The rampant speculation helping to push up world oil prices should be
reined in by controlling energy demand with conservation and boosting
supply, an energy official said Monday.
William C. Ramsay, deputy executive director of the
International Energy Agency, said a growing mass of money available for
speculation was fueling the trend as the cost of a barrel of oil
approaches $100.
"The speculators wouldn't be in the market if the underlying
conditions of the market weren't advantageous to the speculators,"
Ramsay told reporters in Tokyo. "Our attitude is: fix the
fundamentals."
Ramsay said oil-importing countries should work harder to
stem the growth in demand through greater energy efficiency and
conservation. Suppliers, meanwhile, should be more flexible about
providing more oil to the market, he said.
"I think we can remove a good bit of the incentive for the
speculators, and they can go speculate somewhere else," Ramsay said.
He spoke amid signs that the supply of oil could loosen up.
Oil prices fell more than US$1 a barrel at times Monday in Asia after
reports that oil exporters would discuss increasing their output at an
upcoming meeting in a bid to cool record crude prices.
Light, sweet crude for December delivery was down 93 cents
at US$95.39 a barrel in Asian electronic trading on the New York
Mercantile Exchange by late afternoon in Singapore. The contract rose
86 cents to settle at US$96.32 a barrel Friday.
Ramsay said the recent surge in prices was caused by several factors.
He listed unrelenting demand, underinvestment in production,
OPEC production restraints, geopolitical tensions and storms that have
damaged facilities.
Energy officials are also finding that consumers are strongly resistant to higher prices.
Ramsay pointed to American consumers, who have not changed
their driving habits much in the face of more expensive oil, and
Chinese industry, which is taking pricey energy in stride amid the
country's spectacular economic boom.
Subsidies for local consumers are also buoying demand
despite tight supply. The 30 members of the Organization for Economic
Cooperation and Development, for instance, spend about $250 billion a
year on energy subsidies every year, he said.
Few analysts believe the underlying fundamentals of supply and demand support prices near US$100 a barrel.
Many blame speculative investing fueled by the weak dollar for
oil's recent run-up. Oil futures offer a hedge against a weak dollar,
and oil futures bought and sold in dollars are more attractive to
foreign investors when the U.S. currency is falling.