Covid-19 and Energy Markets
The coronavirus pandemic (COVID-19) is bringing with it not only concerns about spreading the virus but also concerns about a possible global recession. No one really knows for sure how long this virus is going to be with us. Already oil prices have plummeted to their lowest in the last 30 years. As of Tuesday they went below $30 a barrel, putting many shale companies in danger of bankruptcy. This is just after prices lifted temporarily when President Trump ordered U.S. energy officials to purchase oil to refill the nation’s emergency reserve. Covid-19 is impacting the energy market.
Help is on the way from Covid-19
With the future of travel uncertain, Trump is also looking at providing assistance to some of the hardest hit industries thus far, like cruise lines and airlines. Plus, he is planning to offer low-interest loans to oil and natural gas producers.
The fossil fuel industry is suffering a hit, but they aren’t the only energy industry feeling the sting. The future of renewables is not looking good, possibly worse than the fossil fuel industry. Rob Jackson, professor of Earth system science at Stanford University, said, “Employment trumps environment in politics. If companies are hurting, they may delay or even cancel climate-friendly policies that require investments up front.”
Unlike America’s new found fossil fuel independence, renewable energy still very much depends on a global supply chain. Right now that supply chain has been severely interrupted. “There are very real concerns about the ability to get critically important parts of the supply chain in a timely fashion,” said Greg Wetstone, CEO of the American Council on Renewable Energy.
“For companies, the outbreak is already introducing doubt into renewable-energy global supply chains and challenging company balance sheets,” said Dr. Melissa Lott, a researcher at the Center of Global Energy Policy at Columbia University. “If economic stimulus packages drive money away from clean energy investments by infusing fossil fuels industries with short-term capital while ignoring clean energy supply chains … we could see a domino effect that would push us further away from our clean energy goals.”
Survive to thrive again
The oil and natural gas industry is going through some hard times, but this industry is necessary to life as we know it. It will survive to thrive again. This, however, is the first big test of the renewable-energy industry. So far, it’s recovery from Covid-19 and renewable energy markets looks very uncertain.