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U.S. urges subsidy cuts to tame oil prices

Secretary Bodman says subsidies will stoke higher oil demand

A car passes buy an electric car dealership Wednesday, June 4, 2008, in Portland, Ore.  While oil prices have retreated, refiners, gasoline wholesaler...

A car passes buy an electric car dealership Wednesday, June 4, 2008, in Portland, Ore. While oil prices have retreated, refiners, gasoline wholesaler...

U.S. Energy Secretary Sam Bodman called on yesterday for more countries to scrap fuel price subsidies that stoke oil demand, adding that more regulation of energy markets was not the solution to record prices.
Bodman's comments came just ahead of his meeting with top energy officials of Japan, South Korea, India and China, the latter two of which have failed to raise domestic gasoline and diesel prices fast enough to keep up with roaring global markets.
It is part of a broader Group of Eight energy gathering that comes one day after oil's over US$10 surge to an all-time high above US$139 a barrel, the biggest one-day gain on record.
"It's a shock, but if you look at the rate of oil production globally, it has been 85 million barrels a day for three years in a row," Bodman told a group of reporters.
"We know demand is increasing because a lot of nations are still subsidising oil, which ought to stop," he said.
But he steered away from greater regulation, despite pressure from U.S. lawmakers to step up oversight of energy markets in the hopes of detering the flood of new investors and speculators that some blame for inflating food and fuel prices.
"We've looked at it and have concluded unfortunately that this is not a matter where there needs to be more regulation of markets," he said.
The U.S. Commodity Futures Trading Commission will meet with international regulators in Washington next week, just weeks after it announced a slew of measures to increase surveillance of energy and other commodity markets.
Bodman also stopped short of calling on OPEC to pump more crude, but said producers should allow for greater investment, while consumer countries need to help rein in demand by passing on the full burden of world prices that have doubled in a year.
India raised domestic fuel prices by about 10 percent this week, provoking a muted public backlash and threatening to stoke inflation to a 13-year high with only its second increase in two years. China has raised pump rates only once since mid-2006 due to inflation worries, increasing them by 10 percent in November.


Updated : 2021-06-25 17:22 GMT+08:00