COUNTRIES such as Australia that rely on oil imports must not cave in to public demands for petrol price relief, the International Monetary Fund warns.
Consumers must be fully exposed to rocketing prices and learn to change their consumption habits, the IMF says in a report released today.
The price of a litre of unleaded petrol rose from $1.16 to $1.30 in one day last week.
The IMF says that if consumers in net oil-importing countries felt the full force of market price signals on oil, it could prevent countries such as Australia from falling further into debt.
"For consuming countries, this requires full pass-through of world oil prices into domestic energy prices," the IMF's World Economic Outlook says.
Economists agree, saying higher prices would force consumers to use less petrol.
"People ought to be seeking to become more economical in their use of oil," ANZ's chief economist, Saul Eslake, said. "None of that will happen if governments seek to suppress price signals."
The Treasurer, Peter Costello, said this week the world had entered its "third oil shock", but the IMF report finds that shortages and high prices have, to date, been less severe than the previous two.
Nonetheless the IMF warns that oil prices will not fall soon. The world price of crude oil stayed at near-record levels this week, fetching $US68.50 ($93.50) a barrel on Friday. Higher oil prices are affecting the global economy, the IMF finds, because oil-exporting countries are hoarding more of their revenue from oil than in previous oil shortages. This stockpiling of petrodollars raises the risk of a "sudden, disorderly adjustment" in world markets, the IMF warns.
Mr Eslake said a fundamental shift in power could happen as global savings moved from generally compliant Asian nations towards oil exporters with a traditionally more hostile relationship with the world's biggest debtor, the United States.
These countries would be less inclined to buy American exports and fund its burgeoning current account deficit, he said.
"They have no particular vested interest in keeping the US economy afloat," Mr Eslake said.
The IMF says Saudi Arabia is still the biggest holder of world oil reserves (at 22.1 per cent), followed by Iran (11.1 per cent), Iraq (9.7 per cent) and Kuwait (8.3 per cent).
Meanwhile, the president of the NRMA, Alan Evans, said it was dishonest for petrol suppliers to blame the rising price of crude oil for sudden price rises at the bowser because a $1 rise in the price of crude oil equated to 1 cent per litre rise in the price of petrol.
Based on the price of a barrel of crude oil, petrol should have risen only by 3 cents a litre at the pump, he said.
There were also marked anomalies between the cost of petrol in the city and in the bush, Mr Evans said.SMH