Monday, June 9, 2008

Oil Prices Could Spur Global Recession

G8 Ministers Vow New 'Green' Efforts

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Faced with record-high oil prices, the world's leading economies and oil consumers have pledged greater investment in energy efficiency and green technologies to control their spiraling thirst for petroleum.

In a joint statement, energy ministers from the Group of Eight countries - joined by China, India and South Korea - also urged oil producers to boost output, which has stalled at about 85 million barrels a day since 2005, and called for cooperation between buyers and producers.

But with little prospect for a production surge soon, the focus of Sunday's meeting in Japan was on what wealthy nations should do to rein in consumption, while reducing carbon emissions blamed for global warming.

"We also have to address too the demand side of the equation," said John Hutton, Britain's business secretary. "We will do that through new measures to improve energy efficiency (and) accelerate our moves to a new, low-carbon form of energy generation."

The 11 nations account for 65 percent of the world's energy consumption and face record-high oil costs. Prices gained 8 percent Friday to US$138.54 on the New York Mercantile Exchange.

Energy experts say most producers have little ability to expand output. The exception is Saudi Arabia, which could increase output by about 2 million barrels a day.

The president of the Organization of Petroleum Exporting Countries, Chakib Khelil, has said that the cartel will make no new decision on production levels until its September 9 meeting in Vienna.

The nations meeting Sunday said they would set goals in line with International Energy Agency recommendations for a vast expansion of investment in renewable energies and energy efficiency.

For instance, the G8 countries - the United States, Japan, Russia, Germany, France, Britain, Italy and Canada - pledged to launch 20 demonstration projects by 2010 on so-called "carbon capture and storage," which would let power plants run on cheap, abundant coal, then catch emissions store them under the ground.

But there were clear rifts on another technology promoted by some as an answer to oil dependence: nuclear energy. VideoWatch ministers from top industrial nations grapple with rising oil prices.

The carefully worded joint statement called for assurances on safety and security of nuclear materials.

The United States, Canada and Britain said they were determined to build new reactors. Japan also has ambitious nuclear goals.

But Germany said it has not changed its decision to phase out nuclear power.

The ministers met amid rising concerns over soaring oil prices.

"The situation regarding energy prices is becoming extremely challenging," warned Akira Amari, Japan's trade and energy minister. "If left unaddressed, it may well cause a recession in the global economy."

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