| EU/NR 69/08: STATEMENT BY AMBASSADOR JOHN BRUTON ON OIL PRICES |
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No. 69/08 STATEMENT BY AMBASSADOR JOHN BRUTON ON OIL PRICES
Ambassador John Bruton, Head of the European Commission Delegation to the United States, issued the following statement "I have noted recent calls to regulate the commodities market in order to rein in oil market speculation. The underlying argument here is that commodity futures traders have driven the price of oil up by as much as $75 a barrel. "While the jury is still out on the degree to which, if any, speculation may have influenced oil prices, there is no doubt that the main reason for rising oil prices is a rising world appetite for oil and products and services that use oil. The obvious long-term solution is therefore a shift to a low-carbon economy, to increased energy diversification and to behavioral changes in our daily lives. We should avoid distractions. "In certain quarters, speculation is considered the sole cause of high oil prices. This is an illusion. "It is important to determine what speculation is. There is a very thin line between a company that buys its fuel in advance as a hedge against an increase in price, and a company that uses trading as a speculative instrument or assists others in hedging or spreading their risks. This activity is inherent in the free market system. Ill-considered additional regulation of trading could also accelerate speculation as traders rush to get in ahead of impending regulations. We should also avoid misplaced attempts to blame foreign markets. "The fundamentals of the global energy market have changed and the era of cheap energy is over. Oil is traded at over $140 a barrel today, compared to an average of $73 a barrel in 2007 and $25 in 2002. While oil consumption in OECD countries has been declining, non-OECD oil consumption rose 3.7% in 2008 and is continuing to rise. China and India net oil imports are projected to rise from 5.4 million daily barrels in 2006 to 19.1 million barrels in 2030. Demand is also growing rapidly in oil-producing countries. Oil production is just not keeping pace with the sustained strong demand; neither is global refinery capacity. "Only structural changes can alleviate the long-term consequences of this for the global and local economy. The current increase in oil prices is telling us something. We have got to change how we generate, use and often how we waste energy. "The EU has anticipated the structural shift with its decision to move towards a low-carbon economy, which emphasizes energy savings and the development of renewables. "Europe's goal is to achieve a 20% energy saving and to increase the share of renewables in energy consumption to 20% by 2020. Europe also promotes transparency of oil stocks, and strengthened relations between producing and consuming countries. In the short term Europe recognizes the need to support the poorest households, and to assist net oil importing developing countries. "The lesson of the subprime crises is clear: global markets are totally interconnected. In the EU and US we have to work together to identify any problems and correct them rather than relying on misguided attempts to impose our regulations on other markets. That will only destabilize markets even further, not remedy them."
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today warning against misguided attempts to regulate markets and emphasized the need for structural changes to control 
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