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Page added on September 16, 2020

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A long road back for oil and gas

A long road back for oil and gas thumbnail

Houston’s oil and gas industry is facing a long recovery from the coronavirus pandemic if my family’s travel spending — or lack thereof — is any indication.

Since the pandemic began to close the U.S. economy in March, my family has spent just $386 to gas up our two cars, about a quarter of the $1,412 we spent over the same six-month period last year. Our family of four spent nothing on flights so far this year, down from $1,220 by this time last year.

Although my wife returned to work last month at a local school district, I’m still working from home like most of my colleagues at the Houston Chronicle. My usual 57-mile, round trip commute from Cypress to our Southwest Freeway office has been replaced by a short walk from my bedroom to the study. I’ll get to enjoy my shorter commute for several more months, as Chronicle editors say my coworkers and I won’t return to the newsroom for the remainder of the year.

As coronavirus cases spiked in Texas this summer, my family stayed close to home. There were no road trips to Austin to celebrate cousins’ birthdays, no overnight getaways to Galveston and no weekend jaunts to Lake Travis with neighbors. After New Jersey imposed a two-week quarantine on visitors from Texas, we sadly canceled our July flights to see family and friends back east.

We’re not alone. Global demand for crude oil plunged by 16 million barrels per day during the second quarter, the largest drop in a single quarter, according to Bank of America Securities.

Although demand is recovering as more states and countries lift work and travel restrictions, gasoline and jet fuel consumption remains below historic averages as many people continue to work from home and refrain from flying.

Gasoline demand, which plunged about 50 percent in March and April, is still down about 15 percent from a year ago, according to the Energy Information Administration. Gas prices this summer have been the lowest in 16 years, averaging just $1.77 in Houston between Memorial Day and Labor Day. That’s down 64 cents from last summer, according to Gasbuddy.

Demand for jet fuel, which plummeted about 80 percent this spring, is still down about 60 percent, according to EIA. At Bush Intercontinental and Hobby, air travel was down by 75 percent in July, according to the Houston Airport System. Nationally, the number of commercial flights is down by half from pre-pandemic levels.

The demand destruction wrought by the pandemic has been devastating for the oil and gas industry in Texas, which has shed tens of thousands of jobs since the pandemic started. Oil and gas production employment in Texas is expected to bottom out at around 150,000 this fall, 50,000 fewer workers than in February and the lowest number since 2005, according to the Texas Alliance of Energy Producers.

The industry may be in for prolonged pain. Bank of America forecasts that global oil demand could take three years to recover from the pandemic, assuming there is a vaccine or treatment developed for the coronavirus. Although road travel is expected to recover from the pandemic later this year, air travel is expected to take at least three years to recover.

That’s a long time for life to get back to normal. I miss my friends, my coworkers and most of all, my family back in New Jersey. Let’s all do our part to continue to flatten the curve, so we can confidently take to the roads and skies again soon.

houstonchronicle



One Comment on "A long road back for oil and gas"

  1. makati1 on Wed, 16th Sep 2020 5:51 pm 

    FFs are NOT coming back to pre C19 days. Their use for many things will never return. The Amerikan need for a two car garage is over. That extra one will be sold to pay for the necessities. It may even be refitted as a “granny apartment”.

    Travel and related uses will be much smaller as there is no real need in the age of the internet. Need will be the driving factor in the future. That is the whole idea of this “RESET”. Change in the form of downsizing waste and leveling the serfs all over the world. NO? Hmm….

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