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International Trade and Industry Minister Takeo Hiranuma on Friday played down the impact of soaring crude oil prices on the economy and stressed the importance of dialogue between oil-consuming and -producing countries.

Citing the decline of Japan’s dependence on crude oil in its economic activities and sufficient stockpiling by both the public and private sectors, Hiranuma said Japan should not seriously worry about the impact of the rise in oil prices.

“We are not in a panic situation,” Hiranuma told a regular news conference. “Under the current supply and demand (situation), there is no oil shortage. We can say that it is balanced or supply slightly exceeds (demand).”

Hiranuma also touched on remarks made earlier this week by Keizo Okabe, chairman of the Petroleum Association of Japan, that if oil prices continue rising at the current pace, they may increase the annual cost of gasoline and kerosene per household by 30,000 yen.

“This is certainly not something that we can ignore. However, if oil-consuming countries send out a clear message and have dialogue with oil-producing countries, I believe the situation will calm down,” Hiranuma said.

Crude shock to growth

Rising crude oil prices will reduce Japan’s economic growth by a real 0.1 percentage point in fiscal 2000, according to a report by a private research institute.

Shinko Research Institute, affiliated with Shinko Securities Co., also said a climb in the import price of crude oil by $10 per barrel will restrict growth of gross domestic product by 0.2 point in fiscal 2001.

Growth in corporate capital investment will be choked back 0.4 point in the current fiscal year and 1.5 points next year as a result of the oil price hike, it said.

If the higher oil prices hamper the global economy and hit Japanese exports, the effects will double, said Tadao Oshita, economist at the institute in charge of the report.

“The higher oil price will certainly slow down Japan’s economic recovery, although we do not expect it to pull the economy back into a recession,” he said.

The benchmark crude oil price in New York hit $37.20 per barrel Wednesday, its highest level since the 1991 Persian Gulf War.

The import price of crude oil in Japan averaged $20.70 in fiscal 1999, which ended March 31. The price rose to $29 in August and is likely to advance further, he said.

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