Breaking Oil News: G-8 to fight oil prices with efficiency, tech

AOMORI, Japan (AP) — The world’s top industrialized nations and leading oil consumers pledged Sunday to fight skyrocketing energy prices by increasing efficiency and accelerating investment in new technologies, while urging producers to expand production.

Energy ministers from the Group of Eight countries, joined by China, India and South Korea, voiced concerns over record oil prices and said both producers and consumers would benefit from greater market stability.

Ministers, meeting in the northern Japanese city of Aomori, focused Sunday on how they could diversify their energy sources to both control rising demand for oil and rein in emissions of greenhouse gases blamed for global warming.

“We simply must increase the level and breadth of investment all around the world,” said U.S. Energy Secretary Samuel Bodman. “That means promoting aggressive investment in renewable energy and other alternative energies technologies, as well as the development of tradition hydrocarbon resources.”

The 11 nations, which account for 65% of the world’s energy consumption, grappled with oil prices that have hit record highs. Prices made a massive 8% gain Friday to $138.54 on the New York Mercantile Exchange.

The G-8 countries — the United States, Russia, Japan, Germany, France, Italy, Canada and Britain — laid out ways of cutting their dependence on oil in a statement.

They pledged to launch 20 demonstration projects by 2010 on so-called “carbon capture and storage,” which would allow power plants to catch emissions and inject them into underground storage spaces.

While that technology is still in its infancy, proponents say it could eventually allow the expanded exploitation of the world’s abundant supply of cheap coal without polluting the environment and speeding global warming.

There were clear rifts, however, on how to approach the expansion of nuclear energy. The carefully worded joint statement called for assurances on safety and security of nuclear materials, but several nations said they were enthusiastic about building new reactors.

The International Energy Agency, in a report issued last week, estimated the world would have to construct 32 new nuclear power plants each year from now until 2050 as part of an effort to cut global greenhouse gas emissions by 50%.

“I think we’re on the verge of a new nuclear age and that will be a positive thing for the world,” said John Hutton, British secretary of state for business enterprise and regulatory reform.

Germany, however, said it would not join the effort. Jochen Homann, Germany’s economics minister, said Berlin was sticking to its decision to phase out nuclear power.

The G-8, China, India and South Korea also established the International Partnership for Energy Efficiency Cooperation to promote best practices in conserving energy.

While the participants called for more oil production, it could take months to get a response. Production levels have been flat for three years and Chakib Khelil, the president of the Organization of Petroleum Exporting Countries, has said the group will make no new decision on output until a Sept. 9 meeting in Vienna.

The ministers met amid rising concerns that soaring oil prices could trigger global economic troubles. Fanning such fears, both Japan and the United States have announced higher unemployment rates in recent weeks.

“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.”

The Sunday meeting followed a joint statement by five top energy consumers — the U.S., Japan, China, India and South Korea — that warned high prices were a menace to the world economy and more petroleum should be produced to meet rising demand. They argued the unprecedented prices were against the interests of both producers and consumers, and imposed a “heavy burden” on developing countries.

The group, however, diverged over oil subsidies. The International Energy Agency has estimated that oil subsidies in China, India and the Middle East totaled about $55 billion in 2007.

The United States urged countries such as China to lower oil supports, which buoy demand, while poorer developing nations said removing subsidies could trigger political and economic unrest.


Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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