Greenspan Says High Oil Prices May Last
hile the current surge in oil prices may last, it is likely to prove significantly less consequential to economic growth and inflation than the surge in the 1970s, Federal Reserve Chairman Alan Greenspan said Tuesday in a speech to Japanese business executives in Tokyo.
The sharp run-up in energy prices following the shutdown of Gulf Coast production facilities was an "an accident waiting to happen," Greenspan said, the Associated Press reported.
Greenspan said the world was a lot more energy-efficient now than when the Arab oil embargo triggered the first surge in oil prices in 1973, AP said.
Some economists have said the fallout from Hurricane Katrina, which hit Aug. 29, and Hurricane Rita, which struck Sept. 24, could shave as much as a 1% off growth in the second half of this year as consumers, forced to pay higher energy bills, cut back on spending in other areas, AP reported.
A rising demand for oil, spurred by increased use in Asian countries such as China, has eliminated the slack in world oil markets that Greenspan said had kept oil prices relatively contained from 1985 through 2000.
The oil market this year, he said, "had been subject to a degree of strain not experienced in a generation," AP reported.
