Greenspan Says Everything Is Fine  

Noted energy expert Alan Greenspan says that high prices will spur development of alternatives before oil reserves are depleted. Thats comforting (it must be very relaxing being an economist) - but it would be nice if he would specify exactly which alternatives will fill our energy needs. I also note that after a few rocky weeks most oil and gas stocks here are heading back to record levels, even with the price of oil almost 20% lower than it was a few weeks ago.

Federal Reserve Chairman Alan Greenspan said Friday that oil markets may stay turbulent "for some time to come," but he predicted that high prices will spur the use of cheaper alternatives well before the world's oil reserves are depleted. In a speech in New York, Greenspan again offered an optimistic assessment of how oil prices will affect the global economy. Already, he said, U.S. crude-oil inventories have risen to their highest level in three years, helping to abate the recent "price frenzy" in oil markets.

"If history is any guide, oil will eventually be overtaken by less-costly alternatives well before conventional oil reserves run out," Greenspan said in prepared remarks to the Economic Club of New York. But that, he said, will take time. For now, "we, and the rest of the world will have to live with the geopolitical and other uncertainties of the oil markets for some time to come," Greenspan said.

Since Greenspan last spoke on energy, crude-oil prices have dropped more than $10 from a record high of about $58 a barrel and the U.S. economy has shown renewed signs of strength. Oil traders, however, expect prices to surge again in the second half of the year ahead of the winter, when demand peaks.