Greenspan downplays oil impact on economy
In prepared remarks for a speech to be delivered before the Economic Club of New York on Friday, Federal Reserve chairman Alan Greenspan said that while the rising energy prices of the past two years constitute a “prominent” effect on the US economy, it does not rise to the level of effect that events such as the September 11 attacks, two stock market slumps, and several corporate scandals have had on the US economy.
He discounted comparisons of the current energy climate to the energy crisis of the 1970s and pointed out that crude oil prices now stand at only three-fourths of peak prices reached in 1981 when today’s prices are adjusted for inflation. Greenspan pointed out that crude oil inventories are at their highest levels in years and that these stockpiles are likely to grow even more unless demand goes up, output goes down, or storage capacity is filled.
He also remarked that if these stockpiles do continue to grow, they could work to halt the rise in oil prices. Greenspan also said that a change in the amount and ways in which the US consumes energy could significantly alter the economy.