Civil G8 2006

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G8 documents

Global Economy and Oil (Gleneagles, 2005)


1. A strong global economy is of key importance to each of the members of the G8 and to the world as a whole. Global growth in 2004 was strong, underpinned by supportive macroeconomic policies and growth in trade along with increasing regional and global integration. Growth is expected to remain robust, although at a more moderate pace, in 2005, partly owing to higher oil prices and a more neutral stance of macroeconomic policies in countries at an advanced stage of the business cycle.

2. But challenges remain, especially persistent global imbalances and high and volatile oil prices. Weak domestic demand in many parts of Europe, high savings in Asia combined with primarily export-led growth, and strong consumption growth in the US, have resulted in a widening of global current account imbalances. To promote a transition to more balanced global growth, a comprehensive set of policy measures is needed. We acknowledge our shared responsibility to sustain and maintain growth within our own economies. We agree that we must all play our part through vigorous action to address global imbalances and foster growth. We are committed to concrete and credible actions, including:

continued fiscal consolidation to increase national savings in the United States;
actions to raise productivity in Canada;
further structural reforms in Russia, and in Europe to boost growth, employment and domestic demand;
and further structural reforms, including fiscal consolidation, in Japan.

3. We recognise that these necessary actions to help secure an orderly unwinding of global imbalances, are in our own best interest as they will promote sustainable growth and employment in our economies at the same time. In this context, we emphasise the importance of reforms to increase flexibility, raise productivity and enhance job creation. This will be critical in boosting medium-term growth, supporting macroeconomic stability and meeting demographic challenges.

4. Strong global growth has boosted energy demand and, together with capacity constraints, has led to high and volatile oil prices; such uncertainties have provided opportunities for speculation. We are concerned about the risks that sustained high energy prices pose for global economic growth. Oil demand is likely to continue to grow at a rapid pace. Partly related to the long lead time of oil market investments, medium-term investment plans seem to be insufficient at present to meet the rising demand. A number of measures could help to ease the tightness of the oil market.

5. We agreed that secure, reliable and affordable energy sources are fundamental to economic stability and development, and recognised the important role that energy efficiency, technology and innovation can play. And we have separately published a Plan of Action on these issues in addressing climate change.

6. The G8 encourages oil producing countries and oil companies to take all the necessary steps to ensure timely investment sufficient to meet growing demand. In particular, oil producing countries should provide stable and transparent framework conditions for investment in the oil sector, including foreign investment. In this context, the G8 emphasises the important role played by the dialogue between oil producing countries and oil consuming countries in the International Energy Forum (IEF). Furthermore, G8 appeals to oil industries to eliminate structural deficits in refining capacity in order to cope with the changing demand patterns and endorses energy conservation as a top priority.

7. We emphasise the need for concrete actions to reduce market volatility through more comprehensive, transparent and timely data. A factor exacerbating uncertainty is the lack of a universally agreed reporting system for reserves and resources to be applied by oil producing countries and oil companies. Reliable and timely data on supply, demand and stocks facilitate a pre-emptive adjustment to shifts in supply and demand while contributing to more solidly based investment decisions.

8. The G8 therefore welcomes and supports the JOINT OIL DATA INITIATIVE (JODI) launched by several international organisations, including the IEA, and now managed by the Secretariat of the International Energy Forum (IEF) and urges all countries to contribute to the success of this initiative so that market transparency benefits considerably from the establishment of robust world oil market data.

Expert opinion

Halter Marek

02.12.06

Halter Marek
Le College de France
Olivier Giscard d’Estaing

02.12.06

Olivier Giscard d’Estaing
COPAM, France
Mika Ohbayashi

02.12.06

Mika Ohbayashi
Institute for Sustainable Energy Poliñy
Bill Pace

02.12.06

Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal

01.12.06

Peter I. Hajnal
Toronto University, G8 Research Group


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