Greenspan Says U.S Can Weather Record Oil Prices

Record oil prices have taken a “noticeable” toll on the U.S. economy but are not likely to inflict the same level of pain as in the 1970s, Federal Reserve (news - web sites) Chairman Alan Greenspan said on Friday.

“The impact of the current surge in oil prices, though noticeable, is likely to prove less consequential to economic growth and inflation than in the 1970s,” Greenspan told a luncheon hosted by the National Italian American Federation.

U.S. crude oil prices showed little reaction to Greenspan’s remarks, but in late trading they marched to a record high $55 a barrel before settling at $54.93, up 17 cents for the day, on worry over winter heating oil supplies.

“So far this year, the rise in the value of imported oil – essentially a tax on U.S. residents – has amounted to about 3/4 percent of GDP (news - web sites) (gross domestic product),” the Fed chief said. “The risk of more serious negative consequences would intensify if oil prices were to move materially higher.”

Well that’s a relief. It’s not like it’s real money coming out of American’s pockets or something. Uh…