Elena Sorokina About the author: Kate Watters is the executive director of Crude Accountability
For decades, the environmental movement has been saying that it is past time to move beyond petroleum. The environmental, economic, and ethical mandate has been clear to many defenders for a long time, and the arguments for clean energy have been made repeatedly.
Skeptics have refuted this idea, saying that without ongoing petroleum production, the world will come to a screeching halt, and that it is impossible to move our economies beyond oil. Oil markets are perceived to be a central piece of the global economy; without further extraction, the world as we know it will stop, there will be economic chaos, people will suffer, and we won’t be able to move forward.
And yet, here we are. In the midst of a global pandemic, the likes of which the world has not experienced in at least a hundred years, oil production has practically stopped. And, for the foreseeable future there is no sign it will amp back up again. Extraction and drilling have slowed, oil prices are at an all-time low, and we are at a crossroads: an important, critical crossroads, and we must look at the opportunity it provides us.
According to Forbes, the first quarter of 2020 saw catastrophic drops for the major oil companies. They reported that BP saw a 67% drop in profits, Royal Dutch Shell 46%, Total 35%.[1] Exxon Mobil reported a $610 million loss for the first quarter.[2] Chevron’s earnings were up 38% from the same time last year,[3] but the expectation is that profits will drop in the second quarter because of COVID.
The price of oil has also dropped—Brent Crude is at $31.13/barrel, while OPEC basket is at $17. Natural gas prices are similarly depressed at $1.672.[4] This, after negative oil prices stunned the market in April.
Shares in petroleum companies are also dropping precipitously. Even as early as last fall—prior to the COVID-19 pandemic, alternative energy shares outperformed traditional oil and gas investment portfolios.[5] With the current situation, this is likely to only increase.
US oil stockpiles mean that there is no market for oil coming from refineries. Few jets are flying, and automobile traffic is way down as the world isolates in place. The International Energy Agency (IEA) reports, “Global energy demand in the first quarter of 2020…declined by 3.8% or 150 million tonnes of oil equivalent (MToe), relative to the first quarter of 2019, reversing all the energy demand growth of 2019.”[6]
In April 2020, daily emissions dropped by 17 percent, [7] an astonishing decrease, and in March and April, there was a decline of over 1 billion tons of carbon dioxide emissions.[8] Greenhouse gas emissions are predicted to fall by nearly 8 percent by the end of the year due to the reductions caused by the COVID-19 pandemic, the largest annual decrease ever recorded.[9] The IEA also reports that global energy demand will likely drop approximately 6 percent in 2020, an unprecedented decline over the past seventy years.[10] If COVID-19 restrictions remain in place in large parts of the world, this will have an impact that reaches beyond this year.
We have an opportunity to stretch our imaginations—and practice—to behave in ways we thought impossible, but, which are proving to be highly possible, and, in fact, probable, if the pandemic continues for any length of time. The pandemic is having both positive and negative impacts on the environment. Air quality has improved in many parts of the world during the pandemic, but supply chain disruption is impacting not only the hydrocarbon sector, but the renewable energy sector as well.[11]
In the first quarter of 2020, for the first time ever, the
majority of the United Kingdom’s energy was green energy, with over 40 percent
coming from renewables.[12]
This commitment could be shared by other leaders and administrations, which
could free us from our addiction to oil. It is past time to move away from
hydrocarbons, for a healthy future and a livable planet.
[1] https://www.forbes.com/sites/gauravsharma/2020/05/14/q1-2020-big-oil-earnings-what-did-we-learn-from-dire-figures/#36d6b177344a
[2] https://www.cnbc.com/2020/05/01/exxon-mobil-xom-earnings-q1-2020.html
[3] https://www.forbes.com/sites/gauravsharma/2020/05/14/q1-2020-big-oil-earnings-what-did-we-learn-from-dire-figures/#36d6b177344a and
[4] https://oilprice.com/, accessed May 14, 2020.
[5] https://www.ft.com/content/2586fa10-e122-11e9-b112-9624ec9edc59
[6] https://www.iea.org/reports/global-energy-review-2020/global-energy-and-co2-emissions-in-2020, accessed May 15, 2020.
[7] https://www.washingtonpost.com/climate-environment/2020/05/19/greenhouse-emissions-coronavirus/?arc404=true, accessed May 20, 2020.
[8] Ibid.
[9] https://www.npr.org/sections/coronavirus-live-updates/2020/04/30/848307092/greenhouse-gas-emissions-predicted-to-fall-nearly-8-largest-decrease-ever
[10] https://www.iea.org/reports/global-energy-review-2020/global-energy-and-co2-emissions-in-2020
[11] https://inhabitat.com/covid-19-and-its-effects-on-the-environment/
[12] https://electrek.co/2020/04/13/egeb-green-energy-uk-main-power-source-india-electric-solar-produce-van/