US blames India, China for spike
White House has pointed a finger at India and China for the spike in oil prices even as it sought to clarify president George W Bush’s remark about Indian middle class contributing to rising food costs.
By Agencies |
WASHINGTON: White House has pointed a finger at India and China for the spike in oil prices even as it sought to clarify president George W Bush���s remark about Indian middle class contributing to rising food costs. A presidential spokesperson on Monday also stuck to its guns on bio-fuels asserting that US policy of promoting corn-based ethanol in motor fuel supplies was having only a ���small impact��� on world food prices.
���I would point out that obviously the demand for oil is growing around the world,��� spokesperson Scott Stanzel told reporters when asked to comment on oil price hitting a record $120 a barrel Monday. ���Many developing nations like India or China are having greatly increased demand, which obviously is having an impact on price,��� he said.
Asked to clarify Mr Bush���s remark last week that growing prosperity of India���s large middle class is contributing to rising food prices around the world, Mr Stanzel said: ���I can certainly clarify that. We think it is a good thing that countries are developing, that more and more people have higher and higher standards of living.���
���The point I think that was to be made is that as you increase your standard of living, the food that you eat ��� it can venture more into meats that require more commodities to feed the livestock, which uses more of those commodities, whether it���s corn or wheat or other commodities, and it drives up the price,��� he said.
���So that is just a function of how those food prices that we���ve seen spike in the... around the world.��� But reacting to the retort from Indian politicians that the US policy of promoting corn-based ethanol has had a bigger impact on world food prices, he said food prices rose about 43% over the last year. ���Of that portion, an increase in the biofuel production, about 1.5% of that, is due to an increase in biofuel production.���
���The other majority, vast majority of that, is due to things like increased demand, like you were talking about, or increased energy prices, or weather-related problems in Australia or in Eastern Europe ��� problems with wheat production, as an example ��� that���s driving up the price of those commodities.
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���So the fact that we are making more biofuels so we reduce our dependence on foreign energy has an impact, but we believe it is a small impact,��� Mr Stanzel said. ��� Actually, it���s the view of the economic advisors that the impact of biofuel production on food price will diminish over time.��� Mr Stanzel said a law signed by Mr Bush in December regarding energy put a cap of 15 billion gallons of corn-based ethanol that the US can produce.Mr Bush���s remarks on Indian middle class had touched off a furore in India with political parties across the spectrum making critical comments and defence minister AK Antony describing them as a ���cruel joke���. Noting that the US is importing about 12 million barrels of oil per day, Mr Stanzel said the record oil price was ���another example that it���s important for the US to become less dependent on foreign sources of energy���.
���We also have to do more in terms of weaning ourselves off of that foreign oil by expanding the use of alternative sources of fuel, not only corn-based ethanol, but other types of ethanol that we���re investing heavily in cellulosic ethanol as well as hydrogen battery ��� or battery technology, hydrogen fuel cell technology.���
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