Economic Recovery Will Be Powered by Natural Gas and Oil
Posted May 4, 2020
As some U.S. states and communities begin reopening, the COVID-19 threat to public health continues. Our industry stands ready to support safe and thoughtful plans to restart the economy and begin the national recovery from this historic pandemic.
When that recovery kicks in, it will be powered largely by natural gas and oil, here at home and around the globe – in the sense that recovery will mean increased personal driving, commercial transportation and air travel will require more fuels; reopening businesses will need more electricity; and manufacturers will require additional power and supplies of feedstocks.
Natural gas and oil are the leading energy sources for the U.S. and world economies and will be for decades to come according to projections. While some say the current economic slowdown is an opportunity to launch a “green recovery,” facts say the recovery will be characterized by increased use of natural gas and oil.
Some slides prepared by API Chief Economist Dean Foreman help illustrate.
First, there are good reasons to believe there will indeed be an economic rebound once the pandemic is safely behind us. Below, third-party analyses expect the global economy will pick up in 2021 following more than $8 trillion in economic stimulus generated by central banks around the globe:
Second, both the U.S. Energy Information Administration (EIA) and International Energy Agency (IEA) show natural gas and oil driving the world economy decades into the future:
While history shows economic growth and oil demand have tracked together:
And EIA projects post-pandemic oil demand rebounding across the globe in 2021:
All support the point that oil has basic, long-term value. Even amid the economic ravages brought on by COVID-19, the world continues to use between 70 and 80 million barrels of oil per day. Further, projections by EIA and IEA show (with the caveat that the world will return to normal levels of economic activity) that energy demand – led by natural gas and oil – will strengthen and even accelerate over the long term. To that point, emerging evidence this could be underway, that from a U.S. demand standpoint, the worst may have passed – with EIA reporting that U.S. petroleum demand rose for the second consecutive week in the period ending April 24.
Our industry is poised to help lead safe and responsible recovery efforts, because natural gas and oil are energy mainstays – accessible, reliable, portable and adaptable – to supply and support modern economies and standards of living. API President and CEO Mike Sommers:
“Prior to COVID-19, the world demanded 100 million barrels of oil per day for transportation, industrial operations, manufacturing and byproducts used in every sector of the global economy – from paints and asphalts to makeup and iPhones – and projections show long-term demand for oil and natural gas around the world remain strong. Significant challenges remain in the weeks and months ahead for our sector and nearly every other. However, U.S. oil and natural gas – and the American workers who produce, transport, service, refine and ship it – will be critical to enabling our economic recovery.”
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.