French Economy Minister Christine Lagarde has called for joint international efforts to solve structural problems that had led to record crude oil prices around the world, saying that the matter needed "immediate attention."
"The current oil prices are a long-term scenario," the French economy minister said Thursday, nevertheless arguing that the "exceptional price increases witnessed in recent days were due to marketplace problems that we must resolve."
Speaking during an interview on the RTL radio, the minister said that "there were quite exceptional price increases last Thursday, last Friday and again yesterday (Wednesday)," adding that an urgent solution was needed to rectify the situation.
"An increase of six dollars, ten dollars, five dollars... each day is not a normal market behavior and therefore there are problems on the market that we must resolve," said the French minister.
"I do not know if this is related to speculation or something else," but "there is a malfunction in the market and it is imperative that regulators, including the Americans, make an effort to examine where it is currently happening in order to stop it," said the minister.
Asked to comment on the relation between the soaring oil prices and inflation, which rose to 3.3 percent in France in May, its highest level since 1991, Lagarde said: "We must separate the traditional factors of inflation from the inflation which is linked to a particular commodity."
"The price of oil has more than doubled over the last one year, so obviously, this has something to do with fuel inflation and this has contributed to the current scenario where we have witnessed dramatic price increases," said the minister, adding that the situation was no longer tenable.
But, according to the minister, "in general terms, the rice in prices will not necessarily be mathematically as high," because "it is based on one year in relation to another."
"As oil prices will have been sustained at high level for long period of time, the inflationary effect will gradually diminish," said the French economy minister, who later scheduled to leave the country for a G8 economy and finance ministers' summit in Osaka, Japan.
Meanwhile, French Environment Minister Jean-Louis Borloo has urged the international community to observe caution in the development of ethanol as an alternative source of energy, warning against its "runaway effects."
"We must be wary of its runaway effects," the minister was quoted as saying Thursday during an interview with France 2 television, recalling that there had been "a program of extraordinary acceleration in ethanol production in 2005."
"Today, we have seen that there is a potential conflict with food and we are not developing new farms in sufficient numbers to mitigate the effects," said the minister, the only one to hold the rank of a minister of the state in the French cabinet.
"This does not mean we need to stop," said the minister, arguing: "But it means that we need to invest in the production of the new generation of ethanol, which will not be in conflict with food crops."
Source: Xinhua
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