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Oil producers, users dispute price crisis ahead of summit  

by Laura Bonilla 2 hours, 15 minutes ago

JEDDAH, Saudi Arabia (AFP) - Oil powers and consumer nations haggled Saturday over who is to blame for the spectacular rise in crude prices, as they prepared for a summit in Saudi Arabia on the global energy crisis.

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Amid growing pressure for international action as prices speed toward 140 dollars a barrel, the industry was rocked by more bad news when a Nigerian rebel group warned all foreign workers to leave the country or face attack.

The Jeddah Energy Meeting was to consider ways of ending oil price pressures, which have fuelled global inflation.

Growing demand and the need for greater investment in refining have been highlighted, but some nations want the summit to blame the price rises on market funds buying oil futures.

And a working paper for the summit's final declaration, obtained by AFP, calls for action to "improve the transparency and regulation of financial markets through measures to capture more data on index fund activity and to examine cross exchange inter-actions in the crude market."

A senior international energy official involved in the summit called the document "highly controversial" because of the attack on markets.

The document says index funds and other investors have "unrealistic assessments" of the future value of oil.

The official said the attack may be toned down in the final document because of opposition from the United States and other major industrial powers.

Major oil producing powers have sought to divert consumer calls for greater production, even though Saudi Arabia was expected to offer to pump an extra 200,000 barrels a day at the summit.

German Economy Minister Michael Glos has called for a quick increase in oil supplies.

"We need more oil in the world market quickly in order to stop the spiralling prices at the gas pumps," which have passed a "limit" which consumers cannot bear, the minister wrote in an article to appear in the Sunday newspaper Bild am Sonntag.

"Transparency in the international oil markets must be improved. It is the only way to get out of this speculative morass," he wrote.

Increased production is is opposed by many oil powers. Organisation of Oil Exporting Countries president Chakib Khelil asked Friday, "just because car and computer prices were high, would one ask their producers to make more?"

The summit document calls for improved information gathering by groups such as OPEC, the International Energy Agency (IEA) and the International Energy Forum (IEF) "to improve transparency."

It also appeals for an assessment of "the impact of financial markets on the level, volatility of oil prices which can be used to better understand the market situation."

The draft says increased refining capacity is needed, with new construction having been shackled by "constrained refining investment, environmental standards, cost inflation and stringent laws and regulations, resulting in poorer refining returns."

British Prime Minister Gordon Brown, who will be the only major Western leader at the summit, has insisted he was not going to simply urge increased supply but urge producer countries to invest more in renewable energy.

"I am going to Saudi to see if we can get a new deal between oil producers and the consumers where oil producers will invest in countries like ours, and oil consumers like us with good companies, with good technology and skills can invest in the oil-producing countries," he told The Guardian newspaper in an interview published Saturday.

"Where we can make credible commitments and the world can see we will reduce our dependence on oil and we will get demand and supply back into balance."

Brown said the world was going through "the biggest of all three oil shocks" which was "the downside of globalisation".

He predicted that "the world is going to have to build 1,000 nuclear power stations."

The meeting is also to be attended by Chinese Vice President Xi Jinping and US Energy Secretary Samuel Bodman.



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Home arrow Blog arrow Bush says rescue plan will take some time to work
Bush says rescue plan will take some time to work PDF Print E-mail
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Monday, 06 October 2008

By JENNIFER LOVEN, Associated Press Writer 1 hour, 28 minutes ago

CINCINNATI - As Wall Street reeled and global markets plunged, President Bush on Monday said the U.S. economy is going to be "just fine" in the long run. But he cautioned that the massive rescue plan will take time to work.

President Bush speaks about the economy Monday, Oct. 6, 2008 in San Antonio, Texas.  Bush said the $700 billion massive plan of federal intervention that Congress approved last week to save the teetering U.S. economy will take some time to work. (AP Photo/Evan Vucci)

AP Photo: President Bush speaks about the economy Monday, Oct. 6, 2008 in San Antonio, Texas. 

On another jittery day in the financial markets, the president made two rounds of unscheduled comments on the economy — first after meeting with small-business owners in San Antonio, and then at the top of a speech in Cincinnati about judicial nominees.

In both cases, he defended the $700 billion economic bailout plan as one that won't just help Wall Street, but everyday workers and businesses, too.

"I believe that in the long run, this economy is going to be just fine," Bush said. In the short term, he said the Treasury Department must go about enacting its plan to buy up troubled assets from financial firms so that credit will start flowing again to consumers.

Recognizing the scope of the government's intervention, Bush to reassure his audiences that taxpayer money will not be wasted.

The president added that the country has been through rough times before, and "we're going to come through just fine."

Earlier, in Texas, Bush emphasized that the program must be effectively designed and not rushed into action.

"It's going to take awhile to restore confidence in the financial system," he said. "But one thing people can be certain of is that the bill I signed is a big step toward solving this problem."

Bush signed the bill into law after Congress approved it last week.

On Monday, the Dow fell as much as 800 points at one point.

The catalyst for the selling was the growing realization that the Bush administration's $700 billion rescue plan and steps taken by other governments won't work quickly to unfreeze the credit markets. Global banks, hobbled by wrong-way bets on mortgage securities, remain starved for cash as credit has dried up.

The president, after a weekend at his ranch in Crawford, Texas, met with small business owners at an old-fashioned soda shop in San Antonio. He said he understands why so many people are frustrated about why they were suddenly "helping Wall Street."

"The answer is because had we not done anything, people like the folks behind me would be a lot worse off," Bush said as the business owners stood with him. "We'll make sure, as time goes on, this doesn't happen again."

Bush's comments came as his top economic advisers pledged to work with their counterparts around the world to restore confidence and stability to financial markets roiled by tight credit and worries about a global economic slowdown.

To that end, the administration was expected to announce shortly that it had tapped a 35-year-old former Goldman Sachs executive, Neel Kashkari, to head the government's rescue effort on an interim basis, according to an official who asked not to be named.

 



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