High oil prices are hitting those least able to afford it, but an imbalance in demand and supply which is partly behind the price spike could last for years, UK energy minister Malcolm Wicks said on Saturday.
“The sheer scale of the price rises speaks of a clear belief that this supply and demand imbalance will continue for years to come,” Wicks said in a speech to the Riyadh-based International Energy Forum. He cited the rapid development of countries such as India and China, coupled with slower oil supply on international markets, as being mainly behind record prices that neared $140 per barrel last week.
Saudi Arabia has called an unprecedented one-day meeting of oil-producing and consuming nations in Jeddah on June 22, which could be attended by some heads of state. Prime Minister Gordon Brown has said he will be there. Saudi Arabia, the world’s biggest oil exporter, has said current prices are unjustifiable but blamed speculators and a weak dollar.
Riyadh has said it will pump an extra 300,000 barrels per day to make up for shortfalls by other OPEC members. The New York Times reported on Friday that Saudi Arabia is considering raising production by around 500,000 bpd to stem prices. “There are understandable concerns about speculators pushing the price higher than the fundamentals would suggest,” Wicks said, acknowledging that speculation plays a role.
Poorer countries and the poor generally were hardest hit by expensive energy, he said. “The dramatic price rise has put pressure on economies. It has put energy security of some countries under strain, and it is creating real problems for many of those people that are least able to pay for the energy they need,” he said. “In the UK, as elsewhere, we are having to do more, than ever to look after those on lower incomes who are hardest hit by rising fuel costs.” (Reuters)