The European Union weighed into the debate about rising oil prices yesterday, when an EU Commissioner blamed the increase on speculation rather than scarcity and it emerged that finance ministers would discuss the subject next week.
In a relatively rare step, oil specialists from the EU's 25 member governments also met in Brussels yesterday to look at member states' readiness to deal with a possible crisis in supply. They met as oil prices remained firm at around $41 per barrel.
"What we have here is a speculative bubble," said Loyola de Palacio. "There is no real shortage on the markets. That is the reality."
Despite its weight as a trading bloc, the EU has limited clout on the energy markets, because of fragmented national policies and growing dependence on outside sources of supply.
Ms de Palacio has tried in the past to win new powers for the Commission over an increased stock of EU oil and gas but was rebuffed by national governments. The Commissioner is still campaigning for an increase in oil stocks from 90 to 120 days' demand and heightened co-ordination within the EU. She also wants oil prices to be based on a basket of currencies that includes the euro, instead of the dollar alone.
Yesterday's meeting of the oil supply group of national experts was at Ms de Palacio's behest and was intended to look at national governments' readiness for disruptions to oil supply. The group was asked to give information on plans to reduce consumption and use oil stocks should an energy crisis arise.
Although the group is purely advisory, the meeting marked the Commission's level of concern with the current situation.
While European and industrialised Asia-Pacific countries have commercial crude oil inventories that are well within their medium-term averages, the US has been struggling to keep inventories from falling to long-term low levels.
"There is nothing to worry about inventories in Europe and the Asia-Pacific, the big concern is the US," said Harry Tchilinguirian, an energy analyst for the International Energy Agency, the energy watchdog of the Organisation for Economic Co-operation and Development (OECD).
Mr Tchilinguirian said OECD European and Asia-Pacific members had enough oil to last between 80 and 90 days, while the US has about 70 days of demand. - (Financial Times Service)
