Challenges for the Energy Industry
Consumers Are Still Traveling Less Than They Did Pre-Pandemic
Demand for gasoline tumbled when the pandemic first set in. It then rebounded between mid-April and June, but has since leveled off—and it is still well below pre-pandemic levels.
COVID-19 cases are still rising in some parts of the country, which is making people wary of traveling. Additionally, many offices and schools are still operating remotely, which means people are not commuting.
Crude Oil Prices Stay Stagnant
US motor gasoline supplied by energy companies stayed stagnant at about 8.6 million barrels per day during the two months prior to mid-August. During the week ending August 21, this number was up to 9.2 million barrels per day. This is far higher than the low point of 5 million barrels per day that was reached in April, but it is still well below last summer’s levels of about 10 million barrels per day.
The Impact on Shares of Energy Companies
Over 30 energy companies in North America filed for bankruptcy during the first seven months of 2020. Unless demand for fuel makes a quick recovery, the industry could see a wave of more bankruptcies, as well as mergers and acquisitions in the near future.
Shares of energy production companies have tumbled over 20% since early June. On Monday, ExxonMobil was removed from the Dow Jones Industrial Average, illustrating how the energy industry is losing some of its influence on financial markets.
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