Former Federal Reserve Chairman Alan Greenspan Worries About Oil Prices
Former Federal Reserve Chairman Alan Greenspan on Wednesday offered a grim view of the world’s rising vulnerability to high crude oil prices, saying he was skeptical that oil producers can pump enough crude to meet future demand.
Since the 1940s, U.S. consumers have shown an uncanny ability to shoulder rising energy prices, but consumers’ immunity to oil price shocks is running out, Greenspan said.
“The United States, especially, has been able to absorb the huge implicit tax of rising oil prices so far,” Greenspan told the Senate Foreign Relations Committee in his first congressional testimony since leaving the U.S. central bank earlier this year. “However, recent data indicate we may finally be experiencing some impact.”
Greenspan was appointed Fed chairman by President Ronald Reagan in 1987, and served until January 31 of this year.
Lawmakers would occasionally call on Greenspan to speak on energy issues when he was chairman, but his comments are still highly sought-after on Capitol Hill.
“Nobody speaks with greater authority on the U.S. economy,” Foreign Relations Committee chairman Richard Lugar said.
Since 2004, crude oil prices have doubled. Since the start of 2002 the cost of a barrel of oil has soared by $50.
Crude oil prices have stubbornly stayed above $70 a barrel despite the fact that OPEC and other world producers are pumping to maximum capacity. Prices are still within striking distance of their $75.35 a barrel record hit in U.S. futures in April.
With Alan Greenspan starting to make noise, which makes me think that it is time for the American government to start looking at ways to fix this issue. I really respect the work of Alan Greenspan, he is one of the best economists the US has ever had in government and when he speaks, policy makers need to listen.
The US and Canadian governments need to step up to the plate and start working towards new energy solutions now before it becomes absolutely necessary. Gas prices in North America may be cheaper then in Europe, but the European governments have been doing more to get smaller cars on the roads and more to develop new technologies then we have over here.