Oil and Natural Gas is America’s Best Investment

June 2, 2020

Natural gas and oil has suffered, alongside virtually every other industry, throughout the Covid-19 pandemic. The demand for oil plummeted amid worldwide lockdowns and the supply skyrocketed after the Russia-Saudi price war, resulting in record-low prices. Not surprisingly, the eco-left used these circumstances as an opportunity to declare Covid-19 as “the end” of oil and gas. During this global crisis, it is more important than ever to focus on the facts rather than hyperbolic, partisan rhetoric.

In reality, there is no evidence that the fall in oil and gas demand is anything more than a short-term blip – something that almost every industry is experiencing right now. One cannot use unprecedented, exceptional circumstances to define the future of a longstanding, necessary industry. Jude Clemente, a Forbes contributor, reminds us of that in a recent piece.

Policymakers and the oil and gas industry itself must see beyond the clouds today to the time when energy markets collect themselves. Too many of “our experts” regularly forget our most basic energy premise: irreplaceability means that oil demand has no choice but to rebound from the pandemic.

Oil and gas were already showing signs of recovery in April, which “analysts” were quick to call a “breather” that would not last. Instead, oil prices went up 90% in May for their best month on record. There is no denying the necessity of oil and gas, particularly when economic recovery is so important. These fuels constitute over 60% of the energy that enables the $20 trillion U.S. economy and the $85 trillion global economy.

In fact, constituting the industry’s current problems in the wake of Covid-19 as a long-term trend, and subsequently calling for the end of the industry entirely, would be to promote the opposite of today’s reality.

To illustrate, our International Energy Agency tells us that $11 trillion is needed in oil investment from 2018 to 2040 to meet rising demand. Making current investments that much more difficult, lower prices today could easily mean much higher prices in the near future. “IEA: Low Oil Prices Will Take Demand Beyond Pre-Crisis Highs.”

The primary focus of a post-Covid-19 world is going to be economic recovery and expansion, which is the driving force behind the constant need for more energy. Obviously, as the world approaches undergoing that recovery and expansion process, oil and natural gas are going to be more essential than ever.

It is easy to be consumed by a moment, especially one as long-lasting and impactful as Covid-19. But, it is crucial that perspective is maintained, and that reason continues to drive our decision-making. When that is done, even in the midst of a global pandemic, reality can become clear – not only is Covid-19 not “the end” of oil and natural gas, but it is demonstrating America’s need to further invest in this essential industry.