Surging and slipping oil prices were amplified but not caused by investors switching from currencies to commodities, EU economy officials said Saturday.
European Central Bank President Jean-Claude Trichet said economists need to look more closely at recent volatility in oil prices that saw the price of a barrel rocket to US$147 in July and fall briefly under US$100 in Friday trading _ the lowest for five months.
Analysts have blamed growing demand for oil from booming economies such as China and Brazil, where people are buying more cars and shipping more exports to the United States and Europe.
But others have blamed market speculators for rocketing oil and food prices after markets were rocked by the decline of the U.S. dollar over the past two years and a credit crisis that saw investors shift money from currencies, equities and securities toward commodities.
The EU's economic and monetary affairs commissioner, Joaquin Almunia, said these trends had "simply accelerated price movements" that began with the more basic problem of more demand for tighter oil supplies.
"Until the summer, this amplified the rise in prices, and now its amplifying the decrease," he said.
Trichet said economists needed to better understand the effect of demand "and the very strong rise in demand, notably from emerging economies" in causing rapid fluctuations in oil prices.
"I wouldn't call it speculation, I call it a change in the way that investment portfolios are managed, giving greater weight to commodities and oil than before," he said.
He also warned that Europe needed to remember the lessons of the 1970s oil shock and refrain from raising wages in response to record-high inflation, which has been largely triggered by high energy prices.
Trichet called again on labor unions to "live up to their responsibilities" when negotiating over wages to prevent a spiral where higher wages spark more inflation.
The ultimate punishment from the resulting slow growth years ago was massive unemployment that took years to bring down, he said. EU unemployment rates are currently more than double what they were in the 1970s.
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Associated Press writer Aoife White contributed to this story.
