OSAKA - US Treasury Secretary Henry Paulson said on Saturday speculators were not to blame for surging oil prices, with 'all the evidence' pointing to tight supply and strong demand as the main cause.
'In terms of financial investors and speculation and the role that plays, what I emphasise is that we're looking at that, we'll continue to look at that, but all the evidence points to supply and demand,' he said.
'In the world today,' he added, 'what people want to do is look to simple short-term solutions.
'I think there's a danger that if people say 'all this is speculators' then we won't do what we need to do. We don't want to misdiagnose the problem,' he told a press conference here after a meeting of Group of Eight finance chiefs.
He said there had been no significant increase in global oil production capacity for the past 10 years, calling for new investment to tap sources of fossil fuels as well as alternative energy.
'I think we would be making a mistake if we looked away from the major problem and if we thought there could be some short term-fixes here,' Mr Paulson warned.
'Financial investors in my experience don't create trends. They may sometimes follow trends,' he said. 'Commodity prices have moved up based on supply and demand.'
G8 finance ministers called on Saturday for an urgent boost to global oil production and an investigation involving the International Monetary Fund into the recent wild swings in energy prices, including the role of speculators.
They said greater transparency in the oil market and more reliable data were needed, including on 'the size of financial flow coming into the oil market'.
World oil prices have been on a rollercoaster ride recently, soaring close to US$140 (S$193) a barrel on worries about tight supplies, with some blaming market speculators for aggravating the erratic movements.
Oil prices have surged five-fold since 2003 due to a variety of factors, including turbulence in the Middle East and rising demand in emerging economies such as China and India. -- AFP