The Energy Industry Will Be Even More Important During the World’s Recovery

May 19, 2020

Covid-19 has caused significant disruption to virtually every industry, and that certainly includes natural gas and oil. Stay-at-home orders and a subsequent halt in almost all travel led to a plummet in demand, all just as a Saudi-Russia price war flooded the global market. But, despite these difficulties, one important truth remains – for something integral to disappear, there must be something to replace it.

There is still no realistic alternative to natural gas and oil. The reality is that, despite all of the claims and headlines that Covid-19 will be the end of fossil fuels, certain prospects might actually improve from this crisis. Forbes reports:

Oil’s internal combustion engine accounts for nearly all of our car sales (in 2019, plug-ins accounted for just 330,000 of the more than 17,000,000 cars sold, or less than 2%). Fearing human proximity and higher chance of virus infection, it’s quite possible that Americans (and others around the world) may utilize less public transport to avoid such close quarters.

Working from home, and therefore needing less gasoline, is not possible for over 60% of the full-time workforce. Most Americans having less money and higher debt is also likely to result in fewer purchases of “more efficient”, more expensive cars. Electric car manufacturers have proven to be far from immune to Covid-19’s impact, as their sales are expected to drop almost 45% this year. That is not an industry capable of powering America’s recovery.

Jet fuel demand is also likely to recover in the near future as travel bans are lifted throughout the world. As these opportunities to travel return, low oil prices themselves encourage usage since they lower the prices for the gasoline, jet fuel, and diesel fuel that overwhelmingly move our world. Demand for natural gas has actually been higher through the first four months of this year than it was in 2019. 

Covid-19’s fallout is still affecting many aspects of society, but its impact on the natural gas and oil industry seems to have bottomed out. Now, not only will the normalization of our massive energy demand return as the world begins to slowly reopen, but it is likely to increase as fossil fuels will be essential to powering our full recovery.

Oil, after all, is therefore the basis of globalization, an integral and still emerging trend that you’d be well advised to not bet against.