G-8 Leaders Express 'Strong Concern' Over Oil, Call for Output Hike

Leaders from the Group of Eight industrialized powers expressed "strong concern" about rising oil and food prices but said they remain "positive" about the outlook for the global economy in a communique released Tuesday.

Saying that surging oil prices pose a risk to the world economy, the G-8 leaders urged that production and refining capacities be increased in the short term and that investment be boosted over the medium-term.

The G-8 — which groups the U.S., Britain, Japan, France, Germany, Canada, Russia and Italy — also called for diversifying sources of energy and further efforts to improve energy efficiency.

To enhance energy security, the leaders proposed an energy forum focused on energy efficiency and new technology to help dialogue between producers and consumers. No further details were available.

"We remain positive about the long-term resilience of our economies and future global growth," the leaders said in the statement released on the second day of the G-8's three-day summit in northern Japan, noting that growth in emerging economies remained strong.

"However, the world economy is now facing uncertainty and downside risks persist," the statement said.

"We express our strong concern about elevated commodity prices, especially of oil and food, since they pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and increase global inflationary pressure," it said.

During a morning session that was devoted to economic issues, the leaders reached no clear consensus on the reasons behind the doubling of oil prices over the last year. Some attributed oil's rise to growing demand and tight supplies and others stressed the role of speculation, according to Yasuo Kodama, the press secretary of Japan's Foreign Ministry.

The G-8 leaders noted in their statement that financial market conditions had improved somewhat in recent months but said "serious strains still exist." There was no discussion of the subprime mortgage crisis in the U.S. that has rattled global markets, Kodama said.

The leaders also pledged to resist protectionist measures and called for the swift conclusion of World Trade Organization talks that have stalled amid bickering between rich and poor nations over how much to cut farm subsidies and other tariffs.

The leaders recognized sovereign wealth funds as increasingly important participants in the world economy and welcomed recent commitments by these government-owned investment funds to improve transparency.

The leaders briefly touched on food security, stressing that Africa's agricultural output was vital, Kodama said. They planned to discuss the subject more in the afternoon.

They also said biofuel production — which some have partially blamed for the run-up in oil prices — should be conducted in a sustainable manner.

One leader said that the G-8 needs to cooperate more closely with countries outside the group, Kodama said, without identifying the person. Other leaders responded by saying that the group was made up of members with shared values and that expanding the G-8 might dilute the quality of discussion, Kodama said.

French President Nicolas Sarkozy has been pushing for the G-8 to expand to take in growing powers China, India, Brazil, South Africa and Mexico, saying it is unwise to keep them on the sidelines.

In an interview with the Yomiuri newspaper published Monday, Sarkozy said that "at the least," those countries should be brought in for a full day of discussions at the annual G-8 summits. On Wednesday, those five nations countries have been invited for a half-day of talks — and were scheduled to hold their own meeting in Sapporo, the nearest big city, on Tuesday.