|  Many discussions, few solutions   
“We have strong concerns about the sharp rise in oil prices, which poses risks to the global economy.” This quote came from the G8 communiqué on the world economy from Japan, designed to reflect the consensus opinion amongst the developed economies that record oil prices will provide the tipping point into recession in their countries. Many pundits got excited by the $5 drop per barrel earlier in the week -- the largest single day fall since March. These analysts believed the drop pointed to a bottoming out for the U.S. dollar and falling demand for crude as a result of a global slowdown. Personally, I think it is too early draw those conclusions on both fronts.The housing market remains dangerously weak in the United States and that caution is clearly starting to take hold in Britain as well.U.S. Federal Reserve Board Chairman Ben Bernanke sent a strong signal of his concerns by noting that emergency cash facilities will be made available well into 2009 if necessary.He would not do so if he did not deem it necessary. The dollar weakness that we have witnessed for the better part of three years is likely to remain until: 

  * The economy bottoms out.


  * There is a change of leadership in the White House.

Political change often brings with it an ability to break with positions from the past.This could apply to both the dollar and oil prices. Daily demand is holding up at around 87 million barrels a day, but according to OPEC and Saudi officials there is no demand beyond the current production now in place.Traders are basically making a big bet (and a lot of money in the short term) that demand from the developing world will outstrip the production earmarked to come on stream in the next few years. On that front, the G8 also had something to say: “Oil producing countries should ensure transparent and stable investment environments conducive to increase the production capacity needed to meet rising global demand.” Transparent was a word used at great length this week in Japan and last week at the World Petroleum Congress in Madrid.There is a polite but serious “tug of war” taking place between the international oil companies (IOCs) and the national oil companies (NOCs) – think Saudi Aramco, Abu Dhabi National Oil Company (Adnoc), Libya’s National Oil Company or Kuwait Petroleum Corporation.There are similar oil groups in Russia, Central and Southeast Asia. With crude at this level, national oil companies don’t want to pump too much oil and want to hold onto the highest percentage of a field that they can.Many of these NOCs, according to non-government oil company officials I have spoken with, have been less than eager to speed into production or give too much away.This is not reported in the headlines of daily papers and telecasts, but it is the reality on the ground. That equation is part of a greater co-dependency between the G8 and the Middle East.The region is partnering across the board on major projects, but new terms get defined each month.For example, ConocoPhillips signed a long sought after deal with Adnoc this week to develop an onshore natural gas field southwest of Abu Dhabi.The U.S. energy giant will own 40 percent of the holding; its Gulf partner 60 percent.The Shah Field will likely cost $10 billion to develop. On the macro-economic level, G-8 countries are more dependent than ever on Middle East producers.Robert Parker,Deputy Chairman of Credit Suisse Asset Management in London agrees:“The answer to that is a clear yes and the reason why I say yes is that when the oil market was trading at $80 to $100, the impact on the global economy was minimal. With the oil price trading above $140 a barrel, I would argue that is having a very negative effect on the Western economies on the oil consumers.” In today’s scenario, the G8 is calling for great cooperation and dialogue.We saw a hint of this in Japan with the input by leaders of the G-5 (China, India, Brazil, Mexico and South Africa) on the final day.There was not a lot of agreement on how to best address a reduction in greenhouse gases, but plenty of finger-pointing going on. This effort was however a good start.A G-13 (despite the unlucky number) is much more welcoming than the current structure, which candidly seems dated.It should be a group of equals addressing concerns eye-to-eye.While the world seems to be in an expansive mode, we might want to think a bit differently. It should not be a gathering of just energy consuming nations, but bring in the producers (either GCC or another structure) to take us from dialogue to action.Let’s not have one-off energy summits like the recent meeting in Jeddah, but make the process more inclusive, more productive and yes more transparent.  
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