As the fight to contain the spread of the novel coronavirus shuts down economies across the globe, we have had to change the way that we live as broad swaths of the worldwide population shelters in place. Already, we have seen massive implications for peoples’ employments and livelihoods, sweeping announcements of bankruptcy across a multitude of market sectors, and huge disruptions to global supply chains. While the coronavirus has been a tragedy of massive proportions, having killed nearly 150,000 people across the globe and financially devastated many more, there have been some silver linings to the shutdown of the global economy. In China, the dramatic decrease in air pollution has actually saved more lives than COVID-19 has taken. Los Angeles has gone from being notoriously smoggy to being one of the least air-polluted major cities in the world. In New York, traffic accidents have dropped by 40 percent as people stay off the streets. In Venice, the canals are running crystal clear and marine life has returned to the newly clean waterways. Giant pandas at the Hong Kong zoo have finally mated after a decade of attempts in their newfound privacy.
All of these things are excellent for the environment, and considerably less excellent for the economy. This is also true of energy usage in the United States, which has fallen to its lowest level in 16 years, thanks to so many offices, restaurants, and industrial facilities closing down. The amount of energy usage in the United States, according to the Indicator podcast report from NPR’s Planet Money, is a particularly valuable indicator of how the economy is doing as a whole. “How much electricity the country uses tends to match how much the economy is growing or shrinking really closely,” said Cardiff Garcia, one of the show’s hosts, earlier this week. It can tell us how much worse the economy is getting in real-time, and it should also tell us when the economy has started to recover.”
Related: Russia And Saudi Arabia Consider Even Deeper Oil Output Cuts
According to estimates from the New York Times, electricity usage in the United States has roughly fallen by 8 percent since February, a dramatic decline. For comparison, in the 2008 financial crisis, energy usage never faltered by a considerable amount. Other measures from the Edison Electric Institute (EEI) show that the nation’s electricity demand is down 5.7 percent as compared to the same week in 2019, making this lowest week for energy use since 2004. “EEI said power output fell to 64,896-gigawatt hours during the week ended April 4. That was down 5.7% from the same week in 2019 and was the lowest in a week since April 2004.”
“Energy traders noted power use also declined last week as mild weather kept heating demand low across much of the country,” the World Economic Forum reported this week. And we can expect more of the same going forward. “The U.S. Energy Information Administration (EIA) projected economic slowdown and stay-at-home orders would reduce electricity and natural gas consumption in coming months.”
The slowdown in energy consumption will undoubtedly continue to have restorative externalities for the environment, but it is decidedly terrible news for the global energy industry, which has taken a beating throughout the duration of this pandemic. As the oil-producing countries of the world scramble to recover bottomed-out oil prices and reduce the global crude glut, the news that energy demand will remain low for some time to come is surely a blow to investors and insiders.
But industry insiders are not the only people who should be concerned about the impacts of this changing energy landscape. COVID-19 has not just changed the quantity of energy used, it has also changed the way that energy is used and who pays for it. As Oilprice reported last month, “new legions of telecommuters, their tablet-happy toddlers, and kids adjusting to attending school online are eating up huge amounts of bandwidth,” not to mention the new added costs of keeping the lights on at home all day. “This translates to a lot of families around the world ponying up a lot of money for their internet package and electricity bills as we head into what is certain to be a particularly brutal recession.”
By Haley Zaremba for Oilprice.com
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