About a month ago, the oil and gas industry reached an all-time low. The demand for oil dropped rapidly due to the spread of COVID-19, more commonly known as the coronavirus, right as Russia and Saudi Arabia flooded the market with an excess amount of oil. This left the market to collapse while oil prices dropped into the negatives, leaving uncertainty in the air. With such a massive crash, what lies ahead for the oil and gas industry in the coming months or, potentially, years?
The Energy Information Administration (EIA) recently released a report to reflect on how the energy market has been impacted COVID-19.
Crude oil prices are expected to average at $34 billion this year, which is down from 2019’s $64 billion average. The average price is likely to increase as the amount of oil decreases, at a predicted $48 billion for 2021. Meanwhile, global petroleum and liquid fuel demand is predicted to average at around $92.6 billion, down $8.1 billion from last year. 2021 is expected to bring the demand back up approximately $7 billion. The demand for fuel in the United States will significantly decrease as travel restrictions remain in place, impacting the second quarter of 2020 in particular. However, it should grow gradually over the next 18 months.
Natural gas prices, on the other hand, will rise throughout the rest of 2020. However, the total consumption of natural gas will be down 3.9% from 2019 due to the disruption of the industrial sector. Liquified natural gas exports will average at around $5.8 Bcf during 2020’s second quarter and $4.8 Bcf in its third, though the lower global demand for natural gas will show a decline in exports by the end of summer.
Electricity, coal, renewables, and emissions
Social distancing has impacted the United States’ electricity consumption and will continue to do so over the next few months. Because businesses have shut down or cut back on production, both the commercial and the industrial retail sectors will see a 6.5% fall in electricity sales. Electric power generation will also decline by about 5%, due in part to the lower fossil fuel generation. However, the EIA foresees energy-related CO2 emissions to drop by 11% because of business and travel restrictions.