Energy prices on leaders’ agenda
WASHINGTON – The world’s economic powers this weekend will explore ways to defend the global economy from any serious damage should oil and gasoline prices climb sharply higher.
Finance ministers and central bank presidents from the Group of Seven industrial countries convene today, and the energy situation is expected to figure prominently in their discussions. The United States, Japan, Germany, France, Britain, Italy and Canada make up the group.
For now, high prices are expected to slow world economic growth only modestly this year. The global economy should grow by a solid 4.3 percent, down from a brisk 5.1 percent in 2004, according to International Monetary Fund projections.
Asked if elevated energy prices are weighing on global growth, John Taylor, the Treasury Department’s undersecretary for international affairs, responded: “Indeed they are.”
“We think there is so much strength in the global expansion now that they will not derail it, but it’s a drag,” he said.
While other international finance officials agree with that assessment, they also stress that policy-makers cannot be complacent, saying they must look for ways to curb the world’s appetite for energy and also boost spare production capacity.
In addition, policy-makers must improve the timeliness and accuracy of information about the oil market, which may help to reduce price volatility and increase the willingness of companies to invest in new production capacity, the officials suggest.
IMF Managing Director Rodrigo Rato said, “Investment in refineries in oil-consuming countries is, in many cases, lacking.” The 184-nation fund and the World Bank will be meeting today and Sunday.
In the United States, oil prices surged to an all-time high of $57.27 a barrel at the beginning of April. They have retreated recently and were hovering above $50 on Friday.
At the Group of Seven meeting, Treasury Secretary John Snow is expected to discuss the Bush administration’s push for Congress to enact comprehensive energy legislation. The House is working on a bill that is tilted toward helping traditional energy industries including coal, oil and natural gas companies with only modest programs to encourage energy efficiency.
“Congress needs to get off the dime,” Bush said Thursday. “We’ve got to think long-term in this county. … We need to be better when it comes to conservation. We need to continue spending money on research and development.”
High energy prices were a concern at the last Group of Seven meeting in February and the one before that in the fall, but little concrete action has been forthcoming.
In advance of the meetings, Snow held one-on-one sessions Friday with Japanese Finance Minister Sadakazu Tanigaki and Russian Finance Minister Alexei Kudrin, where concerns about high oil prices were among the topics discussed.
The meetings of the international finance institutions will take place under tight security. Snow and Federal Reserve Chairman Alan Greenspan will represent the United States.