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US, Asian Economic Powers Target Fuel Subsidies

The United States and Asia's four largest economic powers agreed in principle Saturday to gradually end subsidies on fuel prices, but China and India may not act anytime soon.

Energy ministers from the U.S., Japan, China, India, and South Korea have been meeting in Aomori, Japan ahead of a meeting of the Group of Eight (G8). The five countries use roughly half the world's oil.

India and China said they would not take any immediate action to eliminate subsidies which keep fuel prices low.

India and Malaysia have both recently raised fuel prices to reduce the subsidies.

Fuel subsidies are blamed in part for raising global oil prices.

But U.S. Energy Secretary Samuel Bodman says fuel price subsidies are not the remedy for rising oil prices.

Bodman told reporters that although global demand for oil is increasing, oil production has been capped at 85 million barrels a day for the last three years. He called for an increase in energy investment.

Oil prices surged more than $11 a barrel Friday to a record of more than $139 in New York trading.

Bodman called the price increases "shocking," but said consumers will not change their habits if their countries keep fuel prices low through subsidies.

G8 environment ministers and their counterparts from fast-growing economies held talks two weeks ago in Kobe, Japan, ahead of a G8 summit next month.

Scientists warned the delegates that rising oil prices threaten to speed the increase of greenhouse gas emissions by spurring a shift to cheaper and dirtier fuels such as coal.

The delegates issued a statement saying wealthy nations should take the lead in setting numerical targets for emissions cuts, but did not suggest any targets.

European governments and some developing countries have been pushing for ambitious emissions goals for the year 2020. But participants at the Kobe talks said such a consensus now seems unlikely.

The G8 includes Canada, France, Germany, Italy, Japan, Russia, Britain and the United States.

Some information for this report was provided by AFP, AP and Reuters.

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