G8 hears oil prices could again soar when crisis eases

Energy ministers from G8 countries on Sunday heard that oil prices could again soar when the global economic crisis eases and demand returns, requiring new investment to head off the possibility.

Meeting in Rome along with representatives from 15 other emerging and oil-producing countries, ministers from the Group of Eight industrialised nations addressed decreased investment in oil projects due to the crisis.
“Investments in new energy projects and new technologies are today postponed or cancelled because of uncertainties weighing on financial markets and the reduction in demand,” Italy’s economic development ministry said ahead of the meeting.

“When the crisis is over, the risk of insufficient energy supply exists, and as a result high and unstable prices.”

Italian Economic Development Minister Claudio Scajola called for an alliance between the private sector and governments to spur investment.

Italy, which currently holds the G8’s rotating presidency, hosted the two-day meeting that began Sunday in the run-up to the annual summit of G8 leaders in July.

The economic crisis has seen oil demand plummet and prices along with it, falling from a record 147.50 dollars per barrel in July to 32.40 in December. It has since risen gradually above the 60-dollar-per-barrel mark.

Electricity demand is expected to diminish by 3.5 percent this year “for the first time since World War II,” said International Energy Agency (IEA) executive director Nobuo Tanaka.

AFP