OSAKA, Japan — The U.S. energy secretary told his counterparts from other countries on Saturday that current high oil prices and volatility in the market could harm global economic growth.
"High prices could produce an undesirable ripple effect on the economies of the world," the U.S. secretary, Spencer Abraham, said in an address to the opening session of the International Energy Forum, a gathering of ministers from 65 countries. "If the industrialized world experiences an economic slump, its markets for the developing world's products will contract, damaging developing economies."
His comments came after the decision on Thursday by the Organization of the Petroleum Exporting Countries to leave its production quotas intact but to promise to pump additional oil if shortages develop, including one stemming from an attack on Iraq. OPEC's decision could lead to tight supplies and higher prices globally because oil importers will likely have to use their inventories to meet demand during the winter months.
On Saturday, Abraham said, "High prices may be pleasing to producers in the short term, but in the long term, volatile pricing regimes of this kind are destabilizing and harmful to all participants."
As energy ministers spoke at the forum, the meeting's sponsor, the International Energy Agency, released a study saying that the global economy will become even more dependent on oil from the Middle East over the next three decades. The study said such continued reliance would further heighten concerns about the security of energy supplies and the ability of major nations to reduce greenhouse gases.
In its biannual world energy outlook, the agency also said it expects oil prices to average $21 a barrel through the end of the decade — down from nearly $30 now.
The global economy is likely to remain hostage to volatile oil markets, the energy agency said. "Unless surplus capacity in current oil production and refining increases, markets will remain sensitive to actual or feared swings or disruptions in supply, whether political or technical," its report said.