G8 explores economic cures

Source: Agencies  |   2008-6-15  |     NEWSPAPER EDITION

FINANCE ministers from the Group of Eight (G8) industrialized nations urged oil producers to boost output to help stabilize record-high oil and food prices, calling the situation a serious threat to global economic growth.

The world economy faces uncertainty and inflationary pressures because of the recent rise in prices, the G8 ministers said in a joint statement after two days of talks in Osaka, Japan.

"Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide," the statement said.

US Treasury Secretary Henry Paulson said the spike in oil prices to new heights was a problem of supply and demand, and not caused by speculators. "This is not something that lends itself to short-term solutions," he said after the meeting ended.

But British Chancellor Alistair Darling said the ministers asked the International Monetary Fund and the International Energy Agency to analyze the financial factors behind the surging oil and commodity prices, and their effects on the global economy.

"There are differences of views as to what effects speculation has had on prices," Darling told reporters.

Noting oil prices jumped five-fold since 2002, Paulson urged countries to let markets work, not rely on subsidies, and pressed oil-producing countries to allow more investment in oil exploration and production.

"Producers need to increase output and capacity," he said.

Oil prices, reaching nearly US$140 a barrel last week, and the recent jump in the prices of corn, wheat, rice, soybeans and other food have been the main topic of the sessions.

Oil prices pulled back overnight on Friday, with benchmark light sweet crude for July delivery falling US$1.88 to settle at US$134.86 on the New York Mercantile Exchange, after OPEC questioned whether crude can remain so high.