Tags: Coronavirus | hassett | oil | price | economy

Kevin Hassett: Negative Oil Price a 'Short-Run Disruption'

an oil well in the middle of a field with a blue sky
(Dreamstime)

By    |   Tuesday, 21 April 2020 01:48 PM

A drastic drop in U.S. crude oil futures marks a "very, very short run disruption" that was expected to happen, given the demand and the excess supply caused by an economy that has stopped because of the coronavirus pandemic, Kevin Hassett, a senior adviser to President Donald Trump, said Tuesday. 

"We stopped in order to control the virus and we've never really stopped the economy before," Hassett said on Fox News' "America's Newsroom." "Strange things will happen while people stay at home and don't drive."

Hassett said he'd learned during meetings on Monday that the oil prices could go into negative numbers. By day's end, futures collapsed below $0 for the first time in history, amid a coronavirus-induced supply glut and ended the day at minus $37.63 a barrel.

"Because of the way these markets work, every now and then people have to take delivery because that's when it's scheduled to happen and they run out of storage," Hassett said. "Economists have known for a long time that this kind of thing could happen ... if you take delivery and you don't have a place to put it then what do you do? You can't dump it on the ground, or light it on fire, or something."

However, there will soon be a "new normal" and with legislation coming to make more money available to the nation's small businesses, "we are building a bridge to the other shore" that will allow the country to open again. 

"When the economies turn back on, I don't think we will see this again," Hassett said.

But as for now, the nation is in a "grave economic situation" after experiencing "one of the biggest shocks that any major economy has ever experienced," said Hassett. "Even shutting down schools has a really big negative effect on the GDP because then they don't count, even if the teachers are being paid to come they don't count the production of the school in GDP numbers and that alone is like three 3% of the GDP."

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A drastic drop in U.S. crude oil futures marks a "very, very short run disruption" that was expected to happen, given the demand and the excess supply caused by an economy that has stopped because of the coronavirus pandemic, Kevin Hassett, a senior adviser to President...
hassett, oil, price, economy
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2020-48-21
Tuesday, 21 April 2020 01:48 PM
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