Greenspan denies oil will impact economy as feared
May 20, 2005
Alan Greenspan said on Friday that even though surging energy prices in the past two years have had a “prominent” effect on the economy in the United States, it has not had as big an effect as have other events, including the September 11 attacks, two stock market slumps, and a number of corporate scandals have had.
The remarks were included in prepared remarks for a speech to be given Friday before the Economic Club of New York. Greenspan played down the comparisons some analysts have made between the current energy situation and the energy crisis of the 1970s. He pointed out that current oil prices, when adjusted for inflation, are only at three-fourths of the peak level reached in 1981.
Greenspan also held out the possibility that current stockpiles of oil are at higher levels than they have been in years and that unless something changes - demand rises, output falls, or storage space runs out - inventories will continue to rise, and that this could work in favor of slowing or halting oil price increases.
The Fed’s chairman also expressed his opinion that changes in the ways and amounts of energy consumed by the US could change the economy in significant ways.