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LONDON: Economic fundamentals, and not financial
market speculation, are responsible for the dramatic rise in the
price of oil, with more investment needed in the energy sector, the
chief executive of British energy giant BP wrote Wednesday.
In a comment piece in the
Financial Times, Tony Hayward wrote that there were three myths with
regard to increasing prices for energy: that speculation was behind
the rise in oil prices; that the supply of fossil fuels was running
out; and that the world could switch to a low-carbon economy
quickly.
Hayward wrote that while global
energy demand in 2007 was above average for a fifth year running,
“energy supply has struggled to respond.”
He said, however, that this was
not to do with declining reserves, but instead with the technologies
and policies used to extract those reserves, claiming that the
“problems in bringing on new production are not so much below
ground as above it, and not geological but political.”
“Producers and consumers should
be encouraged to respond to the market’s signals,” he wrote.
“High prices are saying that we
need more investment— in energy efficiency, new production, new
technology and new energy sources such as wind, solar and
nuclear.”
New York’s main oil futures
contract, light sweet crude for July delivery, closed at $131.31 a
barrel on Tuesday, after rocketing to a record $139.31 on Friday.
--AFP
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