Oil Minister Greenspan

Today Fed Chairman Alan Greenspan took up the topic of energy, specifically the subject of Oil and how its recent price has affected or might affect the U.S. and Global economies. The FED Chairman took the opportunity to comment on the price of oil as well. Mr. Greenspan called the recent price activity a "frenzy" and characterized the rise in energy prices as temporary stating that oil prices will fall back to more normal levels. Now I know how well the FED Chairman has been at controlling the "asset bubbles" in the financial markets. And how well Chairman Greenspan and his fellow Governors have smoothed the business cycle and all but eliminated inflation. But, harken back to a day in 1996 when Chairman Greenspan referred to the stock market price action as "irrational exuberance". After that historic statement, the stock market, as measured by the DJIA rose 90% and the NASDAQ rose 200%. Better early than never? If history is any measure of Mr. Greenspans calls, Oil stands to go considerably higher before the masses recognize that oil is mispriced.

Listening to the Chairman today was a new experience in that he was uncharacteristically clear with his oil stance. No "on the one hand this and the other hand that"...clear and concise...oil prices are too high and do not represent supply and demand. I do not know what makes Mr. Greenspan think he knows what the price of oil should be or shouldn't be, as he has no control over the oil. His control is on money supply, not oil supply. He can adjust interest rates, he cannot adjust the price of oil.