IEA: Developing nations cause high oil prices

Subsidized fuel costs in developing countries are pushing up oil prices, the Paris-based International Energy Agency said in a report.

The IEA also lowered its projected demand for oil; high prices and economic weakness are starting to cut into oil demand, it said. That's not the case, however, in China and the Middle East, where government subsidies are keeping demand up, the Globe and Mail reported.

In China, the government's subsidy program could cost as much as $87 billion. Saudi Arabia and Iran also keep retail prices artificially lower, and Venezuelan President Hugo Chavez subsidizes fuel prices not only in his own country, but in Cuba and Nicaragua.

Russia has subsidized gasoline prices and Vietnam has frozen oil prices until June. Taiwan, Thailand, Indonesia and Malaysia also all have some kind of price-stabilizing mechanism, but their governments are losing money fast.