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U.S. out of step on oil at Mexico summit

  |   March 31, 2010 at 10:23 AM
CANCUN, Mexico, March 31 (UPI) -- Washington backs a system that lets market mechanisms determine oil prices, breaking from the consensus at a Mexico energy summit, officials said.

Delegates from across the globe are wrapping up their second day of talks in Cancun, Mexico, for the International Energy Forum. IEF members kicked off talks Tuesday to tackle energy security and pricing issues.

U.S. Deputy Energy Secretary Daniel Poneman said the market should determine the price for crude oil, the Financial Times reports.

"The goal of the (United States) is a clear and long-standing one and that is to let the laws of supply and demand set prices," he said.

But IEF Secretary-General Noe van Hulst told the Financial Times that huge fluctuations in crude oil prices in the past few years were a sign that intervention was needed.

"I think there is much broader acknowledgment now that we need to do everything we can to avoid that kind of excessive volatility," he said.

Oil prices approached $150 per barrel in July 2008 before collapsing to $30 six months later. A decision by major oil producers to control output is creating some stability, however.

Philip Hunt, the British minister for energy and environment, said in Cancun that previous fluctuations were a "wake-up call" because of the ripple effect oil prices have on the world economy.

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