The Significance of Dialogue Between the Sides of the Oil Equation

  • 11 June 2008

The rise in oil prices is a continuing concern in developed and developing countries alike. Sharp changes in the oil markets and repeated increases in the price of crude are affecting economic conditions around the world and causing an atmosphere of doubts and mutual accusations between oil producers and consumers.

The instability in international oil markets is wreaking havoc in world economic development plans because of the inflation the rise in oil prices is causing. And when examining the explanations each side of the oil equation cites to defend his position and the accuracy of his estimates, the gap between the two positions becomes clearer. What also becomes clear are limited truthful and accurate claims, exaggeration of the situation, and weak arguments surrounding it.

The first step toward resolving any dilemma and facing any problem between parties with differing interests and competing objectives is an agreement on defining the issues and identifying their components rationally, scientifically, and transparently. What also is needed is the good will to reach a solution that would not be at anyone's expense or that would ignore anyone's rights. This is what some producers have recently called for in their proposal of plans for producers and consumers to discuss inexcusable increases in the price of crude oil after it rose by more than 40% this year.

These calls have added importance since they come from the very party that directly benefits economically and financially from the price rise. They also highlight the feeling of responsibility and maturity among the producers who show that they care about the stability of the international oil markets and economy. Neither do the calls for dialogue contradict some OPEC members' objection to an earlier meeting of the organization, set as it is for next September. Meetings between producers and consumers, and the companies working in the field, are for objective dialogue, changing the atmosphere of lack of confidence, and discussing the issues affecting oil markets. They also are for discussing the nature of the roles they play and the effects they may have on price hikes, instead of continuing with assumptions and mutual recriminations.

New developments point to positive developments in this regard. Members of the American Congress agreed lately with the producers and accused the speculators of causing the hike in prices. French President Nicola Sarkozi also admitted that high oil taxes in his country are contributing to the problem. Similarly, Canada has announced that there is no magic solution to higher prices and that it supports a meeting between producers and consumers. These stances come to emphasize the importance of dialogue, discussion, and common action by all parties concerned to near the gap, shorten the distance, unify convictions, and augment points of agreement. Clarifying the picture will likely help in returning things to their proper channels for the benefit of the entire world economy.