TOKYO, Oct. 18 (UPI) -- The head of the U.S. Federal Reserve Board says hurricanes in the Gulf of Mexico show the vulnerability of the world economy to petroleum supplies.
"Even before the devastating hurricanes of August and September 2005, world oil markets had been subject to a degree of strain not experienced for a generation," Alan Greenspan said in a speech Monday in Japan.
"Increased demand and lagging additions to productive capacity had eliminated a significant amount of the slack in world oil markets that had been essential in containing crude oil and product prices between 1985 and 2000," he said.
Greenspan added, "the effect on growth would have been greater had oil not declined in importance as an input to world economic activity since the 1970s."
Israel's Institute for Contemporary Affairs in Jerusalem said about 1 million barrels of oil a day has been taken off the market as a result of sabotage. "If these million barrels a day had reached the market, oil prices would have been at least $20 a barrel lower," the report said.
