BUDAPEST (Reuters) - Crude oil prices are set to rise further and efforts to persuade producers to increase output will not work, global hedge fund manager George Soros warned on Wednesday.
Under pressure from truck drivers, farmers and fishermen, EU leaders will discuss their response to soaring energy prices at a summit on Thursday and Friday, although they are not expected to agree measures to offset price rises.
“Rather than expecting energy prices to go down somehow, we should accept that it must go further up first for us to be able to solve the problem (in the long term),” the Hungarian-born billionaire told reporters in Budapest.
Soros said that shifting to new energy sources was the only long-term solution to what he described as a process of declining reserves and rising costs of extraction.
“There are also huge opportunities in reducing energy consumption, but (crude) prices must go up first so as to encourage people to consume less,” he said.
Soros is one of the world’s most famous hedge fund managers.
He said the woes of the global financial sector, caused by the U.S. mortgage crisis which has punched holes in banks’ balance sheets, would be long-lasting and would spill into the real economy, and the U.S. and Britain the most exposed.
Economic difficulties were already generating political tensions shown when Ireland’s voters rejected the European Union reform treaty last week, Soros said.
“The attitude of the Irish people to their economy has, no doubt, influenced their reaction at their referendum,” he said.