*EPF108 05/24/2004
Text: Energy's Abraham Calls on Oil Producers to Increase Output
(High oil prices threaten global growth, development, energy secretary says) (780)

U.S. Secretary of Energy Spencer Abraham has urged oil producers to increase output in order to support global economic recovery.

In May 22 prepared remarks at the International Energy Forum in Amsterdam, Abraham said that high oil prices serve the interests of neither producers nor consumers.

He said that rising prices stemming from insufficient supplies and market speculation driven by security fears constitute a challenge to global economic growth and a "cruel" tax on the developing world.

In the long term, Abraham said, unstable, volatile energy markets will discourage investment in energy production and development.

Finance ministers from the Group of Seven (G-7) most industrialized countries -- Canada, France, Germany, Italy, Japan, the United Kingdom and the United States -- also called May 23 for an increase in oil production.

Saudi Arabia, which has the largest excess production capacity, has proposed raising production by at least two million barrels per day (bpd), according to news reports.

Organization of Petroleum Exporting Countries (OPEC) current quota is 23.5 million bpd.

Following is the text of Abraham's remarks:

(begin text)

Department of Energy

May 22, 2004

International Energy Forum, Amsterdam

Remarks Prepared for U.S. Energy Secretary Spencer Abraham
Opening Session

Thank you. It is certainly an honor to address this very important meeting.

We meet today amid great uncertainty and challenge in the world of energy. Over the past days and weeks, we have seen the price of crude oil --- and the many products derived from it --- soar to near record levels.

Prices are high, and getting higher, because the unanticipated rate of growth in worldwide demand is outpacing production. This continuing demand growth, particularly in the expanding economies of Asia, is creating some of the tightest energy markets in history. Adding to the challenge of tight supplies is market speculation driven by security fears over terrorism and difficult political dynamics in several energy-producing countries around the world.

The United States and many other nations have taken fiscal and monetary steps that have helped put the world back on the path of global economic growth, and these energy prices are not helpful to our efforts. While higher oil prices are a challenge to the developed world, they are a cruel tax on the most fragile economies of the developing world, in the Middle East, Asia, Latin America and Africa. Simply put, growing energy sector pressures are not in the interests of producers or consumers, and are a looming danger to the developing world --- nations that are trying to improve the quality of life for their citizens.

Mr. Mandil [Claude Mandil, executive director of the International Energy Agency] has just outlined the critical priorities that we are gathered here to address, and I would like to endorse his approach. Mr. Mandil does not speak for any one country, but reflects the collective sentiment of the world's largest energy consumers. He has made many good points, and I want to thank him for his efforts. Our most immediate concern is relieving the short-term problem of tight supplies and getting more barrels of oil to market. Just as producers acted to restore calm after disruptions over the past 18 months, responsible responses by producers are again required with the same urgency.

And, as Mr. Mandil has pointed out, significant long-term challenges also require our urgent attention. Foremost among them is the need for more transparency in our energy markets, the need for more complete and accurate market data, and the need for greater clarity in the regulatory policies that govern the many aspects of the energy sector.

I also would like to echo Mr. Mandil's emphasis on the need for more investment in energy production and development, which is one of the key themes of this conference. The continuous technology and infrastructure additions needed to expand our energy production capacity will require enormous outlays of capital. But unstable, volatile markets will make that critical capital much more expensive and difficult to obtain.

This International Energy Forum presents an extremely useful and timely opportunity to discuss these complex issues --- and the United States is honored to be a participant. Given the many challenges we face, the credibility and effectiveness of our producer-consumer dialogue will be tested. Fellow ministers, the world is closely watching to see whether these meetings translate into effective action.

I look forward to our discussions here as we work together to ensure stable, reliable and affordable supplies of energy to fuel economic growth, raise standards of living, and foster greater cooperation and trust among the nations of the world. Thank you.

(end text)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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