CNBC Press Releases

BARTIROMO: LETS ME ASK YOU ABOUT ENERGY INDEPENDENCE. I KNOW YOU TALK A LOT ABOUT THIS AND YOU WRITE ABOUT THIS IN THE= BOOK. NOW, TODAY ON OUR AIR, MR. CHAIRMAN, SOMEBODY PREDICTED THAT OIL WOULD HIT $100 A BARREL BY YEAR END. BASED ON YOUR KNOWLEDGE OF THE SUPPLY OF OIL AROUND THE WORLD, OR THE POTENTIAL OF-- FOR OIL SUPPLIES, DO YOU THINK THAT PRICES ARE JUSTIFIED WHERE THEY ARE RIGHT NOW, WHICH, BY THE WAY, ARE $86 A BARREL?

GREENSPAN: PRICES IN THE MARKETPLACE AS BROAD AND AS DEEP AS THE OIL MARKET ARE BY DEFINITION THE RIGHT PRICE. ANYONE WHO'S GOT A DIFFERENT VIEW IS BRINGING INFORMATION TO THE MARKET-- TO THE MARKET WHICH IT DOESN'T HAVE, SOMETHING I DOUBT VERY MUCH.

MARIA: SO THEN YOU THINK THAT BASED ON THE SUPPLY OF OIL AROUND THE WORLD AND THE POTENTIAL FOR SUPPLY AND PRODUCTION, OIL SHOULD, I MEAN, I UNDERSTAND WHAT YOU'RE SAYING, FREE MARKETS OR THE MARKET WILL ADJUST THE PRICE, OBVIOUSLY, BUT I'M TALKING ABOUT REAL FUNDAMENTALS IN TERMS OF OIL AROUND THE WORLD.

GREENSPAN: THE BASIC PROBLEM WITH OIL IS NOT THE FACT THAT WE DON'T HAVE ENOUGH CRUDE OIL IN THE GROUND. WE DO, BUT IT'S LOCATED IN PLACES WHERE NATIONAL OIL COMPANIES HAVE MONOPOLYS AND THEY'RE USING A VERY SIGNIFICANT PART OF THEIR CASH FLOW FOR DOMESTIC PURPOSES AND NOT TO BE PLOWED BACK TO INCREASED CRUDE OIL PRODUCTION CAPACITY. WHICH HAS BEEN MOVING AT A VERY SLOW PACE AND AS DEMAND PICKS UP AS IT HAS IN CHINA AND ELSEWHERE IN THE DEVELOPING WORLD, WE'RE BEGINNING TO SEE A GRADUAL PRESSURE ON THE PRICE LEVEL AND WHEN YOU GET A SITUATION WHERE WE HAVE VERY LITTLE BUFFER, WHICH IS THE CASE TODAY, AND YOU GET GEOPOLITICAL ISSUES AS THEY'RE OCCURRING TODAY IN TURKEY AND IRAQ, YOU GET PRESSURE ON PRICES. THIS IS WHAT MARKETS ARE SUPPOSED TO DO.

MARIA: ALL RIGHT, LET'S SAY MARKETS DO WHAT THEY DO, WE DO SEE OIL AT $100 A BARREL. WHAT KIND OF IMPACT WOULD THAT HAVE ON THE ECONOMY?

GREENSPAN: WELL, SO FAR, $80 OIL HAS NOT HAD ANY REALLY SIGNIFICANT IMPACT. AND THE REASON, OF COURSE, IS THAT WE HAVE VERY GRADUALLY, BUT PERSISTENTLY PHASING OUT OIL IN THE WORLD'S GROSS DOMESTIC PRODUCT. THE RATIO OF CONSUMPTION OF OIL OR ENERGY RELATIVE TO WORLD GDP AND BOTH DEVELOPING AND DEVELOPED WORLD, HAS BEEN DECLINING AND THAT'S ONE OF THE REASONS WHY WE HAVE BEEN ABLE TO MAINTAIN FAIRLY STRONG AND BUOYANT ECONOMIES IN THE FACE OF VERY HIGH CRUDE OIL PRICES.

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