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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: ColtonGang who wrote (156412)	6/28/2001 10:44:32 PM
From: Thehammer	Respond to of 769669

Colt Nice try but no cigar, Cuban or otherwise! Regards Hammer

To: ColtonGang who wrote (156412)	6/28/2001 11:32:31 PM
From: ColtonGang	Read Replies (1) \| Respond to of 769669

Greenspan Unafraid Of Energy Price Caps Calif. Problems Ease, Fed Chief Says By John M. Berry Washington Post Staff Writer Friday, June 29, 2001; Page E03 In a broad analysis of the state of U.S. energy markets, Federal Reserve Chairman Alan Greenspan last night disagreed sharply with the Bush administration's argument that capping spot prices for electricity in California would discourage construction of new power plants. Greenspan, in a speech to the Economic Club of Chicago, argued exactly the opposite. "Analogies to the economics of office buildings are evident," Greenspan said. "Few office buildings would be constructed in the absence of the ability to reach long-term leases. Short-term rental agreements are no more conducive to new office construction than spot prices for electric power are to the building of new power plants." A copy of the text was released in Washington. California's energy problems appear to be easing, but they still represent a "worrisome situation for Californians, certainly," Greenspan said. "And because the state comprises one-eighth of our national [economy], it should be a concern for the U.S. economic outlook as well. Fortunately, the overall effects on the California economy, and on those of its neighboring states seems to have been modest, at least to date." Greenspan noted that large increases in the cost of gasoline and other petroleum products, natural gas, and electricity have hurt the U.S. economy in several ways. The most significant is the reduced profitability of non-energy firms, which has forced many companies to reduce spending for new plants and equipment. "As best we can infer, a substantial part of the rise in the total costs of corporations between the second quarter of last year and the first quarter of this year reflected higher energy costs, only a small part of which companies apparently were able to pass through into higher prices" of the things they sell, he said. Most recently, however, natural gas prices "have fallen significantly" and so have gasoline prices, particularly in the Midwest, Greenspan said. "Electricity power costs continued to rise through May, but overall energy prices paid in April and May were down from the levels of the first quarter, suggesting some easing in pressures on profit margins from energy this quarter." Greenspan cautioned that "because of the unpredictability of events in the Middle East," crude oil supplies are never fully secure. Nonetheless, it is encouraging that in market economies, well-publicized forecasts of crises, such as earlier concerns about gasoline price surges this summer, more often than not fail to develop, or at least not with the frequency and intensity proclaimed by headline writers." Greenspan said it was necessary to rely on market forces to guide both energy production and consumption. "In the short run, energy markets must be monitored closely for their potential effects on the cyclical behavior of the macro economy," he said. "Over the longer haul, the experience of the past 50 years -- and indeed much longer than that -- suggest the central role that can be played by market forces in conserving scarce energy resources, directing those resources to their highest valued uses, and ultimately ensuring adequate productive capacity for the future." By Greenspan's analysis, California made a serious mistake by insisting that companies supplying power to retail customers buy that power only on the spot market.