in the united states and in many of our trading partners, and materially worsen the recession our economy is enduring. to mitigate these risks, the treasury provided equity capital to aig and the federal reserve provided liquidity support backed by the assets of aig. the federal reserve's involvement in aig began in mid - september of 2008. aig's financial condition had been deteriorating for some time. the financial and credit markets were experiencing severe stress due to various economic problems arising out of the broad - based decline in home prices, rise in delinquencies and foreclosures, and substantial drop in values of mortgages as well as mortgage - backed securities and other instruments based on such assets. in short - term funding markets, very high spreads between lending rates and the target federal funds rate and very illiquid trading conditions in term money markets had come to prevail. aig was exposed to these problems because of the protection financial products had written on mortgage - related securities, because of investments aig had made in mortgage - related securities in connection with its securities lending program, and because its counterparties had begun to withdraw funding. these pressures mounted through september. the private sector worked through the weekend of september 13 - 14 to find a way for private firms to address aig's mounting liquidity strains. but that effort was unsuccessful in a deteriorating economic and financial environment in which firms were not willing to expose themselves to risks a€ “ a risk aversion that greatly increased following the collapse of lehman brothers on september 15. under these circumstances, on september 16, 2008, acting with the full support of the treasury, the board authorized the federal reserve bank of new york ( new york reserve bank ) pursuant to section 13 ( 3 ) to lend up to $ 85 billion to aig through a revolving credit facility ( revolving credit facility ) in order to ease the liquidity strain on aig. the liquidity pressures experienced by aig during that time of fragile economic markets threatened its ability to continue to operate, and the prospect of aig's disorderly failure posed considerable systemic risks in various ways as a consequence of its significant and wide - ranging operations. such a failure would also have further undermined business and household confidence and contributed to higher borrowing costs, reduced wealth, and general additional weakening of the economy. moreover, at the time the board extended the revolving credit facility, there was no federal entity that could provide capital to aig to help stabilize

use of energy ; but as they modernize, they can adopt energy - saving techniques already in use elsewhere, and their energy efficiency will presumably improve as well. still, as the global economic expansion continues, substantial growth in the use of oil and other energy sources appears to be inevitable. how readily the supply side of the oil market will respond is difficult to predict. in a physical sense, the world is not in imminent danger of running out of oil. at the end of 2005, the world's proved reserves of conventional oil - that is, oil in the ground that is viewed as recoverable using existing technologies and under current economic conditions - stood at more than 1. 2 trillion barrels, about 15 percent higher than the world's proved reserves a decade earlier and equal to about four decades of global consumption at current rates. these figures do not include canada's vast deposits of oil sands, which are estimated to contain an additional 174 billion barrels of proved reserves. in addition, today's proved reserve figures ignore not only the potential for new discoveries but also the likelihood that improved technologies and higher oil prices will increase the amount of oil that can be economically recovered. the oil is there, but whether substantial new sources of production can be made available over the next five years or so is in some doubt. some important fields are in locations that are technically difficult and time - consuming to develop, such as deep - water fields off the coast of west africa, in the gulf of mexico, or off the east coast of south america. in many cases, the development of new fields also faces the challenge of recovering the oil without damaging delicate ecosystems. perhaps most troubling are the significant uncertainties generated by geopolitical instability, as i have already noted. much of the world's oil reserves are located in areas where political turmoil and violence have restrained both production and investment. in both the developed and the developing world, another factor holding back investment in oil infrastructure has been concern on the part of producers that oil prices might fall back as they did in the 1980s and 1990s. in light of that recognition, some oil producers have been reluctant to launch exploration projects even with today's high prices. such concerns have been reinforced by the huge reserves of oil in several opec countries that could be extracted at very low cost if sufficient resources and expertise were directed toward doing so. developments in the natural gas market the story for natural gas shares some similarities with the story for oil, but there are important differences