View Full Version : Hmm, (Bush) Even Greenspan is not worried about Oil prices.

10-15-2004, 10:20 AM
Associated Press
Greenspan Not Worried About Energy Prices
Friday October 15, 12:08 pm ET
By Martin Crutsinger, AP Economics Writer
Surge in Energy Prices Likely to Have Less of an Impact Than in the 1970s, Greenspan Says

WASHINGTON (AP) -- This year's surge in energy prices is likely to have far less of an impact on the economy than the oil shocks of the 1970s, Federal Reserve Chairman Alan Greenspan said Friday.
Greenspan predicted that the global economy will adjust to the recent surge in prices, which has seen oil topping $50 per barrel, by boosting energy exploration and production and by increasing fuel efficiency. But he conceded that the transition period could feature unexpected bumps.


"We and the rest of the world doubtless will have to live with the uncertainties of the oil markets for some time to come," Greenspan said in remarks to the National Italian American Foundation in Washington.

Oil prices closed at a record of $54.76 per barrel on Thursday as fears about supplies in the United States and the possibility of attacks on oil pipelines in the Middle East have sent the price of crude to record levels in dollar terms.

Greenspan, however, noted that even with the recent jump, energy prices are still only three-fifths as high, after adjusting for inflation, as they were at their all-time peak in February 1981.

He said this means that the overall impact on the economy should be lower this time around than during that period, when the oil shocks of the 1970s and early 1980s were enough to push the country into a series of recessions.

Greenspan said that so far this year, the rise in energy has probably trimmed the gross domestic product by about 0.75 percentage point, far less than the shocks of two decades ago.

However, Greenspan warned, "Obviously, the risk of more serious negative consequences would intensify if oil prices were to move materially higher."

However, he said he believed that existing technology and improvements spurred by the increase in prices should be sufficient to "ensure the needed supplies (of energy) for a very long while."