Coronavirus is not only killing people

It is no doubt that this pandemic has impacted different sectors of the economy substantially - whether this be positively or negatively. Supermarket companies are thriving in revenue whilst the oil business is deficient. It has thrown companies out of balance as people are not driving their cars to go to work or the shops. People are not travelling by planes or using public transport. As a result of this, it is expected that global consumption will fall this year by 11m barrels a day. 

There is hope as air travel becomes likely to recover. Consumption of jet fuel, the oil product worst affected by the pandemic as travel bans and lockdowns take effect, will rebound once people emerge out of isolation. However, it may take a few years for concerns to wear off and people's income to rise. An increase reliance on cars once the lockdown measures ease will support petrol demand, potentially for years to come. Nonetheless, because of elevated levels of household debt, many people will postpone buying new cars. As existing vehicles remain on the road for longer, this will slow the rate of growth in the fuel economy.

The oil companies are facing the gravest challenge in its 100-year history. But is this such a bad thing? It can allow our atmosphere to gradually heal. 2019 goes down in history as the peak year for carbon emissions. Now we are faced with the lowest oil prices for almost two decades, with worse potentially on the way. Some oil major stock market valuations halved since January. In a few market, prices have gone negative as sellers are paying people to take the oil. Money is no longer coming in large quantities that many oil companies have grown used it, meaning that only the largest and most efficient companies are likely to survive. Many inland oil producers are reliant on pipelines rather than ships to transport their oil and thus are having no choice but to shut it down. Banks are beginning to cut back financing for oil and gas, and large funds, including Norway's $1 trillion sovereign wealth fund reducing investment in the sector. The Bank of England is also looking into climate stress testing that could force leaders to get rid of assets at risk as the world shifts to net zero carbon. The coronavirus has turned the oil and gas sector into turmoil. 

The price of oil is lower than the cost of shipping it according to US banking giant Goldman Sachs. This is likely to shift the debate around climate change. In 2018, Carbon Tracker estimated that peak demand of oil would come in 2023 but an expert said that it is possible that the crisis has advanced this by three years. Perhaps we have already surpassed peak as we come out of this pandemic with a new perspective. The longer time at home has resulted in more people wondering: do we really need to get on a plane?

COVID-19 is not only killing people but the oil companies. The oil companies were already under pressure from investors concerned about the climate crisis and increasing regulation from governments to cut emissions and the pandemic has exasperated this. I think that people are now more aware than ever on the impact humans have on the environment, especially when we have seen pictures of dolphins returning to the canals in Venice and nature recovering. We have enjoyed the pressure of walking places rather than using public transport or our own car. 

Yes the implications for the oil and gas sector has been significant. But maybe this needed to happen. COVID-19 could be a catalyst for rapid change in these sectors and offering a lifeline to the environment around us. I'm hoping that our government does promote a more green economic recovery plan. It is a positive that European leaders have promised to make their emergency measures align with their Green Deal programme and Fatih Birol, executive director at the International Energy Agency, has said there is an "historic opportunity" to pour investment into energy technologies that cut greenhouse gas emissions. 

I am praying that we don't return to our old ways as our atmosphere is really on its last legs. We cannot keep abusing it to extract oil and to destroy trees and rainforests. It is worrying when I see the US giving $60 billion to struggling airlines and offering low-interest loans to fossil fuel companies. However, US and Canadian oil production, which is relatively high-cost compared to other nations such as Saudi Arabia, looks set to decimate by the decrease in oil prices and some experts think it will have a hard time bouncing back. This in turn, can aid the shift to a low carbon world. 

We have to come out of this pandemic with slight hope. Yes this deadly virus has killed people. But there is hope that it has killed oil companies and ultimately the climate crisis. Potential changes in our behaviour could remain as we become more accustomed to working from home, travelling less and shopping locally. Companies that currently fly supplies from around the world or rely on migrant labour can conclude that building things closer to home is risky. An environmental utopianism could emerge. 

Let's not let a massive spike in the oil industry happen next year when the economy comes out of hibernation. Let's use more renewable energy such as wind and solar. A wind farm requires less capital than an oil field and the returns are more solid and reliable through turbulent economic times. Let's alter the energy industry and its geopolitics. If government is going to invest spending, then do it in renewable and climate change initiatives.