Bodman: Low oil production hurting prices

JEDDAH, Saudi Arabia, June 22 (UPI) -- The price of oil is up dramatically, in part, because global producers aren't pumping enough to meet demand, U.S. Energy Secretary Samuel W. Bodman says.

The U.S. official said in a statement Sunday in the Saudi Arabian city of Yeddah that since Organization of Petroleum Exporting Countries members have kept their production constant in recent years, increased demand has caused prices to spike significantly.

"If there are no additional supplies of oil, for every 1 percent increase in demand, we would expect a 20 percent increase in price to balance the market," Bodman said.

Bodman said to help balance the rising cost of oil with the global demand, increased production must take place and price subsidies must be significantly reduced.

"I'm not arguing for eliminating price subsidies tomorrow," he said, "nor do I expect that is feasible or particularly wise. But I do believe that countries that employ this mechanism have a responsibility to take steps to reduce its use in a reasonable and timely way."