As Coronavirus Lockdown Restrictions Ease, Product Demand Returns to the Oil and Gas Industry

As Coronavirus Lockdown Restrictions Ease, Product Demand Returns to the Oil and Gas Industry

May 5, 2020

The oil and gas industry has faced immense hurdles during the recent market interruption caused by the coronavirus pandemic and lack of demand on a global scale. However, there is light at the end of the tunnel as the infection curve slows and the number of states easing restrictions rises from 16 to 32, quarantined residents in states with lifted restrictions will be eager to get out and about and will get back on the road to do so.

According to S&P Global:

Roughly 35% of gasoline used is driving to and from work. So as US workers trickle back to their jobs, May gasoline demand is expected to increase by 1.234 million b/d over April, S&P Global Platts Analytics forecasts.

“In short, we expect that re-opening orders will account for roughly 70% of the forecast increase in monthly, leaving the remaining roughly 30% to occur derivatively from re-opening or simply because car drivers — out of a reduced level of fear or bored or cabin fever — wish to get out,” according to a recent Platts Analytics note.

When lockdowns were imposed and gasoline demand fell, U.S. refiners took immediate steps to shut down production units to slow down supply in hopes of balancing out the surplus domestically. While this helped the industry weather some of the market turbulence, it also led to plants shutting down and tens of thousands of energy workers being laid off.

As states continue to reopen and Americans get back to normal activities, we expect the industry to gradually bounce back and hope the energy workers across the country who were unfortunate collateral during this slump are able to return back to work.

The environmental extremists who are hell-bent on further tearing down the industry should take a step back and think of how much worse this pandemic could have been without the very industry that kept hospitals running, American households heated, and lights on across the country. These essential workers will be just as important going forward as they are today keeping our day-to-day activities running.