05-12-07 The Japanese government pledged yen 30 mm for a study by the International Energy Agency (IEA) on the impact of short-term speculative money on the oil market, where crude prices have hit record highs.
Economy, Trade and Industry Minister Akira Amari, who announced the plan, said, "We are almost unable to regulate money from investment funds, but we still need to look into how moves by such funds affect oil prices." He said recent record-breaking hikes in crude oil prices were due mainly to the influx of money from short-term funds.

The IEA, the oil-consuming countries' energy watchdog, will determine the use of the money on its own and is expected to organize a "dialogue" early next year involving governments, those in the financial industry and experts on financial and energy issues, Amari said. Other details have yet to be worked out.
The European Union held a similar meeting in cooperation with the Organization of Petroleum Exporting Countries, the government said.

Japan has proposed a study by the IEA since this autumn, warning that the influx of speculative money, almost 10 times the scale of the value of the market itself, causes prices to change regardless of the actual balance between supply and demand. Japan may call for funding from other countries when it becomes necessary for the IEA to expand its study, Amari said.
"Through the study, we hope we will be able to think about a way that investments by funds can benefit the global economy," the minister said. "Then we can create a win-win situation."

The key oil price rose to a record $ 99.29 a barrel late in November in New York.
Analysts say speculative money is believed to have fled from risky home loan securities to oil for quick profits.