Oil crisis is now worse than in the 1970s, says Brown

MICHAEL SETTLE
June 23 2008

Gordon Brown held out the prospect of a fall in oil prices after a trip to Saudi Arabia where he called for a "new deal" to promote clean energy and end the conflict of interest between oil producers and oil consumers.

The Prime Minister said last night the current crisis was worse than the one in the 1970s and called for a "more balanced energy market".

He urged oil-rich states to use some of the $3 trillion of extra income from the current hike in prices to invest in Britain's £100bn "green programme" - the building of more wind farms and nuclear power stations to help the UK meet its share of an EU target to generate 20% of energy from renewables by 2020.

However, as Mr Brown was addressing ministers from the 35 major oil-producing and consuming economies, his political opponents were rubbishing any idea his mission would lead to a quick fall in petrol prices at the pump.

Alan Duncan, Shadow Business Secretary and a former oil trader himself, said it was "total fantasy" for the PM to imagine there was much Opec, the oil producers' cartel, could do about rising oil prices. "The idea that Opec can just go like that and flood the market with oil and bring the price down just shows that Gordon Brown does not understand global markets," said Mr Duncan.

Vince Cable for the Liberal Democrats made a similar point, saying the PM's trip was "either empty-gesture politics or an act of self-delusion" while his leader Nick Clegg insisted: "It's slightly humiliating to see the Prime Minister fly off at taxpayers' expense to Jeddah to announce some gimmick where he hopes Opec will fund wind farms in the UK.

"He's living in cloud cuckoo land if he thinks that's a sustainable solution to the crisis."

Saudi Arabia, the world's largest oil exporter, has been under intense pressure from the US and other oil consumers to increase its crude output to help slow the soaring price of oil.

The kingdom has already announced modest increases and said it would pump 9.7 million barrels a day beginning in July. But those increases have not done much to stem the skyrocketing price of oil, which closed near $135 a barrel on Friday.

King Abdullah said Saudi Arabia was not to blame for soaring oil prices and instead pointed his finger at speculators, high fuel taxes in consuming countries and increased oil consumption in developing economies.

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