Ministers call for measures to counter oil prices

Ministers call for measures to counter oil prices

Associated Press, Gyeongju

Pacific Rim energy ministers on Wednesday called for a wide- ranging response to soaring oil prices and vowed to increase cooperation with OPEC and other international organizations to improve energy market transparency and reduce price swings.

"We agreed that effective responses to high and increasingly volatile oil prices require a broad range of supply and demand- side measures," energy chiefs from the Asia-Pacific Economic Cooperation forum said in a statement at the end of a special one-day meeting in this southeastern Korean city.

Those steps include using strategic oil stocks to respond to supply disruptions, fostering investment in oil exploration, output and refining and promoting measures to increase energy efficiency and diversification of resources, the statement said.

Energy chiefs from the 21-member forum, which includes oil- producing nations Canada, China, Indonesia, Mexico, Russia and the United States as well as resource-poor economies like Japan and South Korea, also held their first-ever meeting with the Organization of Petroleum Exporting Countries.

The APEC Energy Ministers' Meeting is usually held every two years, but because of surging crude prices one was scheduled for this year following last year's Manila gathering. This year's was the seventh gathering.

Increased demand, low spare production capacity, a lack of refining capacity, speculative trading and worries about adequate long-term supplies of oil have caused prices to rise, the ministers said.

"High oil prices ... present APEC economies with significant challenges," they said.

Crude prices, which rose above US$70 a barrel in late August, have caused worries about their impact on global growth by raising costs for consumers and companies.

Prices have since pulled back, though concerns remain following hurricanes Katrina and Rita in the United States and whether supplies will be adequate going into the Northern Hemisphere winter, when demand for heating oil peaks.

Adnan Shihab-Eldin, OPEC's acting secretary-general, told the ministers in a speech that the global economy has grown less dependent on oil and shown "remarkable resilience" to its rising prices.

"However, we must not be complacent as signs of an impact on some economies are beginning to appear, especially in emerging economies with large fuel subsidies," Shihab-Eldin said.

Indonesia, the only country that belongs to both APEC and OPEC, has been hit particularly hard by surging prices. Its government earlier this month cut fuel subsidies, announcing the cost of gasoline would rise 87 percent while diesel fuel would more than double and kerosene triple.

The country, which spent $7.4 billion last year on fuel subsidies, is trying to balance its ballooning budget deficit and stave off an economic crisis.

Ministers also called for expanding energy trade among APEC members, investment in energy infrastructure and acceleration of technological development in the energy sector.

APEC's economies account for about 60 percent of global energy consumption and import 77.2 percent of the crude oil produced by OPEC, according to South Korea's Ministry of Commerce, Industry and Energy.

APEC, launched in 1989, has as its main goal boosting trade among its members, ultimately establishing a free trade area by 2020. The organization also includes Australia, Brunei, Chile, Hong Kong, Malaysia, New Zealand, Papua New Guinea, Peru, the Philippines, Singapore, Taiwan, Thailand and Vietnam.