WASHINGTON -- High oil and natural gas prices have put energy markets under the greatest strain in a generation, Federal Reserve chairman Alan Greenspan said yesterday, but he warned against interfering with market forces he hoped would stabilize prices.
Greenspan expressed a hope that higher prices would spur conservation by businesses and consumers and greater energy exploration by energy companies. That should help get prices under control, he said.
In prepared remarks, he said policy makers should avoid any action that would ''distort or stifle the meaningful functioning of our markets." Greenspan spoke via satellite to the National Petrochemical and Refiners Association meeting in San Antonio. A copy of his remarks was distributed in Washington.
On Wall Street, Greenspan's comments helped give stocks a lift. The Dow Jones industrials gained 37.32 points to close at 10,458.46.
''We must remember that the same price signals that are so critical for balancing energy supply and demand in the short run also signal profit opportunities for long-term supply expansion," Greenspan said.
Greenspan also said that the higher energy prices will not only stimulate new exploration but also research and development ''that will unlock new approaches to energy production and use that we can now only scarcely envision."
The Bush administration has been pushing Congress to enact energy legislation. Lawmakers in the House are working on a bill aimed to promote increased production of a broad range of energy sources, from coal to natural gas.
Economists viewed Greenspan's remarks as optimistic. ''Prices look bleak now but ultimately they will elicit a response by both consumers and suppliers of energy," said Mark Zandi, chief economist at Economy.com.