MercoPress. South Atlantic News Agency

Oil corporations blame high prices on taxes and restrictions

The chief executives of Royal Dutch Shell Plc, BP Plc and Spain's Repsol YPF told the oil industry's biggest gathering in three years, in Spain that restrictions on where they can invest and high taxes meant they could not help boost supplies as much as they might.

BP's CEO Tony Hayward said the argument that financial investors buying oil futures were behind a four-year rally that pushed oil prices to new records above 143 US dollars a barrel was a "myth". He insisted the problem was a failure of supply growth to match demand increase. "Supply is not responding adequately to rising demand," he told thousands of delegates at the World Petroleum Congress. Repsol CEO Antonio Brufau agreed: "The fundamentals in the industry are the significant reasons for having these prices". Shell Chief Executive Jeroen van der Veer said there was enough supply to meet current demand but that the market was tight and that many users were justifiably worried that future supplies will not meet demand. Insofar as financial investors were involved in the market, they were only following such supply fears. "I do not think that you can blame speculation for the oil price", Van der Veer said. Hayward said politics rather than geology was the reason behind anemic supply growth. "The problems are above ground not below it," he said. Brufau noted that the vast majority of the world's oil reserves were in countries, such as Saudi Arabia and Kuwait, which restricted investment by international oil companies. Despite falling spare global oil production capacity, the OPEC oil cartel argues that supplies are ample and that they are investing enough to ensure consumers will have the oil they need in future. However, analysts say that while the oil majors tend to boost their investments when oil prices rise, in the hope of lifting output and profits, state-run or national oil companies often do not respond to market signals.