No Quick Fix for Oil Prices, Paulson Says
U.S. Treasury Chief Calls for Open Investment in Middle East Oil Markets
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Monday, June 2, 2008
DOHA, Qatar, June 1 -- U.S. Treasury Secretary Henry M. Paulson Jr. said Sunday that there was no quick fix to high oil prices, which he called an issue of supply and demand.
Paulson said inflation in the Persian Gulf is "significant" but suggested that Gulf countries pegging their currencies to the weak dollar was not the only reason for it. He said it was each country's "sovereign decision" whether it wants to de-peg its currency the dollar.
Speaking in the Gulf nation of Qatar, Paulson also acknowledged the U.S. economy was experiencing a "downturn" and reiterated that a strong dollar was in the U.S. interest.
The Treasury chief was in the Mideast to deliver a message to officials of Saudi Arabia and other oil-producing nations that soaring oil prices are burdening the global economy. He is urging the countries to open their oil markets to investment that can boost yields, exploration and production.
With oil at record-high prices, Paulson said there is "no quick fix" because it is an issue of supply and demand. Global demand remains strong while "production capacity has not seen new development," Paulson said.
"I don't see a lot of short-term answers," he added.
On a trip to the Middle East last month, President Bush failed to win the help he sought from Saudi Arabia to relieve skyrocketing gas prices. Saudi officials said they already were meeting the needs of their customers worldwide and there was no need to pump more.
Saudi Arabian Finance Minister Ibrahim al-Assaf said Saturday that his country has no intention of de-pegging its currency from the weakening U.S. dollar. He spoke following a meeting with Paulson.
The dollar's decline has pushed the cost of imports into the Gulf, fueling inflation. It has also watered down the benefit of high oil prices.
Iran was also a focus of Paulson's meetings in the Gulf. He said the United States was making it more difficult for terrorists to move money around. "Iranian banks have been aggressive and disruptive in moving money through financial systems," he said.
Paulson will meet Monday with the managing director of the Abu Dhabi Investment Authority, the world's richest sovereign wealth fund. He will then travel to Dubai before returning to Washington.
Bloomberg News contributed to this report.
