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.