WASHINGTON, June 8, 2006 -- Oil will remain an important element in meeting the future energy needs of the United States, but it does not have to be the most dominant factor. That was the testimony of former Federal Reserve Board Chairman Alan Greenspan as he returned to a congressional witness table for the first time since leaving the Fed.
"Current oil prices over time should lower to some point our worrisome dependence on petroleum," Greenspan told the Senate Foreign Relations Committee. "Still, higher oil prices will inevitably move vehicle transportation to hybrids, and despite the inconvenience, plug-in hybrids."
Committee Chairman Sen. Richard Lugar, R-Ind., told Greenspan: "We believe that America's national security and economic well-being depend on reducing our dependence of foreign oil."
Sen. Joseph Biden, D-Del., took it a step further.
"It literally helps to fuel the terrorism we are fighting, because some of the dollars we spend on crude oil winds up in the pockets of radicals," Biden said.
Greenspan testified that not only does the United States need to become less dependent on foreign oil, but it has got to lessen the need for domestically produced petroleum, as well.
"We're running out of oil," he warned. It won't happen anytime soon. It will be gradual. But the amount of oil is finite."
Greenspan said that ethanol holds promise as an alternative to gasoline. But not the kind made from corn but rather cellulosic ethanol made from switch grass.
He said he believes ethanol produced from corn could play a limited role but doubts enough corn could be grown to replace much of the gasoline that now fuels the nation's automobiles.
He also believes that power plant safety has come a long way since the Three Mile Island accident in the 1979 and that nuclear should be given another chance. Clean coal should be used more and the only way to lower natural gas prices is to increase imports of liquefied natural gas.
One in every seven barrels of oil produced in the world is consumed on America's highways.
Some of the older committee members listening to Greenspan's testimony grew up with 20-cent-a-gallon gasoline. But the former Fed chairman told them things have changed.
"The energy abundance on which this nation was built is over," he said. "We will never have the uninhibited lifestyle that low-cost energy allowed us in the '50s."