Washington: Increased use energy resources by fast growing economies like India, China and Brazil is driving the global oil and gas demand, US President Barack Obama said on Saturday.
"The problem is a great deal of uncertainty in the oil markets, part of it prompted by the fact that the economy's growing faster in some places than others, but you've got China and India and Brazil and other emerging nations that are using more and more energy as their economies advance," Obama said at a news conference when asked about the rising gas prices in the US.
Following the current unrest in the Middle East, gas prices in the US have crossed USD 3.5 a gallon and is expected to further go up, which is prompting demand of use of strategic oil reserve, which Obama said is an option not under consideration right now because there is no major disruption in oil supplies.
"We already saw that trend in 2008. Because of the worldwide recession oil prices went back down, but to some degree a lot of what's happening in prices is as a consequence of economic growth, and countries and economies starting to use more oil.
"Part of it, though, is also uncertainty in terms of what's happening in the Middle East," he said.
"One of the messages that I want to send today is that we are confident about our ability to fill any potential gaps in supply. Libya, for example, does not account for a large portion of overall world production.
"They provide a type of oil that is highly valued and there's a high premium on it, but basically even if Libyan oil production was suspended for a significant period of time because of the unrest there, we'd be able to fill that gap.
So a lot of this has to do with uncertainty in the market," he said.
Obama said the idea behind the Strategic Petroleum Reserve is if there was a severe disruption in supply, similar to what happened in the '70s, for example, when OPEC making a decision not to sell for a while, how would the US economy continue to function, and making sure that Americans have sufficient supplies for that.
"Another example would be during Hurricane Katrina when you've got a whole bunch of refineries that have been impacted and production in the Gulf has been impacted.
You know, that's another example where in a short term you can fill that hole," he said.
Obama said rising prices are not a new phenomena.
"Three years ago, before the recession hit, a combination of factors, including rising demand from emerging economies like China, drove gas prices to more than USD 4 a gallon," he said.
"The world-wide recession and the decrease in demand pushed prices back down. But over the past year, as the economy has picked up steam and global demand for oil has increased, prices have increased again," he added.
Obama said the turmoil in North Africa and the Middle East has added uncertainty to the mix, and lost production in Libya has tightened supply.
"The global community can manage supply disruptions like this. Other oil-producing nations have committed to filling any gaps. And we will continue to coordinate closely with our international partners to keep all options on the table when it comes to any supply disruptions," he said.
First Published: Saturday, March 12, 2011, 10:11