The Impact Of The Coronavirus On Energy Consumption
Driven in part by the coronavirus recession and reductions in driving and air travel, the number of oil and gas drilling rigs operating in the U.S. has plummeted by 70 percent over the last year, falling to a record low since World War II.
At least 14 oil and gas companies have declared bankruptcy since March. The casualties include, last week, Chesapeake Energy, a once high-flying but heavily indebted pioneer of hydraulic fracturing and horizontal drilling.
Oil and gas is a famously boom and bust industry. But Andrew Lipow, a Houston-based energy analyst and President of Lipow Oil Associates, LLC, said that the coronavirus could cause permanent shifts in American working and transportation habits that could impose long-term harm on the fossil fuel industry.
“One thing that we’ve seen with this virus is the ability of companies to allow a significant amount of their workforce to telecommute and work from home,” Lipow said. “And of course, that I expect to continue going into the future. Which means there is going to be less demand for gasoline.”
The burning of less oil and gas means less smog and greenhouse gas pollution. Renewable energy, such as solar and wind, has been performing better during the Covid-19 recession because it generally powers electricity production – not transportation – and even people working at home need to plug in their air conditioners and laptops.
While oil companies are laying off thousands of workers, in Western Maryland last month, the Maryland Public Service commission approved the construction of a 17 turbine wind farm to generate electricity atop Dan’s Mountain.
Mike Tidwell is Director of the Chesapeake Climate Action Network.
“The Dan’s Mountain wind project in Allegheny County in Western Maryland is a 70-megawatt wind farm that will produce clean, renewable energy for the people of Western Maryland for decades to come,” Tidwell said. “It is being built on a mountain ridge that was previously strip mined for coal, and so it’s a perfect location for a wind farm.”
In contrast, this past weekend, the Virginia-based Dominion power company announced it was abandoning plans to build the 600-mile Atlantic Coast natural gas pipeline. And on Tuesday, a federal judge ordered the shutdown of the Dakota Access oil pipeline across the Upper Midwest because the Trump Administration failed to conduct a required environmental study.
But despite the bankruptcies and project setbacks, it would be unwise to think the oil and gas industry is dead, energy industry analysts warn. Many of the drilling sites now closing are likely to roar to live again in a year or two, said Matt Kelso, data manager with Fracktracker, a nonprofit organization based in Pennsylvania that studies the industry.
“Most of these wells are being shut in with the intention of opening them up later,” Kelso said. “So it’s not like these wells are going away, and they are not being permanently plugged.”
Ed Crooks, vice-chairman of the energy research firm Wood MacKenzie, said the coronavirus could shift the economy into a more environmentally-unfriendly direction.
“Some of the trends, affecting energy demand, could head in different directions,” said Crooks. “So, it’s quite possible there is going to be more telecommuting, with fewer people going into the office. There might also be a big shift away from mass transit, people stopping using public transport because of a fear of infection. They might also be a big move of people from the cities into the suburbs, and that will mean people will drive cars more.”
In that case, the coronavirus – and more precisely, social distancing – could prove to be a fatal disease for cities like Baltimore, Washington and Philadelphia, as more residents avoid human contact in the city and flee to the isolation of the suburbs. That, in and of itself, would be an environmental catastrophe: the opposite of smart growth.