Zee Beam News

09 June 2008 - Upstream OnLine - Group of Eight (G8) energy ministers are looking inward for solutions to record oil prices, touting the need for domestic efficiency rather than piling pressure on a resistant Opec to pump more crude. Oil prices posted their biggest ever one-day surge on Friday, leaping more than $10 to a record high above $139 a barrel. Caught between mounting popular discontent at home and the need to invest billions in greener energy to cut world carbon emissions, the G8 ministers offered few new ideas for heads of state to consider at their summit next month. "(On) energy efficiency and energy diversification, we all recognise that tremendous progress is being made but more has to be done,” Canada's Natural Resources Minister Gary Lunn said. In a group ranging from top oil consumer the US to the second largest exporter Russia, few had expected the meeting to result in measures that could stem oil's six-year rally, which has gathered pace this year as investors fear the world will struggle to produce enough crude to meet demand in the decades ahead. However, their message appeared to reflect a growing acceptance that consumer nations must find ways to temper their own demand by focusing on technology, conservation and diversification rather than hounding Opec to pump ever more oil, as Australia's prime minister urged earlier in the day. The group of G8 ministers plus non-G8 guests China, India and South Korea, which together consume two-thirds of the world's energy, said they shared "serious concerns" over the cost of oil. Analysts said they were on the right track. "This is the right development and this will ... improve the supply and demand balance in the medium- and long-term, but it won't have an immediate impact on prices," said Toshinori Ito, senior analyst at UBS Securities Japan. "Oil prices are surging not because of a supply shortage, but because of massive liquidity," Ito said, referring to the influx of financial funds into markets, helped by low interest rates. The G8 comprises the United States, Britain, Canada, France, Germany, Italy, Russia and Japan. Oil has doubled in a year and risen 44% since January, forcing developing countries such as Indonesia and India into unpopular fuel prices rises while richer nations ponder how to soften the blow of soaring energy costs for the vulnerable. South Korea yesterday became one of the first countries to cave in to public pressure, announcing a $10 billion one-year handout to help 14 million low-income earners. The issue is certain to hang over G8 leaders when they meet in Japan early next month, a summit where host Japan hopes to win backing for a target to halve carbon emissions by 2050. The energy ministers agreed on the need for more large-scale carbon capture and storage (CSS) projects that bury emissions from power plants, a cornerstone of the International Energy Agency's (IEA’s) call for a $45 trillion energy "revolution". "The time for talking is over. We have to implement this," British Business Minister John Hutton told Reuters in an interview, referring to the IEA goals. The IEA report released on Friday, commissioned by G8 leaders three years ago, said the world would need to effectively "decarbonise" the power sector by building dozens of billion-dollar CCS plants over the next 40 years, although world governments remain at odds over who should foot the bill. About 190 nations are racing to craft a framework by the end of 2009 to succeed the Kyoto Protocol, a UN pact aimed at fighting climate change by mandating emissions curbs. The first phase, which ends in 2012, commits only 37 industrialised nations to emissions curbs between 2008 and 2012. The aim of the replacement pact for Kyoto is to bind all nations to cuts.