Pandemic may be a turning point for oil business, executives and analysts say
Share Now on:
As carbon emissions and air pollution plummet, influential industry voices question whether we’ll return to our pre-COVID-19 driving and flying habits.
The CEO of Shell said in a new interview that “we have a core role to play in the energy transition” away from oil. BP’s chief executive reportedly told workers the pandemic has “accelerated and amplified” a company reorganization plan to lower carbon emissions. During an interview with IHS Markit as part of the consultancy’s CERAweek Conversations series, ConocoPhillips’ chairman and CEO said, “I would probably if I was a betting man today say it would be pretty difficult for [the United States] to return to 13 million barrels a day.”
Is COVID-19 a turning point for the oil and gas industry? Executives and analysts are watching several key factors that could accelerate change in the fossil fuel business.
First: global demand. So many people around the world have been forced to learn to work and play without driving or flying. “It’s hard to imagine how the aviation industry ever goes back to the rate of growth we have seen in the last two decades,” said Mark Lewis, head of sustainability research at BNP Paribas Asset Management.
The pandemic lockdown has shown “blue skies and clean air” in places like China and India, Lewis said. “This will leave a big impact on the psyche of citizens in the developing world and [put] extra pressure on policymakers.”
Another factor amplified by the pandemic: deglobalization. Countries have pursued vaccine research on their own, imposed export controls on face masks and ventilators and imposed travel bans. Companies in the medical space have pledged to make supply chains more regional.
Deglobalization could mean fewer international meetings and less flying and shipping.
“I think we’re seeing the broader forces of deglobalization, which is also accelerated by the COVID-19 crisis,” said Mark Finley, a fellow in energy studies at Rice University and a former senior economist at BP.
The oil industry is also under pressure from investors, given that fossil fuels have been the stock market’s worst-performing sector for years. Lewis said renewable energy stocks fetch double the price of oil shares.
“And if investors are telling you that they want to see more renewables investments rather than oil investments, you know the writing is on the wall,” he added.
Even before the pandemic, many major oil companies were moving to provide more environmentally friendly types of energy, including natural gas and wind. Whether the pandemic has sped up change is hard to know, Finley noted.
“For everyone in New York or San Francisco who wants to sit at home and work from home,” he said, “there’s somebody in the emerging world who aspires to own a car.”
COVID-19 Economy FAQs
What’s going on with extra COVID-19 unemployment benefits?
The latest: President Donald Trump signed an executive action directing $400 extra a week in unemployment benefits. But will that aid actually reach people? It’s still unclear. Trump directed federal agencies to send $300 dollars in weekly aid, taken from the federal disaster relief fund, and called on states to provide an additional $100. But states’ budgets are stretched thin as it is.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.