Posted on: 03. 16. 20
The single largest issue in the media right now is the rise of coronavirus. Since December, the virus has ravaged China, quarantined a mass number of citizens in Italy, and has now been officially deemed a pandemic by the World Health Organization (WHO).
Currently, there is no cure for coronavirus and experts expect that it is going to have a significant impact on how day to day life functions throughout the globe!
So, what does all of this have to do with the oil and gas industry? Well, truthfully, a lot, for both good and bad reasons. From international price wars to how our government strives to take hold of the situation, here are some of the key points to understand about the current state of our industry.
OPEC Implements Price Cuts
When coronavirus completely lambasted China at the beginning of its emergence, it was clear that oil and gas were going to be a tight commodity for countries in need. According to a CNN article, China is currently using up 10 million barrels a day.
The Saudi Arabian controlled OPEC opted to increase their profits during the outbreak and slashed their prices between $4 and $7 a barrel. These cuts resulted in mass price reductions throughout the oil and gas industry at a global level, causing our markets to see losses that haven’t been fathomed since the early 1990s.
Price Cuts Impede Oil and Gas Progress
Although usually, reduced prices on crude oil are a good thing for the economy, with the threat of coronavirus being used as the catalyst, financial experts don’t view this situation in a positive light.
Even though people will have more expendable cash as a result of reduced prices, quarantines, travel bans, and warnings to stay home will ultimately be a major thorn in our industry’s side.
Although the United States still plans on trying to stay competitive with OPEC’s prices, those of us in the industry fear that shale sites and facilities will take drastic financial hits due to the drastic price declines. As the production of oil becomes more expensive with little financial gain, we predict that the impact will be felt at a very personal level amongst our mining sites and production locations.
How Oil and Gas Companies can Pull Through
Although there is no official word from the government, recently President Trump announced that he plans to approach congress with a potential financial solution for oil companies and individuals impacted by the coronavirus price drops.
It’s our hope that plans for aiding our industry come through because if shale companies continue to produce themselves into debt, there’s a good possibility that several will end up having to permanently close their doors.
Stay Updated on Market Progress and More With Pro-Gas, LLC
While we don’t have all of the answers, the team at Pro-Gas, LLC is dedicated to staying on top of the oil market’s progress. Follow us to stay updated on industry news and how our products can help boost the production of crude oil at competitive prices. Contact us today to learn more about our services.
