Will Oil Get Kicked to the Curb After the COVID-19 Sales Slump?
It wouldn’t have seemed possible at the close of 2019, but the global COVID-19 pandemic has forced the world to learn to operate using a lot fewer fossil fuels. People are successfully working from home, proving to employers and other skeptics that a telecommuting workforce can still get the job done — at least in some fields. Outside of work, they are still mostly staying home and traveling less, which continues to cut back on fuel consumption.
Now that many parts of the country (and the world) are starting to open back up and slowly return to normal, it begs the question of what our future need for oil and gas could look like moving forward. Some believe that we will simply return to our old gas-guzzling ways once the pandemic is over, but that really depends on how ingrained those behaviors are and how we feel about them compared to the new way of life we more recently adopted. Let’s take a look at some possibilities.
Developing Theories in Uncharted Territory
Right away, let’s be clear that there are no experts on fossil fuel industry recovery following a global pandemic. The last global pandemic occurred in 1918, just a few decades after the first "horseless" carriage was even invented. At the time, we were also only one generation away from the development of the first commercially viable oil well in the United States. This is the first global pandemic since humanity’s reliance on oil really began. Needless to say, we are in fully uncharted territory when it comes to developing recovery theories.
Barriers to Returning to the Same Level of Demand in a Post-COVID-19 World
When the global pandemic fully subsides, it won’t necessarily mean every office worker will head back to work in their former office buildings. Many companies made significant financial investments in work-from-home tools for their employees, which could easily mean setting up employees to work out of home offices could be here to stay for most of them. After all, if there is one positive thing the stay-at-home orders have proven, it’s that many jobs that companies wouldn’t have considered performing offsite can be done successfully from home.
Factors in Favor of Returning to the Same Level of Demand in a Post-COVID-19 World
On the flip side of the argument, some factors could cause an increase in oil and gas usage. As the world opens back up, people will be cautious and want to avoid identified risk areas where viruses tend to spread more rapidly. One of the most obvious germ hotspots is public transit. Some experts feel this could lead to more people driving cars instead of taking public transit, and this would lead to increased transportation-related emissions. To what degree this could happen is unclear, as many people take public transit due to financial necessity and don’t have the option to own their own vehicle.
Taking the Opportunity to Tackle Climate Change
COVID-19 has left a trail of devastation in its wake, but it has also managed to do what no United Nations Convention on Climate Change has ever been able to do — improve global CO2 emissions. Whether you look at the Kyoto Protocol or the Paris Climate Treaty, voluntary emission reduction strategies agreed upon by global leaders had failed to achieve timely reductions in global CO2 emissions. The pandemic, on the other hand, brought global emissions down to 2006 levels in just a few weeks.
Where Do We Go from Here?
The global pandemic has slowed our use of fossil fuels, but it hasn’t eliminated it. For that to occur, renewable energy resources must reach a point where they are financially competitive, or society must undergo a dramatic shift in opinion regarding paying a higher cost to eliminate fossil fuels.