Pandemic Crisis Offers Glimpse Into Oil Industry's Future -- David Sheppard -- Financial Times -- May 3, 2020

Linked at paywall. Archived.

Opinions on both sides.

On one side stand executives like Lord Browne, who now chairs LetterOne, part owner of independent oil and gas producer Wintershall DEA, as well as sitting on the board of a biomedical institution researching potential vaccines for Covid-19. They believe the world will be changed so indelibly that oil demand will struggle to regain the upwards trajectory that has underpinned the industry for over a century. They see the potential for demand to peak earlier than expected, with a more rapid shift into renewable energy.

On the other side of the argument are those who think that efforts to mitigate climate change risk being derailed by cheap oil and a global depression that will suck up so much government time and stimulus money that climate efforts will be pushed aside. In this scenario, investment in the oil industry could fall so much that supply shortages eventually emerge, spiking prices higher.

And this:

The political backdrop for the oil industry is also less stable. Saudi Arabia’s initial response to the slowdown in oil consumption was to launch a price war with Russia, raising its production to maximum levels, partly in a bid to make up in volumes what it lost in price.

While the kingdom has since returned to restricting output, under pressure from US president Donald Trump, analysts believe that could be a portent of national oil companies realising that demand is going to peak sooner rather than later. For Saudi Arabia, which has 75 years’ worth of oil in the ground, the most rational approach may be to pump as hard as possible now.

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Today's Rant

May 3, 2020: Sweden won the debate. I'm getting tired of the "blame game" and arguing about who won the debate. That's why I like watching poker. Poker players learn by playing. Poker players are forced to work with the hand they are dealt. Poker players cannot predict what cards they will be dealt, nor can they predict how their opponents will respond. When a hand is over, a hand is over. They move on to the next hand. They don't debate each hand until the cows come home. Good poker players learn from each hand but they don't need to talk about what they learned.

We are now ready to benefit from both the draconian lock down efforts and Sweden's "herd immunity" strategy.

1.The goal of the draconian lock down efforts was to flatten the curve. It was not to stop the spread of the virus, nor decrease the number of ultimate cases and ultimate deaths. It was to slow the spread of the virus, but even with a vaccine this virus will not be eradicated due to human efforts.

2. The powers-that-be were panicked over the thought that the heath systems would implode, that the heath care sector could not keep up. That was the purpose of slowing the spread, or "flattening the curve."

3. The health systems have now had time to prepare, the curves have flattened everywhere (with some notable exceptions).

4. We should now implement Sweden's strategy. Open "everything" up with targeted surveillance, and targeted responses.

 It will be interesting to see the number of corona-virus-associated deaths in southern California three weeks from now following the on-again-off-again opening of the southern California beaches.