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U.S. Treasury Secretary Henry Paulson told CNBC Thursday that rising oil prices are not driven by market speculation but instead reflect tight supplies and growing global demand.
"There aren't easy short-term solutions," he said. "But it's about increasing the supply over the longer term and developing new sources of energy."
However, the Treasury secretary emphasized that the long-term economic fundamentals are strong, and the United States remains competitive globally.
"We've got some significant problems today, in the short-term, but I don't go to any country that there are not many more problems than we have in the U.S.," he said. "So as I look at it, the U.S. workers compare very favorably everywhere else in terms of productivity." (For the entire CNBC interview with Paulson, click on interview at left.)
However, Paulson cited a need to bolster training and education of the U.S. workforce.
He also insisted that the United States has a strong dollar policy.
"The long-term strength [of the U.S. economy] is going to be reflected in the value of our currency," he said. "Our policy has got to be a policy that's going to increase confidence in the U.S. economy. Right now we're in a tough patch."
While turmoil in the credit markets has calmed since March, Paulson said, the biggest risk to the economy remains housing.
He also praised Congress' recent efforts to create an independent regulator for Fannie Mae [FNM
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]and Freddie Mac [FRE
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], which control some 80 percent of U.S. mortgage origination, he said.
"A strong regulator will really add to the confidence surrounding these organizations and the secondary mortgage market," he said. "That ultimately means lower rates and more access to mortgage financing, which I think is going to be helpful in shortening the correction in the housing market."
- Reuters contributed to this report.
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