Fed Chairman Talks on Energy

Federal Reserve Chairman Alan Greenspan said Tuesday that the best energy policy for the U.S. would rely on the operation of free markets to determine prices and spur development of new energy sources.

In a speech at Rice University in Houston, Greenspan said he believed all current forms of energy, including oil, natural gas, coal and nuclear power, would play major roles in supplying the country’s energy needs in coming years. He also endorsed development of renewable energy sources and continued research into such exotic forms of energy as nuclear fusion.

In all of these activities, Greenspan stressed it is crucial that policymakers allow markets to operate freely with as few government constraints as possible. Greenspan noted that the sharp jump in natural gas prices, home heating oil and gasoline that occurred last winter, along with electric power shortages in California, had all been dealt with effectively through the market.

He said breakthroughs in exploration already were lowering the cost of finding new sources of oil and natural gas.