Finance ministers from the Group of Eight industrialized nations urged oil producers Saturday to boost output to help stabilize record-high oil and food prices, calling the situation a serious threat to global economic growth. The world economy now faces “headwinds” because of the recent rise in prices, the G8 ministers said in a joint statement at the conclusion of two days of talks in Osaka in western Japan. “Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressure,” the statement said. The fundamental factor driving oil prices is the imbalance between rising global demand and supply constraints, the ministers said. They added that geopolitical and financial factors also play a role – a reflection of some ministers' view that speculative trading in oil markets is pushing up prices. US Treasury Secretary Henry Paulson insisted that the problem stems primarily from tight supplies and warned against embracing “short-term solutions.” Noting that oil prices have jumped fivefold since 2002, Paulson in a statement called on countries to let markets work and reduce reliance on subsidies. He pressed oil-producing countries to allow more investment in oil exploration and production. “I think there's a danger if people say, ‘Oh, it's the speculators,'” Paulson told reporters after meeting with his G8 counterparts. “We don't want to misdiagnose the problem. And if you look at the problem, I think it's pretty clear. We have not had an increase in production capacity in oil for the last 10 years.” Echoing Paulson, British Chancellor Alistair Darling said focusing too heavily on speculators distracts from the main issue. “What we need to do, as a matter of urgency, is to increase supplies,” he said. But other G8 members, particularly France, Germany and Italy, place greater blame on speculators. Italian Finance Minister Giulio Tremonti said “enormous” speculation is behind the rising energy prices. He has proposed an increase in margins needed to trade oil futures contracts. Japanese Finance Minister Fukushiro Nukaga, chair of the G8 meeting, downplayed any differences among members, saying they simply “don't yet have a full understanding of what is actually happening.” To help find out, the ministers called on national authorities to examine commodity futures markets and take “appropriate measures as needed.” They also asked the International Monetary Fund and the International Energy Agency for a report later this year on the factors behind surging oil and food prices. The agenda for the G8 talks also included troubled financial markets and private-sector
