Gasoline prices jumped overnight in some Canadian markets as energy-consuming nations meeting in Japan urged oil producers to step up output.
In Toronto, regular gasoline jumped about six cents per litre at several stations, costing about $1.35. On Tuesday, the M.J. Ervin survey listed Toronto's average price as $1.30 per litre, with a Canadian average of $1.31.
Liberal MP Dan McTeague says institutional investors, like hedge and pension plan managers, are artificially inflating prices and "bringing the international economy to its knees."
"Supply is more than adequate, and demand is down. And yet these prices are going as if someone has declared war," McTeague told Â鶹´«Ã½.
McTeague says index analysts from major banks are also "abusing the system."
Traditionally, they are not supposed to participate in futures commodities exchanges, but electronic trading capabilities -- like the ones in place at the Toronto Stock Exchange -- are providing insiders with a "backdoor."
The result is not only distorted oil prices, but food prices as well, says McTeague.
He likens the recent oil crisis to the U.S. sub-prime mortgage problem.
"This is another example of a bubble that is about to burst," he said.
Oil's price closed at US$138.54 on the U.S. Mercantile Exchange in New York on Friday after briefly breaking $139. That US$11 rise followed a US$5 jump on Thursday.
In Aomori, Japan on Saturday, Akira Amari -- Japan's trade minister, who hosted the meeting of five consumer countries -- said: "Current oil prices are at abnormal levels. There is an overwhelming lack of investment and production levels have hardly increased over several years."
Since 2005, world oil production has stalled at about 85 million barrels per day.
At the same time, global economic growth -- particularly in China and India -- has pushed demand dramatically upward.
To explain the rapid rise in prices, analysts also cite:
- The decline in value of the U.S. dollar
- Fears about the long-term supply of oil
- Aggressive speculation
China argued that speculation, more than its rising demand, was driving the rise in price.
The ministers, meeting in advance of a G8 energy conference on Sunday, said the unprecedented prices hurt both consuming and producing nations.
The group also vowed to:
- Work on energy diversification
- Co-operate on strategic oil stocks
- Improve data on oil production and inventory
Where the group didn't find consensus is on the issue of oil subsidies. According to the International Energy Agency, oil subsidies in China, India and the Middle East totalled US$55 billion in 2007.
Those subsidies shield consumers in those countries from rising oil prices and the attendant impact on gasoline costs.
China and India argue that a rapid phase-out of the subsidy could trigger political and economic instability.
"We are taking very precise and delicate measures so we will not destabilize the government," said Zhang Guibao, China's delegate. "If we face such problems in a country such as China, with a large population ... there would be adverse impacts felt throughout the world."
India did boost gasoline and diesel prices on Wednesday. Consumers reacted by blocking rail tracks and roads, and shutting down businesses.
With files from The Canadian Press and The Associated Press
