Angel Gurria, the head of the The Organisation for Economic Co-operation and Development (OECD), expressed his views that the proposal to slash fuel taxes or subsidising prices can be disastrous.
Addressing at the annual meeting of the world's richest countries, he held that the best answer to high oil prices is actually high prices that lower demand.
The members of OECD are attempting to come to a consensus about plans to deal with climate change and reduce the consequences of the world financial crisis. OECD’s annual meeting comes at a time when the world is confronting an increasingly sluggish economy and increasing oil prices, which had recently touched the mark of 135 dollars a barrel. OECD is bringing together business, governments and pressure groups in an attempt to find a common ground on how to reduce greenhouse gas emission and slow down global warming.
The OECD meeting will look at the practicability of intensifying the use of nuclear energy and bio fuels in order to meet the rising energy needs. And it will also look at the role companies can play in encouraging clean technology.
However Mr. Gurria's remarks on the price of oil can be controversial for now, when, the government of UK is under increasing political pressure to let go of plans to heavily tax the most-polluting cars.
The OECD is also going to show its economic forecast for the world economy. The forecast is expected to repeat the global predictions published by the International Monetary Fund in April, The predictions anticipates a global deceleration which is longer and deeper than believed earlier.
Much of the discussions at the meeting will concentrate on how delicate the world financial markets are, inspite of the fact that central banks have put in billions of dollars to support the banking system.
Jean-Claude Trichet, the president of European Central Bank President is expected to addressed the conference which falls just a day after the 10th anniversary of ECB. Mr Trichet is likely to stress on the necessity for the ECB to be on its guard against the mounting pressure for price increases in Europe fostered by high oil prices.
However, with the support of European governments, he may admit that the ECB has to consider the fast slowdown expected in the growth.
OECD is also concerned that the rise in bio fuels price is putting extra pressure on the already tight world food supply. OECD aspires to be the key medium where informal talks between emerging countries and rich countries can take place. It wants to hold talks on the question of how to deal with globalisation. Amidst the rising demands on the world economy, with rising fuel and oil prices, combined with problems over the prospects of world trade talks, makes it a difficult task.