01-05-01 OPEC'S new secretary-general Dr Rodriguez Araque blames Chancellor Gordon Brown's taxation policies as the main cause of high petroleum product prices in Britain. The OPEC chief was addressing an international energy conference at Dundee University where he argued that it was not OPEC's policies but Brown's high tax and duty regime that were the cause of high prices.
Rodriguez, Venezuela's former oil minister, said: "I believe the UK population understands very well the realities underlying its high petrol prices. "In the UK 80 % of the final price to the consumer of petrol at the pump is accounted for by national taxes and duties. Raw oil from producer countries, including OPEC, make up only 12-18 % of that price. "Chancellor Brown gets far more out of a barrel of oil than Saudi Arabia or any of OPEC's 10 other members.
He added: "The irony is that Western countries put pressure on us to reduce prices by increasing output, but when prices drop they don't drop their taxes." He said that in Venezuela, petrol costs 30 pence a gallon and is cheaper than bottled water. Other factors outside OPEC's control were also contributing to high energy prices for consumers.

Rodriguez made the historic visit to Dundee to attend Dundee University's Centre for Energy, Petroleum and Mineral Law Policy (CEPMLP). He cites as a major factor to high energy prices the significant decline over the past 25 years in refining and pipeline capacity in the US, the world's biggest energy consumer. He said: "This leads to an increase in product prices, which inevitably has an impact on crude oil prices."
The scale of the US' refining and pipeline problem is shown by the different directions in which its crude and refined petroleum inventories have moved in the past year. Crude oil inventories are up almost five 5 % at 313 mm barrels; in contrast to this, petroleum product inventories are down 6 % at 193 mm barrels. In other words, US prices are rising not because of OPEC cutting back supplies this year but because thecountry cannot process fast enough the raw material inventories it has already built.
On the day that London's Petroleum Exchange was bought by Atlanta-based Intercontinental Exchange, he blamed speculation on futures markets for also fuelling high Western petroleum prices. "Some 150 mm barrels of oil are traded on futures markets each day, nearly twice the world's daily demand," he said.
High transportation fees had further stoked oil prices. There was a shortage of shipping following the scrapping of hundred of tankers as a result of strict environmental regulations requiring the new generation of oil tankers to have double hulls.

The secretary general, argued that OPEC's output strategy was designed to maintain market stability in oil prices in a range between $ 22 and $ 28 a barrel. "Our price band mechanism helps maintain the balance between world demand and supply," he said. "It is no different from what the Seven Sisters [the world's seven major oil companies] did in the pre-OPEC period, agreeing supply flows between them to ensure that there were no abrupt falls in price."
Asked if OPEC feared the development of non-oil sources of energy, he said: "When we reach that river, we will cross it. For the time being, oil and gas resources will remain the world's main forms of energy. The future still remains with hydrocarbons, and 78 % of the world's proved crude oil reserves are in OPEC member states."

Rodriguez became secretary general of OPEC in January in succession to Dr Rilwanu Lukman. His appointment followed the decision by Venezuela's radical new president, to begin implementing OPEC oil flow policies instead of defying them as it had done before. He also confirmed that OPEC was considering increasing output from September.
"At our next extraordinary meeting in July we will maintain current output levels," he said. "But probably when we meet in September, we will increase production in order to satisfy the market if there is any increase in demand."
Rodriguez said that withthe slowdown in the world economy it was impossible to forecast what the situation would be in four months' time. He said: "There are so many uncertainties in the market. "We don't know what will happen with Japan and the US, although the chairman of the European Central Bank is optimistic," he added. "We are monitoring the situation continually."