Mary Harney (Dublin Mid West, Progressive Democrats)

The price of oil has traded at significantly high levels for some time reflecting a number of interacting factors including unanticipated strong demand, tight capacities, geopolitical uncertainties and some market speculation. Disruption to supply has not been a factor, though anxiety about possible disruption has fuelled the market. However, since OPEC's announcement on increased production at the beginning of June, crude prices have fallen back slightly from their recent high levels, although market volatility and concerns about supply and demand issues could mean that relatively high prices will remain a feature of the international oil market for some time. It remains to be seen if OPEC's recent announcement of expanded production will have a calming effect on the market in the longer term.

The situation will be taken into account in the Economic Review and Outlook which is prepared by the Department of Finance and due to be published later this year. If energy costs continue to rise I would be concerned about their impact on growth, employment and inflation but it is difficult to assess the longer-term outlook until OPEC's recent market calming initiatives have worked into the market.

The International Energy Agency has warned that a sustained increase in oil prices will have an adverse effect on GDP in eurozone economies. We have no control over international factors that influence world oil prices, but their impact re-emphasises the critical importance of strengthening competitiveness and energy efficiency. Our ability to adapt and remain competitive is a key issue for Ireland in the face of sudden or prolonged adverse global economic conditions over which we have no control.

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