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High oil prices here to stay, energy forum hears

by Staff Writers
Rome (AFP) April 21, 2008
High oil prices are here to stay, but they cannot be blamed for the current global food crisis, an international forum heard on Monday.

Biofuels, once seen as a key factor in curbing greenhouse gas emissions, lie behind the stunning rise in food prices worldwide, participants at the International Energy Forum suggested.

"A conflict (is) emerging between foodstuffs and fuel ... with disastrous social conflicts and dubious environmental results," outgoing Italian Prime Minister Romano Prodi said.

Biofuels were developed as part of plans to limit and reduce greenhouse gas emissions, held responsible for global warming.

But since they are made from crops that take up land that would otherwise be used for food production, they have been increasingly blamed for soaring food prices.

Qatari Energy Minister Abdullah bin Hamad al Attiyah said the world would have to choose "what its priority is going to be -- driving or eating."

He rejected suggestions that high oil prices were behind the food crisis, which was due to food shortages.

"Even the big rice exporters such as India, Bangladesh and Thailand are in the process of reducing their exports," he said.

Venezuelan Energy Minister Rafael Ramirez said biofuels were having a negligible impact on the oil markets.

"But look at the impact (they have) had on food prices. It's madness," he said, adding: "All the countries of Latin America have been hit by the surge in food prices."

As oil prices spiked to fresh records of above 117 dollars, participants at the IEF predicted that the situation was unlikely to change any time soon.

"We believe that prices will remain around this level, at least around 90 dollars," Ramirez said.

The chief executive of Italian energy giant ENEL, Fulvio Conti, predicted that "oil prices will remain high as long as demand remains high."

The Organisation of Petroleum Exporting Countries, which produces around 40 percent of the world's oil, denied that opening the taps, as called for by countries such as the United States, would help.

"There isn't much OPEC can do," Iraqi Oil Minister Hussain Al-Shahristani said.

"OPEC is producing as much as the market requires. The solution is in the hands of the speculators. They're the ones who are fixing the price and not the producers."

From Iran's point of view, oil prices were not "excessively high" compared with other raw material prices, said Iranian Petroleum Minister Gholamhossein Nozari.

International Energy Agency executive director Nobuo Tanaka said oil prices, at their current level, "are too high for everbody, especially for developing countries."

No single factor was to blame, Tanaka said, but a combination of factors, such as as the weaker dollar, speculation and the weather, as well as the fundamentals.

Some oil producers pointed out that they actually stood to gain from high oil prices.

Venezuela, for example, is planning to impose a new tax on oil profits in a move that will create additional revenues of around nine billion dollars.

The head of Libya's National Oil Company, Shokri Ghanem, said rising prices would translate into substantial additional revenues for his country.

IEA chief Tanaka suggested that developments would force consumer countries to be more efficient in their energy use.

Furthermore, it would persuade them to look more seriously into alternative energy sources, such as nuclear power and renewables.

British energy minister Malcolm Wicks Britain hopes to develop a new technology to "capture" and store carbon dioxide from burning fossil fuels instead of releasing it into the atmosphere.

"My government has said that we will publicly fund a large-scale demonstration project of carbon capture and storage (CCS)," he said.

"It will be one of the first in the world based on a coal-powered station, stripping out the CO2, transporting it, storing it in a depleted oil or gas reservoir under the North Sea."

Wicks insisted that the problem of rising oil prices was not "a football match" that pitched producers against consumers.

"It's not a matter of one side blaming the other. It's a problem we all share," Wicks said.

"Ensuring clean, secure and affordable supplies of energy is of paramount importance -- how we square the circle of improving energy security while tackling climate change is the key challenge for all nations in the 21st century."

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Analysis: India, China to aid Nigeria oil
Abuja, Nigeria (UPI) Apr 21, 2008
India and China have decided to help Nigeria build new refineries rather that continue to buy crude oil for export from the petroleum-rich West African nation.

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