Guest “the gas tank is half-full” by David Middleton.
May 11, 2020 10:03 AM UPDATED 2 HOURS AGO
Commuters choose cars over public transport to avoid exposure to coronavirus
Javier Blas, Vanessa Dezem and Sarah Chen
Bloomberg
LONDON, BEIJING, FRANKFURT — James Li, a public relations account director, would rather spend an hour sitting in Beijing traffic than risk 30 minutes exposed to crowds on a train. “Traffic is as bad as it could be” but the subway is still too dicey,” he said.
In Frankfurt, real estate assistant Anna Pawliczek is driving to work for the first time in her career. “I definitely have always preferred to chill out in the train, instead of being stuck at traffic lights,” she said.
But days after Germany ended its lockdown, her company is asking returning employees to avoid public transportation at all costs.
Gasoline demand is rebounding, suggesting that the car — at least for now — is making a comeback. As lockdowns ease and parts of the world reopen for business, driving has emerged as the socially distant transportation mode of choice and is offering some near-term relief to an oil market fresh off its worst crash in history and reeling from an unprecedented collapse in energy demand.
“People are using more their cars because they are afraid to use public transportation,” Patrick Pouyanne, the CEO of French oil giant Total, said.
It’s too soon to say whether this change is permanent. In some parts of Asia that reopened earlier than the rest of the world, people are venturing back onto trains. And it’s unclear whether global gasoline demand will ever fully recover.
But on the streets of Beijing, Shanghai and Guangzhou, morning traffic is now higher than 2019 averages while subway use is well below normal, according to data compiled by BloombergNEF. Volume on Beijing’s metro system is 53 percent below pre-virus levels. Subway usage in Shanghai and Guangzhou is down 29 percent and 39 percent, respectively.
[…]
Prior to the COVID-19 lockdown, US drivers consumed 9.7 million barrels of gasoline per day (week of March 13, 2020). By April 3, 2020, demand had collapsed to 5.1 million barrels per day as states imposed shelter in place orders. As of the week of May 1, 2020, demand had risen back up to 6.7 million barrels per day, and this was before most states began to reopen their economies.
The resurgence in the demand for fuel isn’t limited to automobiles. Carnival Cruise Lines reported a surge in bookings, when they announced that some cruises will resume in August.
Goldman Sachs’ global head of commodities research, Jeff Currie, expects a rapid recovery in all areas of petroleum demand, with the exception of air travel. Currie says that demand could exceed supply as soon as June 1…
“We believe demand will exhibit a V-shaped recovery, but supply will exhibit an L-shaped recovery,” he said, as wells need to come back online, and companies need to increase spending. This could mean demand rises above supply as early as June 1, he said.
But while demand returns to normal, it will be from a base with less business travel. “Before we used to have these internal meetings and things of that nature, and I think this is going to be way more Zoom-oriented, other types of substitutes,” he said.
“Look at the routes that the airlines are planning when they come back, they’re not going to be at the same level that they were previously.”
While the recovery in petroleum demand has helped firm up oil prices, it will take a while for the built up surplus to be worked off.
However, there are some 1.2 billion barrels in storage, Currie added, that would need to be drawn down before prices improve for more than a couple of hours. This, according to Currie, will happen in three stages.
The first oil in storage to go would be the millions of barrels in floating storage. It is the most expensive kind of storage, so it would make sense that traders and producers would first aim to get rid of it to save on tanker fees. Currie says this will happen sometime in the third quarter of the year. The amount of oil removed from floating storage will be around 450 million barrels. In the fourth quarter of the year, oil stockpiles in onshore storage will begin to decline, Currie said, by up to 400 million barrels.
The past two months have essentially been a trial run of the Green New Deal…
The COVID-19 Economy and a Taste of ‘Net Zero’
By ANDREW STUTTAFORD
May 7, 2020
From a BBC report on the impact of the COVID-19 lockdowns on CO2 emissions:
To keep the world on track to stay under 1.5C this century, the world needs similar cuts for the foreseeable future to keep this target in view.
“If Covid-19 leads to a drop in emissions of around 5% in 2020, then that is the sort of reduction we need every year until net-zero emissions are reached around 2050,” said Glen Peters… from Cicero.
[Cicero is the Centre for International Climate and Environmental Research]
1.5C is the target that emerged from the Paris Agreement on climate change.
[…]
If something akin to the COVID-19 economy for decades is what you want, going for ‘net zero’ by 2050 may be a way to achieve it.
[…]
Unless people really like “the COVID-19 economy,” I don’t think they’ll want decades of it.
I just realized that today, May 12, is my 39th anniversary as an oil industry geoscientist. My first day as an Associate Geophysicist with Enserch Exploration in Dallas, Texas was May 12, 1981. How time flies!
