Greenspan warns of rise in long-term energy prices

US Federal Reserve chairman Alan Greenspan warned Tuesday that a dramatic rise in long-term energy prices, fed by Middle East supply fears, posed a significant economic risk.

"These elevated long-term prices, if sustained, could alter the magnitude of and manner in which the United States consumes energy," the 78-year-old central bank chief said.

Until long-term oil and natural gas price expectations had been "benign," encouraging businesses to ignore a spike in short-term market prices when making investment decisions, he said.

"The recent shift in expectations, however, has been substantial enough and persistent enough to influence business investment decisions, especially for facilities that require large quantities of natural gas," Greenspan told the Center for Strategic and International Studies.

Greenspan the "energy intensity" of the US economy had almost halved since the early 1970s.

The impact of the rising prices on energy-related investments was "significant," but it was likely to be more muted than the slump triggered by the 1970s oil shock.