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Sunday, March 26, 2023


Former Fed chairman delivers keynote address at Houston energy forum


Former Federal Reserve Chairman Ben Bernanke discussed his experiences as leader of the central bank of the U.S. and shared his forecast on the global economy during his keynote speech at IHS CERAWeek, which is an annual energy forum considered to be the most prominent gathering of energy industry professionals in the world. | Courtesy of Cameron McHugh

Thousands of senior energy executives and oil and gas industry officials gathered at the Hilton Americas Hotel this week to attend the week-long IHS CERAWeek 2014 energy conference.

IHS CERAWeek is an annual energy forum considered to be the most prominent gathering of energy industry professionals in the world. Each year, CERAWeek attracts the presence of attendees such as U.S. Secretary of Energy Ernest Moniz, BP Chief Executive Bob Dudley and Microsoft Chairman Bill Gates.

This year’s attendees had the opportunity to listen to former Federal Reserve Chairman Ben Bernanke discuss his experiences as leader of the central bank of the U.S. and share his forecast on the global economy during his keynote speech. Bernanke served two terms as chairman of the Board of Governors of the Fed — from 2006 until his retirement in February.

Before joining the Fed, Bernanke headed Princeton University’s economics department before being appointed to the Board of Governors and as Chairman by President George W. Bush in 2002 and 2006, respectively, and again by President Barack Obama in 2010.

Bernanke was welcomed to a ballroom of some 500 attendees and introduced by Pulitzer Prize-winning energy scholar and conference chairman Daniel Yergin. Bernanke reminisced on his early career as an energy economist and highlighted his subsequent academic career as a professor at Princeton.

Bernanke addressed many of the challenges he faced as Fed chairman during the financial crisis, notably the failure of large financial institutions and the economic shockwaves that rippled throughout the economy, such as those caused by the failure of Lehman Brothers and AIG. He recalled AIG’s collapse as one of his worst moments in the position as chairman. With AIG on the brink of failure, both the Fed and U.S. Treasury committed nearly $185 billion in federal assistance under the Troubled Asset Relief Program to prevent a collapse that was sure to trigger a total economic meltdown.

“It may not work, and we may lose a heck of a lot of money. But on the other hand, if we don’t do this, it is going to bring down the system. So at the end, it was an easy choice, but it was a very painful choice because we knew that there was a huge downside even if we took the action,” Bernanke said.

Bernanke shared a broader perspective of the global economy and his forecast for the future.

“I’m moderately optimistic at this point. … All the major industrial economies, the Eurozone, U.S. and Japan … are all showing signs of recovery to different degrees,” he said.

Challenges to economic recovery have been addressed with improvements in financial conditions, the partial turnaround in the housing sector, and restrictive fiscal policy at the federal, state and local levels. Bernanke stated that economic headwinds “look to be diminishing, so it appears that the U.S. economy should continue to recover.”

Bernanke noted that Europe is starting from a weaker position since its own financial crisis, but that the Eurozone is showing more confidence for recovery in areas such as industrial production and increasing stability within its financial system.

Emerging economies such as China, Bernanke argued, would need to reduce dependence on massive investment and export-led growth, and rather refocus its economy more on domestic demand and less on exports to achieve more stable growth rates in the long term.

On the unconventional hydrocarbon revolution taking place in the U.S., Bernanke emphasized the role of energy as an integral part of the global economy and highlighted its significance in achieving economic recovery. Increased energy production in the United States has assisted in the creation of approximately 2 million direct and indirect jobs, accounting for roughly a quarter of all jobs created since 2008, Bernanke estimated.

He further cited increased energy production as a critical factor contributing to the reduction of the United States’ trade imbalance, which has been reduced from 6 percent to around 2 to 3 percent within just a few years due to the nation’s decreased reliance on foreign energy. As a result of the United States’ booming energy industry, foreign countries and companies are being attracted to invest within the U.S., keeping jobs and capital within the country’s borders rather than sending them overseas.

“The U.S. economy still has a ways to go before it will be where we all like it, but clearly this is something that contributed to our recovery and is one of the bright spots. … We are, in fact, regaining our very strong position in energy production,” which is critical to driving economic growth, he said.

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