PARIS (Reuters) - The Group of 20 economic powers will set up new working groups to examine volatility in commodity and energy prices, a senior official from one of the countries involved said ahead of a meeting in Paris.
“The North African crisis has shown how speculative pressures on commodities prices and grain and farm prices can have an impact that goes beyond financial markets and can have very much more serious and dangerous consequences,” the official said, speaking on condition of anonymity.
The meeting of finance ministers and central bankers in Paris will showcase the debate on French President Nicolas Sarkozy’s ambitious agenda for his G20 stewardship, which at its launch in November included proposals to reduce the volatility of food and fuel prices.
But France’s hopes for tough curbs on commodities speculation to tame soaring prices are largely expected to be thwarted by leading producer nations lining up to oppose market interference.
The official said that in addition to existing working groups looking at the functioning of derivatives markets, new groups would also examine issues relating to fossil fuels and farm prices.
“What worries us is volatility and beyond volatility it will also be looking at price peaks,” he said.
Massive popular movements in Tunisia and Egypt, fueled in part by rising food prices, have underlined the impact the commodities surge has had on broader political stability.
Countries including France and Italy have long argued that speculative pressures from unregulated financial markets have been a key factor driving up prices but other countries had for a long time resisted this analysis, the official said.
He said there had been a growth in awareness of the risk of speculative pressures over the past two years and the issue would be a key factor in the weekend meeting.
“Over the past two and a half years, attitudes toward speculation have changed and there aren’t many around today who say that speculation doesn’t exist,” he said.
Reporting by James Mackenzie and Patrick Graham