The economy, which had hit a temporary soft patch from surging energy prices, probably will weather the situation well, Federal Reserve (search) Chairman Alan Greenspan (search) suggested Friday.

"The effect of the current surge in oil prices, though noticeable, is likely to prove less consequential to economic growth and inflation than in the 1970s," the Fed chief said in a speech to the Economic Club of New York (search).

A copy of his speech was distributed in Washington.

Greenspan, in a largely upbeat assessment, noted that oil and gas prices have calmed down a bit recently.

As he did in April, the Fed chief expressed hope that high energy prices would spur conservation by businesses and consumers and greater energy exploration by energy companies. That should also help moderate prices.

Oil prices skyrocketed into record territory in March and closed at a new peak of $57.27 a barrel at the beginning of April. Prices have since retreated and now are above $47 a barrel.

President Bush has called on Congress to produce a comprehensive energy bill by August. The House passed a bill last month, but its prospects in the Senate — where energy legislation died two years ago — remain uncertain.

Greenspan also repeated his interest in letting market forces help to stabilize prices. He said any response by policy-makers should not "distort or stifle the meaningful functioning of our markets," he said.