from "From The Wilderness" WASHINGTON, Oct 1 (Reuters) - Worried soaring oil prices could hurt the best global prospects in years, finance chiefs from wealthy nations met on Friday to try to work out what lay behind the surge and how to buffer the economic expansion.
Group of Seven finance ministers and central bankers met at the tightly guarded U.S. Treasury building over lunch and were to work through the afternoon before a dinner with Chinese counterparts that has currency reform on the menu.
The officials will set out their world-view at about 5:45 p.m. EDT (2145 GMT) in a communiqué sources said would include a call to bolster oil-market monitoring to make it easier to discern if scarce supply, hefty demand or market speculation lay behind crude's drive to record levels.
The answer to this question is critical.
It could affect policy responses big oil consumers must adopt -- higher interest rates to stem inflation or a renewed focus on finding new energy sources -- and may offer key information on how long the price rise will last.
On Friday, U.S. crude oil futures topped $50 a barrel.
RISKS RISING
"High and volatile oil prices pose a risk to the outlook, dampening consumer spending and company profitability," Britain's Chancellor of the Exchequer, Gordon Brown, warned on Friday. He said it was vital for the G7 "to improve the transparency and the efficiency of the oil market."
G7 sources said a document released on Friday by Brown laying out his calls for improved energy market data would form the basis of language on oil in the ministers' communiqué.
After the half-day formal meeting, G7 ministers will sit down with China for a working dinner billed as an historic chance to bring the Asian giant into the fold and discuss its plans to ease a peg of its yuan… to the dollar…
The G7 gathering comes ahead of weekend meetings of the International Monetary Fund and World Bank…
Ministers are seeking energy market transparency to discover if world oil supplies may be scantier than they thought in May when they urged producers to open the spigots…
Another G7 official suggested the rise in oil costs was rooted in such fundamental factors as over-estimated supplies and was not solely due to speculation.
There is "a recognition that oil resources are scarcer than was thought a few years ago," the official said. "We agree there is a need for more transparency on the potential supply of various areas."
If scarcity is the chief culprit, the oil price shock may not prove as temporary as hoped, the official said.
"WRAPUP 1-G7 finance chiefs mull oil before China meeting"
Reuters, October 1, 2004
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