US Federal Reserve chairman Alan Greenspan said last night that a rise in crude stocks might ease the upward pressure on the price of oil.
Greenspan noted that futures prices for delivery of oil in the summer were higher than spot prices, which suggested a building of inventories.
He added that, if sustained, this could 'encourage enough of an inventory buffer to damp the current price frenzy'. Greenspan was speaking to an oil industry conference in the US.
Greenspan did not hazard a guess at the impact of current high oil prices on the US economy, or discuss the potential impact on inflation. Some economists believe the higher energy prices will lead to
slower economic growth in the second quarter.
But the central bank chief said energy efficiency had become a more important factor in new investment decisions as a result of the surge in prices.
One critical factor in saving energy and oil will be the US auto industry, he noted. 'Of critical importance will be the extent to which the more than 200 million light vehicles on US highways, which consume 11% of total world oil production, become more fuel efficient as vehicle buyers choose the lower fuel costs of lighter or hybrid vehicles,' Greenspan said.
