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Brown says volatile oil price is threat to global economy - Update


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Thu, 01 Jan 2009 13:50
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London - British Prime Minister Gordon Brown warned Friday that oil price volatility remained a threat to the global economy and lack of investment in the industry or other energy resources could cost trillions of dollars. "Wild fluctuations in prices harm nations around the world. It is clear that our most pressing challenge is price volatility," Brown said at the opening of an energy meeting in London.

The meeting, originally planned for the summer when the oil price hit more than 140 dollars per barrel, was attended by oil ministers from 40 countries.

It will look at greater transparency on the oil market and discuss ways to prevent future unpredictability of the oil price.

Many of the participants travelled to London directly from this week's meeting in Algeria of the Organization of the Petroleum Exporting Countries (OPEC) which announced a cut in oil production to boost demand.

The problem of sharply fluctuating oil prices hit producing countries as well as consuming nations, Brown said, calling for a "new partnership" between them.

According to Brown, research has shown that the oil price hike from around 60 dollars to nearly 150 dollars per barrel had cost the global economy some 150 billion dollars over the summer.

Failure to invest could cost the world economy an estimated 1.3 trillion dollars by 2030, Brown predicted.

"The risk now is that investment in oil and other energy sources will once again stagnate, supply capacity will begin to tighten just as demand responds to improving economic conditions," he warned.

Earlier, Energy Secretary Ed Miliband had urged new measures to prevent oil-price volatility. It was important to continue the dialogue between oil producer and consumer nations begun last June in Jeddah in Saudi Arabia, he said.

"We have a duty to do all we can to prevent such price spikes in the future. That is why it is right to continue the dialogue started in Jeddah and I hope that we can agree a series of steps to promote transparency in the oil market and improve its effectiveness as a route to greater stability."


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