Energy ministers debate oil price surge  

The SMH reports that governments are getting increasingly nervous about the rising oil price - Cracks show as energy ministers debate oil surge. However they can't be bothered doing anything useful about the underlying cause, like encouraging substitutes for oil - instead they'd rather blame OPEC and subsidies in developing countries.

Apparently NYMEX trading in crude oil futures passed the million contract level for the first time on Friday too - so speculators will continue to get the finger pointed at them too. Having a convenient set of scapegoats is all well and good (and bashing big oil and OPEC isn't something I'm particularly averse to) but it won't solve the underlying problem - the supply of oil is finite, and the American attempt to control Iraq's oil has limited production in the one large untapped reserve remaining, so we're stuck with flat production in an industrialising world with a rising population - which means it is time to switch to alternatives.

Energy officials from five top consumer nations urged producers to step up investment on Saturday, a day after crude's biggest surge ever, but they offered no new ideas on how to deal with record prices and remained divided on fuel subsidies.

Japan, the United States, China, India and South Korea - who together guzzle nearly half the world's oil - said that they had agreed on the need for greater transparency in energy markets and more investment by consumers and producers both, while stopping short of calling on OPEC to pump more crude today.

But a call from the United States for an end to heavy price subsidies that protect many Asian drivers from soaring costs fell on deaf ears, as China and India said they could only raise domestic rates gradually in view of their fragile economies.

On Sunday the full Group of Eight energy ministers will meet amid unprecedented volatility in the oil market and growing public discontent over governments' failure to soften the blow, which worsened with Friday's more-than-$US10 surge to a record $US139.

US Energy Secretary Sam Bodman pointed part of the blame at cheap fuel in Asia, where fast-growing economies and low prices have helped drive oil's explosive six-year rally.

Of course, Mr Bodman could look at US oil consumption over the past 50 years compared to that of Asian nations and then consider if perhaps he should be blaming his own country for being primarily responsible for this situation.

Or he could look at per capita consumption right now.



The front pages of today's papers were all warning motorists of more pain ahead.

MOTORISTS will face pump prices as high as $1.70 a litre within days and more than $1.80 by July after fresh Middle East tensions propelled world oil prices to record highs. And the pain won't stop there. NRMA president Alan Evans and oil analysts are predicting petrol will be $2 a litre by the end of the year.

The bad news came as the Federal Government delivered its strongest hint yet that a new emissions trading scheme - set to begin in 2010 - will envelop the transport sector. That could mean even higher costs for motorists, who would be forced to cover the price of carbon embedded in the petrol they use.

But in a proposal that could render political squabbling over fuel tax reductions irrelevant, The Sun-Herald understands the petrol excise regime could be dumped and replaced with a system of charges based on environmental, social and economic damage inflicted by different types of vehicles and road use.

The plan - which has strong backing from motoring groups who will argue the case in Canberra in coming weeks - will be considered as part of the Government's much-anticipated tax review, headed by Treasury Secretary Ken Henry.

In London for talks with political and business leaders, Treasurer Wayne Swan warned the coverage of an emissions trading scheme should be "as broad as possible", hitting out at his Opposition rival Malcolm Turnbull for suggesting fuel should be excluded. "We will be publishing a green paper next month, which will open the discussion about this question," Mr Swan said.

The comments came as world oil markets were whipped into a frenzy by Israel's Transport Minister, Shaul Mofaz, warning that an attack on Iranian nuclear sites looked "unavoidable", raising concerns about the region's stability.

The global price leapt by $US11 to a record $US139 a barrel in the biggest single-day jump yet. Investment bank Morgan Stanley predicts prices will hit $US150 a barrel by July, with demand from Asia already running at record levels.