Mon, Nov 21, 2005 - Page 6 News List

OPEC tells Europe to lower taxes

GREEDY?Top energy producers said that they would do their best to meet demand, but pointed out that in Europe, tax is responsible for 80 percent of the oil price


The world's top energy producers, under pressure to meet global demand, called instead on Saturday on leading consumer states, mainly in Europe, to cut taxes on oil to alleviate hikes in prices.

The Organization of Petroleum Exporting Countries (OPEC), which supplies about 40 percent of world oil, and heavyweight member Saudi Arabia, made the call at the opening of the permanent seat of the International Energy Forum in Riyadh.

Saudi King Abdullah, whose Gulf state holds the world's largest oil reserves, vowed to continue to provide enough supplies, but called on leading consumer states to cut taxes on petroleum products.

"The policy of the kingdom is based on reaching a reasonable and fair price for oil and to provide enough supplies to all the consumers," he said at the opening, which was accompanied by a forum on the energy industry.

"But all the efforts of the producing countries will not bear fruits if they are not met with a positive position by the main consumer states," he said.

"These states should alleviate the ordeal of their citizens by cutting taxes on petroleum products when prices increase," he said.

OPEC chief and Kuwaiti Energy Minister Sheikh Ahmad Fahd al-Sabah also said "we will have many meetings and we will try" to seek tax cuts in consumer countries.

"This is a financial issue of their own, but everyone should know that in Europe, 80 percent of the price [of oil] is made up of taxes," he told reporters.

"They ask for an increase in production, and we ask for a cut in taxes ... which are one of the reasons for the hike in prices," he said.

But French Minister of Finance and Economy Thierry Breton claimed that high consumption in industrialized countries is to blamed for high prices rather than high taxes.

"It is not a problem of taxation. We do not want to give the impression that we want to facilitate consumption here or there. Instead, we should limit consumption in energy economies," he said.

The forum was the first major gathering for the world's energy consumers and producers after oil prices hit a historic high of US$70.82 a barrel on Aug. 30, before retreating to around US$57 at present.

For his part, Qatari Energy Minister Abdullah bin Hamad al-Attiyah said the energy market may see increased oil supplies in the second quarter of next year, possibly pushing down prices.

"There will be more oil floating and this might be a concern. We have to deal with it very carefully," Attiyah told reporters.

"Now so far, if we keep the price as it is, it will be okay. But what will happen in the second quarter," when demand usually decreases due to the end of the winter season in the northern hemisphere.

Attiyah said OPEC, which meets in Kuwait on Dec. 12, was expected to study "important" issues, particularly energy demand.

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