High crude oil prices will more than offset the benefits of debt relief the Group of Eight rich nations gave to poor countries last year, and this year the G8 will make the situation worse by promoting more investment in fossil fuels, a new report warned on Wednesday.
The report shows that developing countries continue to pay more for oil imports than they receive in debt relief, and recommends that G8 leaders meeting this weekend in St. Petersburg, Russia, end government subsidies to their oil industries, support the development of renewable fuels and cancel debt linked to unsound loans made for finding oil.
The report was released by the Jubilee USA Network, an alliance of religious groups, environmentalists and other organizations that want debt relief for poor countries.
Sub-Saharan Africa's oil imports are expected to cost an additional $10.5 billion a year because of high crude prices, which is more than 10 times the amount that 16 African countries combined will receive this year after some of their debt is canceled under last year's G8 deal.
"This year in St. Petersburg the G8 will focus on promoting trillions of dollars of investment in fossil fuels, which will exacerbate climate change and fail to promote long-term alternatives to the role of volatile oil prices in debt creation," the report said.
Russia has made energy security a major theme at this year's G8 meeting, but the report is critical of the summit's draft action plan that calls for finding new oil and natural gas reserves at a faster rate, increasing drilling and expanding global oil refining capacity.
"We are concerned that the rising cost of oil imports is draining far more money out of impoverished countries than debt cancellation is contributing each year," said Neil Watkins, the national coordinator of Jubilee USA Network. "This money was supposed to be used for healthcare and clean water, not oil."
G8 members, particularly the United States, have argued that increasing available global oil supplies will help reduce wild crude price swings, which in turn will benefit poor oil-consuming nations the most.
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