Finance ministers from the Group of Seven wealthy nations yesterday urged the world's largest oil producers to increase output and bring down petrol prices, saying "low oil prices would benefit the whole world economy".
Striking a note of alarm in an otherwise upbeat assessment of the global economy, the G7 officials said oil prices - which are at a 21-year high - remained a risk to the outlook.
"We call on all producers to take action to ensure world oil prices return to levels that are consistent with lasting economic prosperity and stability," they said in a statement after a two-day meeting in New York.
Overall, the G7 said the world economy was "strong", with recovery "proceeding rapidly with global growth of around 4.25 per cent in 2003-04, the best growth rate in the world economy in the last 15 years."
The finance ministers' concern came as oil prices reached a record $40 a barrel following a surge in prices by 38 per cent in the last year due to refining bottlenecks, stockpiling, instability in Iraq, caps on output and higher demand from rapidly-growing economies, particularly the United States and China.
Ministers from the Organisation of Petroleum Exporting Countries (OPEC), meeting on Saturday in Amsterdam, deferred a decision on pumping more oil until early next month, despite calls from Saudi Arabia - prompted by Washington - for increased production.
With soaring petrol prices and angry drivers threatening President Bush's re-election prospects, pressure for the G7 to lobby OPEC for the first time in four years to increase output came in particular from US Treasury Secretary John Snow. "Higher prices act as a tax on both families and businesses," Mr Snow said, adding the US would like to see prices fall to the OPEC target level of $22-$28 a barrel.
"It is vital that oil producers provide adequate supplies to ensure that prices are at levels that foster strong global economic growth," he told a press conference after the meeting of officials from Japan, Germany, Britain, France, Canada and Italy, along with Russia, in the Waldorf Astoria Hotel.
The Minister for Finance, Mr McCreevy, attending on behalf of the EU presidency, also urged OPEC ministers to increase output and bring oil prices down in Ireland and other EU countries.
The G7 talks in New York took place against a backdrop of rising petrol prices in the Republic.
In a statement yesterday, ISME, which represents small and medium-sized businesses, accused the Government of profiteering from hikes in global oil prices and called on it to reverse the tax rises imposed in the last budget.
ISME said the Government could do little to influence oil prices but it did have the power to influence the cost to the end consumer. It said the Exchequer receives about 57 per cent of the end cost of oil products in the form of excise duty and VAT. So as oil prices rise, the Government benefits from collecting increased duty.
ISME said the Government should reverse the increase in excise duty imposed on petrol and diesel products in the last budget. This would result in a reduction of 5 cent per litre.