In the face of record high oil prices, Germany and Britain are expected at the G7 meeting on Friday in Washington to propose measures to make world oil markets more transparent.
Surging oil prices will top the agenda when finance ministers and central bankers from the seven most powerful industrial countries meet in the US capital. Germany and Britain are expected to respond to the alarming effect that high oil prices have on the world economy with a proposal for more transparency in international oil markets.
“To be precise, we are working with the British government on a transparency initiative,” an unnamed German government source told Reuters news agency. The aim is to counter the high amount of speculation on oil markets with increased transparency and information.
The senior finance officials from Group of Seven (G7) nations Canada, Britain, France, Germany, Italy, Japan and the United States are set to assess global economic prospects currently bedeviled by high oil prices, regional growth imbalances and currency rigidity in China.
The annual meeting of the International Monetary Fund (IMF) and the World Bank is scheduled to take place directly after the G7 meeting and will likely discuss Britain’s challenge to join it in agreeing to pay off 10 percent of the debts owed international agencies by poor countries.
German government spokesman Bela Anda said Wednesday in Berlin that Chancellor Gerhard Schröder emphatically supports bringing up the oil market transparency initiative at the G7 meeting. Details of the proposals have not been provided.
“The oil price is quite significantly determined by lots of speculation,” Schröder had said during his visit to Norway on Tuesday.
Will it help?
But the head of the German Institute for Economic Research (DIW), Michael Hüther, said he doubted politicians would be able to influence a drop in oil prices in the short term.
“Politics can only mollify, but it can’t intervene at short notice,” he told Reuters.
Hüther disputed that speculation had a great effect on the most recent prices increases. Instead, he said, the problem was high demand and low supply, and he blamed “fundamental factors like hurricanes and political unrest.”
Oil prices hit a record high on Tuesday, reaching the important psychological barrier of $50 (€40.67) a barrel for the first time. Since then they have dropped slightly but were creeping back towards the $50 point on Thursday afternoon.