June 23, 2008

Gordon Brown Asks OPEC to Increase Oil Production

British Prime Minister Gordon Brown made a quick trip to Saudi Arabia over the weekend. He was the only western leader to make the trip. According to The Times Mr. Brown:

Told oil-exporting nations they had a responsibility to increase production to avoid “uncertainty and unpredictability for years ahead”.

However apparently the members of OPEC didn't agree. Chakib Khelil, head of OPEC and also Algerian Oil Minister, insisted that increased production was unnecessary and that oil demand was decreasing:

“We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply,” Mr Khelil said he “didn’t hear anything” to suggest that OPEC members other than Saudi Arabia were planning to increase supply.

Back in the United States Barack Obama seemed to agree with OPEC that speculators are to blame for the current high fuel prices, rather than supply failing to keep up with demand. According to the New York Times Mr. Obama favours imposing tighter controls on oil speculators:

Mr. Obama proposed closing the so-called Enron loophole, a legal provision requested by that company in 2000 that exempts crucial energy commodities from government oversight. He also proposed preventing traders of American crude oil from routing transactions through offshore markets to evade American limits and working with other countries to better regulate oil-futures markets, and he called on the Federal Trade Commission and the Department of Justice to investigate market manipulation and oil futures.

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