Alan Greenspan testifies before the Senate Foreign Relations Committee about U.S. oil dependence:
Greenspan sounds alarm on oil supply, Reuters/IHT: Alan Greenspan ... offered a grim view on Wednesday of the world's rising vulnerability to high crude oil prices, saying he was skeptical that oil producers could pump enough crude to meet future demand... "The United States ... has been able to absorb the huge implicit tax of rising oil prices so far," Greenspan told the Senate Foreign Relations Committee... "However, recent data indicate we may finally be experiencing some impact." ... Greenspan warned that a big oil price increase could spur "a significant contraction in the economy."
Greenspan said that few of the world's dominant producers, aside from Saudi Arabia, see the danger that rising crude oil prices pose to the economy, and to their sustained ability to sell oil. ... Greenspan said while U.S. businesses had so far been able to improve productivity to compensate for costly energy, households were suffering from higher gasoline prices.
"Current oil prices over time should lower to some extent our worrisome dependence on petroleum," said Greenspan... "Still higher oil prices will inevitably move vehicle transportation to hybrids, and despite the inconvenience, plug-in hybrids." Greenspan warned that... "The balance of world oil supply and demand has become so precarious that even small acts of sabotage or local insurrection have a significant impact on oil prices," he said, adding that global refining capacity was still too limited.
A few months ago, a Greenspan warning that a large increase in oil prices could cause "a significant contraction in the economy" and his worry that high oil prices are beginning to place a drag on output would have had a much larger impact. I wonder if he misses the power to move markets.