High costs to impact U

High costs to impact U.S. energy use-Greenspan

Apr 27, 2004 - Reuters Power News
Author(s): Reuters

WASHINGTON, April 27 (Reuters) -

Federal Reserve Chairman Alan Greenspan said on Tuesday the likelihood of persistently high energy prices would likely help keep U.S. energy use in check and influence energy-related business investments.

"The rise in six-year oil and (natural) gas futures prices is almost surely going to affect the growth of oil and gas consumption in the United States," Greenspan said in remarks prepared for a conference on energy security. In his speech, which did not touch on the current outlook for the U.S. economy or interest rates, the Fed chief said the "dramatic rise" in oil and natural gas futures prices in recent years suggested such elevated prices would prove to be the norm.

"The recent shift ... has been substantial enough and persistent enough to influence business investment decisions, especially for facilities that require large quantities of natural gas," Greenspan said.

"Although the effect of these developments on energy-related investments is significant, it doubtless will fall far short of the large changes in our capital stock that followed the 1970s surge in crude oil prices," he said, adding the U.S. economy was much less energy-dependent than in the past.