- The Washington Times - Friday, June 29, 2001

Federal Reserve Chairman Alan Greenspan yesterday urged Congress to consider ways to expand nuclear power and expressed optimism that the marketplace is resolving the nation's energy problems without legislative action.

In a speech to the Economic Club of Chicago last night, Mr. Greenspan strongly advocated free-market policies like those pushed by the Bush administration over the price controls and other government-induced solutions pushed by Democrats as the best way to break up bottlenecks and bring down energy prices.

Nuclear power is "an obvious major alternative to coal" that has "obvious environmental advantages" because it generates no emissions, he said. "The time may have come to consider whether we can overcome the impediments to tapping its potential more fully."

Before nuclear power can be expanded, however, the country must find "an acceptable way to store spent fuel and radioactive waste," he said, and it must be made more economical.

With nuclear and other energy sources, Congress and the public face some "trade-offs" between expanding development and protecting the environment, he said.

"But those concerns should be addressed in a manner that, to the greatest extent possible, does not distort or stifle the meaningful functioning of our markets."

Mr. Greenspan was optimistic that high prices for gasoline, oil, natural gas and electricity in the past year already have produced the desired effect: a dramatic increase in drilling and huge amounts invested in new power generation.

In recent weeks, the increased development activity has worked dramatically to lower high prices, he said, and that's good news for pinched businesses and consumers as well as the economy.

"Overall energy prices paid in April and May were down from the levels of the first quarter, suggesting some easing in pressures on profit margins" for businesses, he said.

The drop in the last month of the run-up in gasoline prices should help to boost the purchasing power and confidence of consumers, he added.

Despite extensive efforts to control power prices in California, Mr. Greenspan said that even there the market signal sent by higher power rates instituted since the beginning of the year has spurred increased generation and started to lower prices.

While the retail power rates paid by consumers and businesses are set to rise as much as 50 percent by December, the skyrocketing wholesale power prices paid by the state recently have fallen to their lowest levels of the year.

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