Developing economies face oil price dilemma, OPEC Chief says

OPEC: Developing countries are facing a dilemma in managing oil prices on their home market, Chakib Khelil, President of the Organization of Petroleum Exporting Countries (OPEC), said here on Tuesday.

Speaking at a plenary session of the on-going 19th World Petroleum Congress in Madrid, the OPEC Chief said that with the different economic bases and purchasing powers it is irrational to let people from the developing countries have the same price as those in developed ones.

Governments in developing nations thus face a dilemma: too much subsidy will be an economic burden, while no subsidy will be unfair for the general public, according to the OPEC chief.

It is unimaginable, Khelil said, to have one and the same price for people with a monthly income of 500 U.S. dollars and those with 3,000 dollars.

The fact that Europe and the United States have different oil prices tells us that even among the developed economies governments would subsidize oil prices, Khelil said. The OPEC leader said that volatile and high oil prices are no good for either oil purchasing countries or producing countries.

He said OPEC, which is producing 40 percent of the world’s crude oil, does not set the price.

With new technology, OPEC will increase its production and turn out about 50 percent or even 60 percent of the world oil supply in the future, Khelil said, adding the cartel will contribute about 52 percent of the world’s oil by 2010.

Madrid, Wednesday, Xinhua