Economist Thomas Simpson On Oil: Price Decline Will Help U.S. Economy, Hurt Energy Sector

Economist and former Federal Reserve Officer Thomas Simpson exclusively told Benzinga that in addition to softening demand for and increased supply of oil, there has also likely been a dynamic unleashed that is contributing to a steeper drop. “This includes speculators facing margin calls and selling stocks that they had been holding for expected price appreciation,“ Simpson said. “The market is likely overshooting on the down side -- the reverse of what happened on the way up.” Simpson explained the price decline will be a net plus for the U.S. economy since consumers will have more in their wallets to spend. At the same time, Simpson noted a slowing in the development of the energy sector which will affect growth in domestic energy development and production. The futures market sees current prices around a bottom with prices edging higher over the next several years, according to Simpson. “I think that this path is reasonable, but the risks are on the upside,” Simpson said.