Sarkozy to create fund to fight rising oil prices
France called on the G7 on Tuesday to press oil-producing nations to boost their output in a bid to bring down prices that have reached record highs and thrown a spanner in oil-fired economies.
Finance Minister Christine Lagarde said she would put the request to her counterparts of the Group of Seven club of rich countries to seek a common front with Britain, Canada, Germany, Italy, Japan and the United States.
“We cannot forever be in a market system in which the price is permanently on the rise, to the benefit of producers, who are building up major oil revenues,” Lagarde told France 2 television.
“I have decided to alert all of my G7 colleagues to discuss this issue, among consumer nations, and that we present it to producing nations,” she said.
Lagarde said she would ask the G20 group of emerging economies to join in the drive to bring down the price of the barrel, that hit a record high of 135 dollars last week.
France has been rocked by nearly three weeks of protests by fishermen who have blocked ports, fuel depots and marinas to press demands for government aid to help cushion soaring fuel coasts.
While the protest movement appeared to be dying off in France after the government released aid, fishing fleets in Spain, Portugal, Italy and Greece launched action to press for assistance.
Private ambulance drivers in the northern city of Caen disrupted traffic during a protest against high petrol costs that they said were driving their businesses to the brink of bankruptcy, traffic authorities and protest organisers said.
Algeria’s energy minister and OPEC president Chakib Khelil said earlier this month that falling production in non-OPEC countries such as Russia had contributed to the spectacular rise in global oil prices.
But the head of the Organisation of Petroleum Exporting Countries blamed the weakness of the dollar and other factors for the rise, dismissing calls for a boost in production as a solution.
“If OPEC decides to raise production … these hikes will not really lower the price,” said Khelil in an interview to Spanish radio on Monday.
President Nicolas Sarkozy said in a radio interview that French consumers should brace for higher oil prices and that France was committed to developing alternative energy sources.
With France set to take over the presidency of the European Union in July, Sarkozy said he wanted to discuss with EU leaders the possibility of suspending the value-added tax on oil imposed by European states.
“I want to ask the question to our European partners: if oil continues to increase, should we not suspend the VAT taxation on the price of oil,” Sarkozy said.
“The demand for oil products is getting stronger and stronger and supply is not increasing or very little,” said Sarkozy, who last week travelled to Angola, sub-Saharan Africa’s second biggest oil producer after Nigeria.
French consumers pay about 19.6 percent VAT on the price of oil, which Sarkozy said had doubled since he took office last year.
Elected on a promise to fix France’s sluggish economy, Sarkozy is struggling with low approval ratings as French voters list worries about spending power as their number one concern.
“The cost of living is high, the cost of living is higher in France than elsewhere and there is no point in denying this reality,” Sarkozy said.
Source: The Economic Times