TULSA, Okla. — Crude oil prices have fallen to under half of what they were a month ago. With it, gas prices have plummeted as well. While that's easier on a driver's pocket at the pump, it's having lasting effects in Oklahoma's oil industry.
Tom Seng is the director of the University of Tulsa's School of Energy. He says the industry could look different when the economy returns, having to become even more efficient after downsizing in the wake of COVID-19.
One month ago, Seng was looking at reduced oil usage in countries like China, but now reduced usage is a global issue. In the US, travel to work and vacation is in question long-term, which could further cut demand.
"As we speak, are they making vacation plans for the summer? Because until we see that happen we are in a really dangerous situation where gasoline demand and jet fuel demand this summer could be all-time-lows,” Seng said.
AAA is monitoring how COVID-19 could impact travel plans both short-term and long-term. In a statement to 2 Works for You, a AAA spokesperson says the company recommends travelers "stay informed and heed all official advisories from local officials, CDC and the U.S. Department of State."
"We are currently evaluating what that means for AAA’s annual Memorial Day holiday travel forecast, and will provide updates as available," the statement reads, regarding if AAA will even conduct its annual travel survey.
That reduced demand has hurt the oil industry, forcing companies to limit spending, and reduce drilling. Seng says that especially hurts rural towns that rely on drilling for their economies.
Seng says the effects will continue as long as COVID-19 keeps its hold on the economy, but when people once again start getting out and traveling, the effects will begin to diminish.
"This is not the death of the oil and gas industry,” Seng said. “The economy will get back to where it was, and you cannot run an economy without energy, and we are still very reliant on fossil fuels to run this economy.”
Seng says people getting out during the summer would speed up the process, but it's unlikely. However, he says down the road it will happen one way or another.
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