Japan's energy minister said that if the situation doesn't change, it could lead to a global recession [AFP]

The call came after the 11 nations that guzzle nearly two-thirds of the world's energy held talks in the Japanese city of Aomori, 600km north of Tokyo.
 
"We affirm the need to maximise investment in our own domestic production and we call on other oil producing countries to increase investment to keep markets well supplied in response to rising world demand," the joint statement said on Sunday.
 
Preparatory talks

The talks in Aomori, a hub of Japan's nuclear energy industry, are one of a series of meetings leading up to the G8 summit on July 7-9 when climate change is expected to be a top issue.

"If we leave this situation as it is, it could lead to a recession of the world economy," Akira Amari, Japan's energy minister, the host of the meeting, said in his opening address.
 
The G8 includes the UK, Canada, Italy, Japan, France, Germany, Russia and the US.

Amari said that the 11 nations meeting in Aomori together consume 65 per cent of world energy while also releasing 65 per cent of the carbon dioxide emissions blamed for global warming.

"Climate change and energy issues are two sides of the same coin," Amari said. "It is indispensable to solve these problems together."

The 11-nation talks came a day after US and Asia's four largest powers in a separate round of talks voiced "serious concerns" about spiralling oil prices and called for more investment to keep markets well supplied.

'Huge problem'

Kevin Rudd, the Australian prime minister, has meanwhile said that the world had a "huge problem" when it came to petrol prices and only the Organisation of the Petroleum Exporting Countries (Opec) could fix the issue by increasing the supply of oil.

"Opec needs to open the production lines to a greater extent [and] increase global oil supply," he told Australia's Channel 10.

"The G8 provides the opportunity to apply the blow-torch to the Opec organisation, and it's time that happened."

However, Chandran Nair, from the Global Institute for Gomorrow, said that increasing oil supply was not a solution.

"Increasing supply is a knee-jerk reaction you'd expect from politicians. It's politically expedient to say we have to produce more ... it's intellectually lazy.

"But look at long term issues facing the world ... it doesn't take a genius to understand we have to reduce the amount of oil we consume."

Seoul concession

Under domestic pressure in view of the skyrocketing prices, South Korea said on Sunday it would spend 10.5 trillion won ($10.2bn) over a year to help ease the financial burden on about 14 million people from the surge in oil prices.

Han Seung-soo, the prime minister, told a news conference the government planned to refund part of the additional money that low income earners spend on buying fuel.

"The super-high oil prices are affecting not only our country but the whole world. But the difficulty is especially severe with our country that produces not a single drop of oil but is the world's fifth-largest oil consumer," Han said.

South Korea's financial measures to alleviate the pain on oil users come as other Asian countries roll back oil subsidies which are proving too costly for governments to shoulder.

India and Malaysia raised fuel prices last week, joining a growing list of Asian governments no longer able to afford big subsidies and triggering protests.

Oil prices, which have soared five-fold since 2003, posted their highest ever one-day gain of $10.75 on Friday to close at a new record of $138.54 in New York after hawkish remarks by an Israeli official on oil producer Iran.

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