WASHINGTON - High energy prices should spur investment in alternative energy sources and induce conservation over the long term, but they make the economy vulnerable in the near term, Federal Reserve Chairman Ben Bernanke said Wednesday.
"We're in a difficult period," Bernanke told the House Financial Services Committee, noting high demand for global supply could keep energy prices high. "And the risk exists if there are significant disruptions of supply then we'll get additional spikes and movements in energy prices."
"Longer term, energy prices at current levels should be sufficient to bring forth a number of alternative sources of supply as well as induce significant conservation on the part of the consumers and firms," he said.
"So I'm actually fairly optimistic about 10, 15, 20 years down the road because these high prices will allow the economy to adjust. But over the next five or 10 years, we are in a zone of vulnerability without available alternatives."
REUTERS NEWS SERVICE
