Paulson: no quick fix for oil price

[July 03, 2008]  LONDON (AP) -- U.S. Treasury Secretary Henry Paulson warned Thursday that rising oil prices are likely to prolong the world economic slowdown.

Speaking at a London news conference, he said there will be no quick fixes to calm soaring oil prices which hit a trading record, above $145 a barrel on Thursday.

"I think that the oil prices are a strong head wind and at this level, they have got a high risk that they are going to prolong the slowdown," Paulson said, winding up a European tour.

Paulson was holding talks on Thursday with British Treasury chief Alistair Darling and banking executives following meetings in Russia, Germany and others in Britain.

British Prime Minister Gordon Brown, who met Paulson on Wednesday, told a parliamentary committee that he agreed that oil prices are likely to continue rising.

"If demand exceeds supply and is likely to exceed supply for years to come, people will expect the price to rise," Brown told the House of Commons liaison committee.

Paulson and Darling told reporters that the United States and Britain urgently need to end their addiction to oil, reduce dependence on foreign energy imports and promote investment in renewable alternatives.

However, Paulson also conceded there is unlikely to be any short term impact to lower prices.

Saudi Arabia's oil minister, Ali Naimi, said Thursday that his country has no immediate plans to boost production, despite the new price record.

"I don't believe this situation avails itself of quick fixes," Paulson said. "But that doesn't mean we shouldn't be focused on this intensely right now, in terms of taking measures that will lead to changes."

Paulson and Darling called for more transparency from oil producers about their reserves and urged the Group of Eight industrialized nations to consider how to increase oil production at a summit in Japan next week.

"There are questions in the short term about the ability to meet the demand," Paulson said.

Darling said action to lower dependence on foreign oil must take place faster than previously anticipated. Nations need to "move far more quickly than many people thought was necessary," he said.

[Associated Press; By DAVID STRINGER]

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