Greenspan calls for more oil infrastructure

Federal Reserve Chairman Alan Greenspan said July 21 that it’s “perfectly credible” that crude-oil prices could fall in the short run, but he warned that prices in the long-term may remain high without increased investment in oil infrastructure.

“We have had a very significant run-up (in crude oil prices) and it’s perfectly credible that it could go down for a while,” Greenspan told the Senate Banking Committee. “But ... unless we address the issue of getting adequate investment to convert the proved reserves into productive oil capacity, we’re going to have trouble meeting long-term demand for oil.”

Crude oil prices have more than doubled to about $60 a barrel since early 2004 and are expected to shave as much as three-quarters of a percentage point off U.S. economic growth this year. Greenspan said earlier July 21 that a further increase in oil prices “could cut materially into private spending and damp the rate of economic expansion.” Greenspan has said the supply of oil hasn’t been able to keep up with demand recently partly because of constraints on investment in some major Middle Eastern oil producers.

—The Associated Press