LONDON (Reuters) - Oil consuming nations are joining forces to persuade OPEC to open the taps further, fearing prices near 10-year highs could hurt economic growth and shaken by Europe-wide fuel protests by truckers and farmers.
German Chancellor Gerhard Schroeder said during a visit to Spain at the weekend that the Group of Seven industrial nations would tackle oil prices at its summit in Prague next weekend.
Governments across Europe are desperate to end the trucker blockades that cut off petrol supplies and jammed roads last week. Politicians have been shocked by the depth of public anger over petrol prices and the level of support for the protesters.
"We will try together, perhaps via (the EU council of finance ministers) Ecofin but also via G7, to develop ideas which will lead to a process in which oil production will be adjusted to the needs of the global economy," Schroeder told reporters.
The German edition of the Financial Times, citing German government sources, reported that G7 finance ministers would urge OPEC to act to cut prices by boosting output.
It said the initiative, launched by Britain, had already been discussed by the other six members of the G7 -- the United States, Japan, Germany, France, Italy and Canada -- and Russia. All were interested in a joint position, the paper said.
Adding to the pressure on OPEC, EU finance ministers have said that oil prices in excess of $30 a barrel -- triple the level a year ago -- are a real worry. Benchmark Brent crude closed out the week at $33.90 a barrel on London's International Petroleum Exchange.
"The current level of oil prices is a major source of concern. Oil prices need to return to a level that preserves worldwide growth," Ecofin said in a September 9 statement, timed to nudge OPEC into action at an output meeting in Vienna the following day.
The pressure paid off and the cartel's ministers lifted production by 800,000 barrels to 3.3 million barrels daily.
But relief for oil consumers was shortlived and crude prices shot up again last week, spooked by tensions in the Middle East.
Many international policy makers fear global growth could be slowed by up to half a percentage point if oil prices stay at these levels, according to Germany's Deputy Finance Minister Caio Koch-Weser.
Speaking last Thursday after high-level talks to plan the annual meetings of the International Monetary Fund and World Bank in Prague, Koch-Weser said the oil price was clouding an otherwise bright economic outlook.
"Most (of the officials) thought there could be a weakening of worldwide economic growth by half a percentage point..if oil prices stay where they are," he told Reuters in an interview.
But OPEC has shown little inclination to bail out oil consumers again. Instead, the cartel has called on Western governments to ease the tax on gasoline and diesel.
"Responsibility for such high prices lies fairly and squarely on the shoulders of those governments that see fit to impose exorbitant levels on taxation on petroleum products," it said last week.
And the cartel has found an unlikely ally in the tens of thousands of truckers and farmers who have jammed roads and blockaded oil depots across Europe, calling for big cuts in fuel levies.
-- cpr (buytexas@swbell.net), September 17, 2000