U.S. President Barack Obama and Treasury Secretary Timothy Geithner sought to quell fears on Thursday that unrest in Libya would put oil prices on a long term upward trajectory.
We actually think that we'll be able to ride out the Libya situation and it will stabilize, Obama, referring to fuel prices, told a group of corporate chief executives.
Geithner said the world had plenty of oil reserves that could be deployed in the event of a sustained disruption to supply. We have substantial capacity across the major economies in the strategic reserves, he told the executives.
Hopefully, by reminding people of that and calling attention to the fact that there's a fair amount of excess capacity in parts of OPEC ... hopefully that will make it less likely the market ... starts to build in higher prices over time.
Oil futures were at their highest levels since late August 2008 as the escalating problems in Libya disrupted supply. Brent rose near $120 in intraday trading though it later pulled back to $111.12 in a sell-off sparked by rumors that Libyan leader Muammar Gaddafi had been shot.
Geithner and Obama spoke at the first meeting of a new panel of business leaders the president has asked to come up with ideas to boost U.S. competitiveness and hiring.
Obama encouraged the business leaders not to worry about inflation, an issue executives said was a growing concern.
I think the emerging issue is inflation, General Electric Chief Executive Jeffrey Immelt, who is chairing the new panel, told the president during the meeting.
When asked by reporters later whether he was concerned about rising oil prices, Immelt did not answer directly.
There's a lot going on in the world geopolitically. I think we have to see what happens next and where things settle in, he said. There's not a lot of core inflation even today and I would say in general the economy is getting better every day as a backdrop.
FOCUS ON JOBS
Improving the economy is the core focus of the panel, which replaces another group of advisers on U.S. economic recovery led by former Federal Reserve Chairman Paul Volcker. Volcker stepped down when that group dissolved earlier this year.
Immelt said the panel would focus on creating jobs and he promised specific proposals for delivery to Obama within 90 days. The new panel includes several members from the old one.
Citigroup Chairman Richard Parsons, American Express Co Chief Executive Kenneth Chenault, AOL co-founder Steve Case, Southwest Airlines Chief Executive Gary Kelly, DuPont Chief Executive Ellen Kullman, and Intel Corp Chief Executive Paul Otellini were among the panel's members.
The executives expressed optimism about their companies' growth prospects in 2011, but some said access to credit and skilled workers was a persistent problem.
Kullman said 2011 would not be as big a growth year for her company as 2010, but she remained optimistic.
Matt Rose, chief executive of Berkshire Hathaway Inc's Burlington Northern Santa Fe railroad, said he believed the economy is better than what you read.
The group's next meeting will take place outside of Washington in order to draw on the ideas and input of people around the country, according to White House deputy communications director Jen Psaki.
(Additional reporting by Patricia Zengerle and Alister Bull; Editing by Todd Eastham)