OPEC is expected to respond to pressure from oil importing countries by raising supply limits this week, but refining capacity remains an obstacle to consumers benefiting from this, according to the president of OPEC.
After hitting an all time high of $70.85 a barrel in the immediate wake of Hurricane Katrina, oil prices have moderated, but remain a concern to world leaders who have been pressured OPEC to take action.
Last week the IMF downwardly revised growth forecasts for Germany, France, the UK and Italy partly as a result of oil price increases. A recent meeting of EU finance ministers called for action from the oil cartel, while the impact of oil on the world economy will also be discussed at the meeting of the G7 group on Friday.
OPEC is expected to agree to increase production by between 500,000 and 1 million barrels a day. However it remained questionable whether in the wake of Katrina's impact on US refineries whether refining capacity could handle extra supply.
According to recent figures from the International Energy Agency, although increased demand for oil has been matched by increases in crude supplies, refinery capacity has failed to keep pace, causing supply bottlenecks. Speaking at the recent meeting of European Union finance ministers, UK chancellor Gordon Brown called for oil producing countries to use extra revenues caused by recent oil price increases to invest in oil production and refining capacity, as well as for the productive sector to improve energy efficiency.
Meanwhile, a study released yesterday by Sustainable Energy Ireland (SEI) shows that Irish industry"s expenditure on energy increased by 27 per cent between 1998 and 2002. Between 2000 and 2005 electricity prices faced by industry rose by 51 per cent.
"By examining ways in which energy efficiency can actually improve the bottom line, executives will transform the issue of energy efficiency from a cost burden into a sustainable competitive advantage. They will also be playing an important role in helping Ireland to combat the negative impacts of climate change," said SEI chairman Mr David Taylor. Mr Taylor was speaking yesterday on the first day of Energy Awareness Week.
