Enron Prize winner Greenspan

[Forstater, Mathew]

Chairman of the Federal Reserve since 1988, Greenspan visited the campus for a talk at Stude Concert Hall sponsored by the James A. Baker III Institute for Public Policy. Following his lecture, he received the Baker Institute's Enron Prize for Distinguished Public Service. The prize, made possible through a gift from Enron Corp., recognizes outstanding individuals for their contributions to public service.   Greenspan's speech offered an assessment of what lies ahead for the energy industry. In the wake of the Sept. 11 attacks and the current weakened state of the economy, he stressed the need for policies that ensure long-term economic growth. "One of the most important objectives of those policies should be an assured availability of energy," he said.   Greenspan said that this imperative has taken on added significance in light of heightened tensions in the Middle East, where two-thirds of the world's proven oil reserves reside. He noted that the Baker Institute is conducting major research on energy supply and security issues.   Looking back at the dominant role played by the United States in world oil markets for most of the industry's first century, Greenspan cited John D. Rockefeller and Standard Oil as the origin of U.S. pricing power. Following the breakup of Standard Oil in 1911, he said this power remained with American oil companies and later with the Texas Railroad Commission. This control ended in 1971 when remaining excess capacity in the U.S. and oil pricing power shifted to the Persian Gulf.   "The story since 1973 has been more one of the power of markets than one of market power," Greenspan said. He noted that the projection that rationing would be the only solution to the gap between supply and demand in the 1970s did not happen. While government-mandated standards for fuel efficiency eased gasoline demand, he said that observers believe market forces alone would have driven increased fuel efficiency.   "It is encouraging that, in market economies, well-publicized forecasts of crises more often than not fail to develop, or at least not with the frequency and intensity proclaimed by headline writers."