[asia-apec 1637] APEC and Oil Prices

[APEC Monitoring Group]

>From Borneo Bulletin On-Line, Brunei Nov 6 2000

MONDAY, NOVEMBER 6, 2000 

  Apec faces balancing act on oil prices
  TOKYO (AFP) - Asia-Pacific leaders meeting in Brunei Darussalam this month face a balancing act to accommodate the rival interests of oil producers and importers as the price of crude surges. 
  Leaders of Asia-Pacific Economic Cooperation (Apec) member nations will push for a more stable pricing regime for oil at their November 15-16 summit in the oil-rich Sultanate, according to aides. 

  Senior Apec trade officials and diplomats meeting in September said action was needed to tame wild swings in the cost of crude oil, which has raised fears of inflation as it shoots up to 10-year highs. 

  But the group includes major oil exporters such as Russia, Mexico, Indonesia and Malaysia, who have gained from the higher price of oil. 

  "Naturally there are some differences of interest," acknowledged Mitsuru Taniuchi, the Tokyo-based chairman of the Apec economic committee, which is drafting a statement on oil to be issued by the Apec leaders. 

  US President Bill Clinton, Russian President Vladimir Putin, Chinese President Jiang Zemin as well as the leaders of Japan, Australia, Canada, Peru and South Korea, among others, are to attend the summit of 21 nations. 

  "The Apec countries will probably affirm their shared understanding that high oil prices could hurt the economies of developing nations," said Hiroaki Kagawa, an international affairs official at Japan's trade ministry. 

  Those developing nations include crisis-wracked Indonesia, which as a member of the Organisation of Petroleum Exporting Countries (OPEC) agreed last week to a new 500,000 barrel-a-day output increase, the cartel's fourth hike this year aimed at taming prices. 

  For every extra dollar on a barrel of oil, Indonesia earns three trillion rupiah (US$330 million) more a year, said Indrayana Hadir, director of estimates and revenues at the Indonesian Department of Oil and Gas. 

  "Indeed the rise in international oil prices has pushed revenue up, but it's also meant an increase in domestic government subsidies" for the poor, who are hit hard by dearer cooking and heating oil, he said. 

  "So overall the rise in revenue is only slight," Haidir said. In contrast the developed members of Apec, such as Japan and the United States, have grown more immune to oil price volatility despite the thirsty energy needs of their industries and consumers.