India for regulatory mechanism for transparency in oil market
Monday, 22 December 2008
LONDON, Dec 21 (PTI): India has underlined the need for putting in place appropriate regulatory mechanism to restraint unhealthy "speculative practices" and bring about transparency in crude oil market.
"We should collectively put in place appropriate regulatory mechanism to ensure that unhealthy speculative practices are restrained and absolute transparency is brought to crude oil market," said Murli Deora, India's Minister for Petroleum and Natural Gas.
To achieve it, Deora proposed at the 'London Energy Ministers Meeting' here Friday, the setting up of an Expert Group to make suitable recommendations in that regard.
"Stability in prices can be achieved provided the suppliers and buyers of crude oil entwine their interests by entering long- term sale and purchase agreements not only for the purpose of supplies but also for prices at which such supplies are made. Spot sales should be confined to the minimum."
Deora said the timing of the meet could not have been better when "all of us are together fighting one of the biggest economic meltdowns."
There was an unprecedented boom; then the collapse.
"Who imagined this," he asked. There were some indications and apprehensions which "we discussed last time at Jeddah," he said. However, the dizzy heights of the oil price curve restricted "our responses."
"Steep rise in oil prices was distressful for the energy deficient economies, as their evolution, sustenance and the growth centred on oil," he underlined.
Deora said in the recent past with sudden collapse of the crude prices, "you would have realized that the speculators have been having a field day in causing extreme volatility in the prices".
"It is now evident that oil prices are being determined by the commodity exchanges. This is a dangerous sign and should have alerted all of us. Unfortunately it did not," he stressed.
The minister noted that stability is the first requirement for sustained economic development. Oil prices on a roller- coaster have created only uncertainty.
"What we now need is to rediscover stable market with transparent regulations; the market where producers as well as consumers find equal respect," Deora said.
He underlined the need for a "reasonable oil price, neither too low to discourage investment nor too high playing havoc with important dependent economies".
"Sharp decrease in oil prices, as witnessed now at USD 40 dollar per barrel, will adversely affect the economies of oil producers choking the supply lines. At the same time, consumers burdened with high oil prices, like USD 147 per barrel in July 2008, will see their economies under tremendous strain," the Indian minister said.
Deora underlined the need to balance the "interests of producers and consumers can only evolve a healthy market." He hoped the present crisis would not lead us to another 'Lost Decade' as witnessed in the late nineties when low crude oil prices restricted investment, capacity creation and recruitment.
"We will have to take our resolves still further to ensure that we are able to address global energy aspirations in sustainable manner," Deora said.
"We should collectively put in place appropriate regulatory mechanism to ensure that unhealthy speculative practices are restrained and absolute transparency is brought to crude oil market," said Murli Deora, India's Minister for Petroleum and Natural Gas.
To achieve it, Deora proposed at the 'London Energy Ministers Meeting' here Friday, the setting up of an Expert Group to make suitable recommendations in that regard.
"Stability in prices can be achieved provided the suppliers and buyers of crude oil entwine their interests by entering long- term sale and purchase agreements not only for the purpose of supplies but also for prices at which such supplies are made. Spot sales should be confined to the minimum."
Deora said the timing of the meet could not have been better when "all of us are together fighting one of the biggest economic meltdowns."
There was an unprecedented boom; then the collapse.
"Who imagined this," he asked. There were some indications and apprehensions which "we discussed last time at Jeddah," he said. However, the dizzy heights of the oil price curve restricted "our responses."
"Steep rise in oil prices was distressful for the energy deficient economies, as their evolution, sustenance and the growth centred on oil," he underlined.
Deora said in the recent past with sudden collapse of the crude prices, "you would have realized that the speculators have been having a field day in causing extreme volatility in the prices".
"It is now evident that oil prices are being determined by the commodity exchanges. This is a dangerous sign and should have alerted all of us. Unfortunately it did not," he stressed.
The minister noted that stability is the first requirement for sustained economic development. Oil prices on a roller- coaster have created only uncertainty.
"What we now need is to rediscover stable market with transparent regulations; the market where producers as well as consumers find equal respect," Deora said.
He underlined the need for a "reasonable oil price, neither too low to discourage investment nor too high playing havoc with important dependent economies".
"Sharp decrease in oil prices, as witnessed now at USD 40 dollar per barrel, will adversely affect the economies of oil producers choking the supply lines. At the same time, consumers burdened with high oil prices, like USD 147 per barrel in July 2008, will see their economies under tremendous strain," the Indian minister said.
Deora underlined the need to balance the "interests of producers and consumers can only evolve a healthy market." He hoped the present crisis would not lead us to another 'Lost Decade' as witnessed in the late nineties when low crude oil prices restricted investment, capacity creation and recruitment.
"We will have to take our resolves still further to ensure that we are able to address global energy aspirations in sustainable manner," Deora said.