Greenspan warns of dramatic rise on oil and gas futures

| 4/30/2004

Alan Greenspan, chairman of the U.S. Federal Reserve, warned April 27 of a “dramatic” rise of oil and gas futures that could represent “an economic event that can significantly affect the long-term path of the U.S. economy,” Reuters news service reported.

Greenspan said the rise in six-year oil and gas futures was “almost surely going to affect the growth of oil and gas consumption in the United States and the nature of the capital stock investments currently under contemplation.”

On April 27, benchmark Brent crude futures hit their highest level since the Iraq War, when they reached $34.33 a barrel. As the price of crude rises, so does the price of diesel fuel.

Addressing the Center for Strategic and International Studies in Washington, DC, Greenspan said the strength of crude oil prices reflected “fears of long-term supply disruptions in the Middle East that have resulted in an increase in risk premiums.”

The United States, he added, should increase its capacity to import liquefied natural gas to reduce price volatility. Imports of liquefied natural gas accounted for 2 percent of U.S. gas supply in 2003.