VIENNA, 3 December 2005 — The president of OPEC said yesterday he wanted the powerful oil organization to maintain high production through the northern hemisphere winter to avoid price rises but also urged consumer countries to do more by building refineries and cutting fuel taxes.
Organization of Petroleum Exporting Countries President and Kuwaiti Oil Minister Ahmad Fahd Al-Sabah told reporters he would recommend that OPEC “continue with our production and to not make any cut at the next meeting.”
The 11-nation group gathers in Kuwait on Dec. 12. He said production should continue at a high level “because winter (in the northern hemisphere) is coming and we don’t want to have any problem with the prices.”
The minister said OPEC was currently producing 30.3 million barrels of oil per day. The OPEC production quota is 28.0 million barrels per day plus 2.0 million barrels made available in view of hurricane disruption to North American output.
These figures are for 10 OPEC states as war-stricken OPEC-member Iraq is not included in the quota system. But Fahd Al-Sabah also said consumer states should do their part. “The products market is still under pressure from existing bottlenecks in the downstream sector,” Fahd Al-Sabah told a meeting in Vienna of OPEC and the European Union, referring to lack of refinery capacity that is an especially critical problem in the United States, causing prices to rise.
The OPEC president said that solving this problem “is the responsibility of consumer countries.”
The EU and OPEC said in a joint statement “that the serious tightness in the global refinery system would continue to strain market stability in the next few years, which calls for more efforts to create an environment that promotes downstream investments in major consuming countries and regions.”
Fahd al-Sabah also urged consumer countries to lighten up on high fuel taxes, which keep the price of gasoline for automobiles high, and so also put pressure on crude oil prices. “We believe that it will be in the interest of the final consumer and indeed of the industry as a whole if consumer governments review and rationalize their fuel taxation policies,” the OPEC president said.
He said that adapting taxation policy was especially important “when prices rise to levels that are considered very high.”
But European Commissioner for Energy Andris Piebalgs defended high fuel taxes in Europe as a policy decision to reduce energy consumption.
The EU and OPEC also said that they “welcomed the moderation in oil prices in recent weeks,” pointing to a decision from the International Energy Agency to release emergency stockpiles of oil onto the market in September and the offer from OPEC to make available its spare production capacity.
These measures were announced after the price of oil had climbed to an all-time high point of $70.85 per barrel in New York at the end of August following Hurricane Katrina in the United States, which devastated refining and crude production facilities on the Gulf Coast. Since then, prices have eased slightly and a barrel of oil for January delivery was priced at $58.91 in New York yesterday and $56.79 per barrel in London.
The meeting at OPEC’s headquarters was the follow-up to a first round of talks in Brussels in June and was attended by British Energy Minister Malcolm Wicks, who represented the EU, European Energy Commissioner Andris Piebalgs and Austrian Economy and Labor Minister Martin Bartenstein.