Brown warns on volatile oil price

Volatile oil prices remain a threat to the global economy, Gordon Brown has warned, following the sharp fall in prices in recent months.

In a speech to an energy summit in London, Mr Brown said the "wild fluctuations" in prices in recent months had damaged the global economy.

He called for improved regulation of oil markets to stabilise prices and investment in clean energy technology.

Prices have tumbled from $150 a barrel to below $40 in the past six months.

Prices are now at their lowest level since the middle of 2004 after hitting record levels in July.

Mr Brown told energy ministers that the high oil prices of recent years had stoked inflation and forced governments to keep interest rates much higher than would have otherwise been the case.

This had hurt families and businesses, particularly in developing countries dependent on oil imports.

"It is clear that our most pressing challenge is price volatility," he said.

"Wild fluctuations in prices harm nations all around the world."

'Less volatility'

Mr Brown offered to stage the meeting earlier in the year when prices were seen to be at critically high levels close to $150 a barrel.

It would be a huge mistake to fall back on the old ways of the past Gordon Brown

The meeting is a follow-up to June's gathering of oil ministers in Saudi Arabia which Mr Brown also attended.

Conditions in the global economy have changed dramatically since then, however, forcing oil producers' group Opec to cut output levels in an effort to stabilise prices.

Despite the recent price fall, Mr Brown said there was still a threat of them rising sharply again once the economy recovered and it was in everyone's interest to have a more stable price.

He called for a "new partnership" between oil producing and consuming nations, saying the "visionary internationalism" that had been displayed in dealing with the global banking crisis must be applied to the world's future energy challenges.

"It would be a huge mistake to fall back on the old ways of the past."

Experts are concerned that falling prices, combined with the economic downturn, will discourage oil companies from investing in new sources of oil needed to meet future demand.

Some believe prices could still top $200 a barrel in the long term as demand for oil outstrips supply.

Much of the focus of the meeting is on clean energy, particularly developing new technology to reduce carbon emissions.

The prime minister urged the wealthy oil-producing Gulf nations to invest more in areas such as carbon capture and storage, as a way of diversifying beyond oil.

He also announced �25m in funding for developing countries to invest in low-carbon initiatives, as well as measures to increase the transparency and regulation of international oil markets.

Saudi oil minister Ali Naimi said countries around the world needed to work together to ensure energy supplies remained "secure and reasonably priced".

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