GOVT URGED TO RESPOND TO DROP IN GLOBAL CRUDE PRICES SOON

Jakarta, Oct 27 (ANTARA) - The government must soon respond to a recent drop in global crude prices following the decision of the Organization of Petroleum Exporting Countries (OPEC) to cut its oil supplies due to the global financial crisis, an oil observer said.

The low oil prices would cause state receipts from the oil and gas sector to fall, and so would the fuel oil subsidy, Kurtubi said here on Monday.

In an effort to prop up the declining oil prices, OPEC last Friday announced it will lower supply by 1.5 million barrels a day to 27.3 million barrels a day starting on November 1.

"The government had better lower domestic fuel oil prices soon to boost the real sector, public spending and the people's purchasing power," said Kurtubi who is also the director of the Center for Petroleum and Energy Economics Studies (CPEES).

If the government lowered fuel oil prices, the national economy would grow at a faster pace despite the current global financial crisis, he said.

Asked about the loss suffered by the government from the sale of liquefied natural gas (LNG) from the Tangguh field, he said he did not see any sign of political element in it.

He said he fully supported any initiative to look into the case.