We all know that Covid-19 has impacted the world greatly. Not only is it harming people as a highly contagious virus, it is also having a significant on the world’s economy. In an unprecedented time, nearly the entire human population is being asked to stay home to mitigate the spread of this disease and it is sending ripples across the economy. Now it is reaching the most fundamental markets of our world, one of which being the energy field.
The global oil demand is expected to decline in 2020 as the impact of Coronavirus spread around the world according to MoneyPug, a site used to compare energy suppliers. It is restricting travel and effecting broader economic activity. According to the International Energy Agency’s latest oil forecast, the situation remains unstable that creates another level of uncertainty. No one knows what the full impact will be. A lot of this comes from the drop in Chinese oil consumption but the major travel disruptions to travel and trade.
The IEA had global oil demand at 99.9 million barrels a day in 2020. Now it is down 90,000 barrels a day from 2019. They predicted oil demand would grow by 825,000 barrels a day. The short-term outlook for the oil market will depend on how fast governments contain the outbreak. Regulators have two scenarios for how this could go. There is a negative case scenario, in which the oil market falls by 730,000 barrels a day and an optimistic scenario where the oil market emerges and grows 480,000 barrels a day.
The demand of Chinese industrial gas remains weak. Natural gas was down by almost 25 percent for the year, according to the Chongqing Gas and petroleum Exchange. This data was released this week as the impact of Coronavirus continued to effect consumption. European Q2 gas looks like it will decrease further. US producers are looking at crude prices and Indian demand that may decreases Asian LNG prices. They will come under pressure, major demand centers in both the European and Pacific basins are tightening restrictions.
While coal was already on the brink of collapse, without miners working the mines the industry will likely fall apart. It is an old industry that will be replaced by renewables and natural gas eventually, but now might be the time the sector completely collapses. Some leaders have even incentivized energy purveyors to transition from coal, petroleum, and natural gas to green renewables. Transitioning to natural gas from coal is another option and with the coal industry becoming unsustainable it will become reality.
Renewables are another sector of the energy industry that will suffer. While, like any other energy sector, the field is being challenged by not being able to operate their factories and other industrial facilities. But since coal and oil are also struggling, there could be an in for the industry. If governments invest money in the industry, it could come out on top. Green energy will be challenged as much as the others, and it doesn’t have the foundation of wealth that oil does, but those with the opportunity to further their company will undoubtedly do so. This could be the moment where we fundamentally change the way our energy market behaves.
One thing is clear. Covid-19 is effecting everyone around the world. There is no telling just how much this virus will impact, but it will change a lot in the coming months. However you look at it, the whole industry is being challenged to overcome the obstacles and come out on top. We need to think about how we are living and do our best to create a more sustainable world. This goes for a world without Coronavirus, but now we have the chance to fully augment and reshape the way we do things. Investing in the right businesses, companies, and people to help them get out this won’t only help our economy, it will help the world of the future we are looking to create.