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Wednesday
21st May 2008
For the first time ever, Gordon Brown has spoken out about his concern over the
oil cartel's stranglehold over global energy supply.
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Brown
has called OPEC's level of control over the global energy markets 'a scandal'. |
The Prime Minister spoke candidly about the many increases in oil
prices, following a conscious decision to speak up on behalf of consumers' sense
of fairness.
No. 10 has indicated that it believes the recent
price hikes are not simply due to speculation as many think, but rather that the
speculation has been fuelled by Opec and recent imbalances between supply and
demand.
At Google's third Zeitgeist conference on Monday, Brown said "It is, as
people will recognise, a scandal that 40% of the oil is controlled by OPEC, that
their decisions can restrict the supply of oil to the rest of the world, and
that at a time when oil is desperately needed, and supply needs to expand, that
OPEC can withhold supply from the market."
Some officials at No. 10 have even suggested that the Prime Minister visit
Saudi Arabia for direct talks, but No. 10 has stressed that no decision has been
taken.
Energy prices have been
rising steadily since the end of last summer, with britain's increased reliance
on imported gas and recent drop in our own nuclear generating capacity causing
wholesale prices to rise over the winter. This in turn has meant almost
all electricity and gas suppliers have raised their prices this year, and will
probably do so again by the end of the year.
The Organisation of Petroleum Exporting Countries has kept targets unchanged
at its last three meetings, on December 5 2007, February 1 and March 5, and is
not due to meet again until September.
On Saturday George Bush met the Saudi royal family, who said they would up
production by 3.3% to 9.45m barrels a day - a rise that was dismissed by the
President and had little effect on the price of oil.
Brown said: "Until we have a proper dialogue between consumers and producers
that bring supply and demand into a better position in oil, we will continue to
have problems. Yes, there may be elements of speculation, and yes there may be
elements where people have unfairly restricted supply as an individual member of
OPEC; but we have also got to deal with the supply and demand question. That
will demand in the long term other sources of fuel, that will demand in the
medium term greater energy
efficiency and the use of existing fuel ...
"It also demands, I think, first of all that it should be at the centre of the
agenda at the next European council meeting, it should be at the centre of the
agenda of the G8. A realistic dialogue between consumers and producers has got
to happen, and that would be the start of breaking down the control that has
existed by a cartel."
These tough remarks however, did not come with a solution as to how OPEC could be reformed. Many have suggested a larger dependence on nuclear
power in the long-term, and increased energy efficiency and more renewables in
the short.
Saudi oil minister Ali al-Naimi said in Riyadh at the weekend that supply and
demand were balanced, and that the country was working to increase production.
He asked: "So how much more does Saudi Arabia need to do to satisfy the people
who are questioning our oil practices or our oil policy?"
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