump, its markets for the developing world's products will contract, again damaging developing economies—particularly those whose growth is tied to increased trade and exports," he said.
Abraham met with Saudi Oil Minister Ali Naimi, but details of the meeting were not released. In public comments, however, Naimi told the forum: "We all share your concerns about price volatility, and I would like to make clear that OPEC wants a stable and fair price."
Some OPEC members said the US should be blamed for the recent wave of higher prices. They suggested that the US policy on Iraq has created a "war premium" of up to $4/bbl. But the European Union and other large consumers, including China, disagreed. They suggested that price spikes, including this latest round, happen for a variety of reasons and are not driven by politics or supply alone.
One way to dampen violent market swings is to generate better statistics on international production and demand, both consuming and producing countries said.
"Fluctuations in world oil prices are a serious concern for consumer countries, and we should use this dialogue between consumers and producers to achieve stability in the market," said China's Development Minister Zeng Peiyan.
To that end OPEC and the International Energy Agency pledged to move forward with an oil data transparency project designed to give market players better information on world inventories. But analysts and policy-makers also acknowledged that while steps can be taken to reduce volatility, risk cannot and should not be completely eliminated in energy markets.
"A free market and free trade environment allow potential investors to plan more confidently for investment in the long term," Abraham said.