Oil Drilling Machines

COVID-19 and the Future of the Oil Industry

Spread the love

When the future of oil industry is in doubt, you know we’re in truly harsh times.

Investments and businesses generally related to the oil and gas arenas are normally considered to be stable ventures, and are often cited on lists of good things to invest in.

However, in the wake of the COVID-19 global pandemic, much like the rest of the world, the oil industry is in disarray with virtually no end in sight.

The rapidly declining demand for oil is a direct result of the COVID-19 pandemic, without question. But, there is also a raging price war ongoing in the middle of this that also contributes to this industry appearing to be on the verge of collapse.

The oil industry is facing its steepest challenge in over a century, when the business truly took off as an industry. But, some would say the entire world is facing the exact same challenges, so don’t count crude out just yet.

Here, learn more about how COVID-19 is currently impacting the oil industry and what it means for the future of oil.

A Dying Industry? The Future Of Oil Industry Is Not So Clear

A central question surrounding the entire COVID-19 pandemic is whether everything goes back to normal or not. After the curve has been flattened, or a vaccine found, will the oil industry reign supreme the way it has for decades? 

Or, perhaps this seismic event is simply the catalyst for a seismic shift in the fossil fuel industry altogether. Some experts are of the belief that demand for oil and gas will never be the same after this pandemic, a win for the environmentalists of the world, but a rather dark prognosis for anyone invested in the oil industry.


Some of the bolder predictions state that the prior year will go into the annals of history as the highest carbon emissions ever recorded on the planet, only to dip down this year and every year after this.

Speculation, Some Would Say

On the other side of the coin, there are those who say this will ultimately either be meaningless to the industry and it will bounce back as it always has, or it will even be a boon in the long term, as the currently low oil prices will naturally slow the push towards cleaner energies.

So Who Is Right?

It all depends.

Like so many things in life, the predictions made by any one expert means as much as the weight you’ll place on that person’s opinion. Everyone has an opinion, so a few people are bound to look really smart when this is all said and done.

Ultimately there is no way to know until it all shakes out. The messy combo of political maneuvering, global consensus around climate targets, and investor sentiments will play large roles in whether the industry can make a true comeback from COVID-19. These factors cannot be determined in any short order.

Finally, there is a single, overarching concern that nobody can determine until the freedom of choice comes back. That question is whether consumer behavior is bound to change as a result of this pandemic.

For instance, it seems apparent that a record number of people are working from home. In addition to this, we even have people practicing social distancing by utilizing these same platforms in order to see their friends and “meet” with each other.


The question then becomes this: once the pandemic is over, and people can go back out, will they? 

Think about it for a moment. There is a decent chance that this becomes, more or less, a new normal for the world.

Perhaps traveling to work for many jobs will no longer exist, all working from home because it saves costs and is typically more productive anyways. Plus, most employees love it when given the option to work from home.

So with a decrease in demand of places to go, there will be a commensurate decrease in demand for oil, thus driving prices even lower. 

The Oil Industry As It Stands

Right this moment, it’s an absolute circus show out there.

On the one hand, this means lower prices for those who use a lot of fuel. Read on here for more on whether to consider natural gas vs. diesel marine engines and generators.

On the other, the oil sector is absolutely decimated at the moment, featuring the lowest oil prices in nearly twenty years, with even steeper falls to come, some analysts say. Some major oil stocks have been cut in more than half since January of 2020, more than $130 billion worth of market capital wiped out in such a short time frame.

In a select few markets, things are so bad that the prices for oil have gone negative. This literally means you will be paid to take on the oil, a result of a global surplus and storage facilities going over their capacities.

Various oil wells that produce, on average, over a million barrels of oil per day are getting shut down due to the price of oil now being lower than the cost of shipping. The number of wells being forced to shut down as a result of this phenomenon is growing rapidly, with no end in sight.

Coronavirus has forced almost everyone with a heartbeat to alter their lives in fundamental ways, which has in turn drove the demand for oil down deeper than some of the very wells they dig.

Need Help Figuring This All Out?

While the future of oil industry is in serious doubt, nobody will be able to say exactly how the industry will fare until the virus fades from memory and life returns to some semblance of normal. 

In the meantime, while you’re locked inside, you can take solace in our living section of our blog for more great content during these trying times.


Spread the love