The Unique Impact Of Social Distancing On Energy Demand

In China, the shutdowns to contain COVID-19 have stalled so many industries and kept so many vehicles off the road that the virus has indirectly saved lives by cutting down on the country’s deadly air pollution. And no paltry number of lives either. Conservative estimates project that 4,000 small children under the age of 5 and 73,000 elderly Chinese adults over the age of 70 would have died in a business-as-usual scenario. Meanwhile, in Italy, which has now surpassed China’s death toll with what is now the deadliest coronavirus outbreak in the world, electric power demand has slumped an impressive 7 percent, oil demand has dropped 7 percent globally along with a massive oil price crash, and in the United States, where the worst of the virus hasn’t even hit yet, the gross domestic product is projected to contract at a rate of 5 percent in the coming quarter.

While some sectors are crashing, however, others are picking up the slack--and then some. Millions of people around the world are learning to use Zoom and Slack and a myriad of other home office services as they begin to work from home. “In South Korea, Italy, and Seattle telework and residential internet usage have soared 40% in just weeks,” tallies a Forbes report. “In France 80% of internet traffic is now Facebook, YouTube, and Netflix, and providers are pledging to ensure ‘digital discipline.’” Internet usage, by the way, is still largely powered by fossil fuels.

Yes, telecommuting is not a new invention. Lots of people have been doing it for years, and the United States Bureau of Labor Statistics documented that 24 percent of the U.S. workforce worked from home in the last year, continuing a nearly decade-long trend of workers setting up their home offices. 

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While these trends are not novel, “coronavirus isolation has already boosted that, and could be a watershed event for digital connecting,” says Forbes. These new legions of telecommuters, their tablet-happy toddlers, and kids adjusting to attending school online are eating up huge amounts of bandwidth. 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. 

And that’s just one side of the equation. For their part, business owners may be thrilled to be offsetting a lot of the costs associated with running an office in these months of lockdown. “After the virus clears and we’re left with a recession, landlords may have a hard time convincing corporate tenants to keep paying pricey overhead for employees who still got the work done, remotely,” says Forbes. “It can cost $20,000, according to JLL, to kit out the average 150 square feet of office space per worker. And, depending on your city, $300 or more per employee per month for rent, plus $50 per employee per month in supplies and snacks, and $20 per month to keep the lights on, air-conditioned and computers charged.”

But that silver lining that you can finally see as the smog clears? That still stands. As telecommuters, well, telecommute, they will be driving their cars a whole lot less. This translates to much fewer carbon dioxide emissions, to be sure, but it also translates to a lot less gas. The dip in gas demand by your average citizen, not to mention all the oil-based industry that’s currently shut down around the world, also means that oil prices, which have already taken quite a tumble, will remain low. Good ol’ supply and demand. This will mean a lot of savings for a lot of workers in the U.S. and around the world--hopefully enough to lighten the blow of all the other costs workers will be taking over for their bosses.

By Haley Zaremba for Oilprice.com

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