Picture Source: Pixabay
The oil industry was hit hard back in 2020 as the Coronavirus pandemic shutdown the world economy. Now however, as the pandemic dies down thanks to the vaccination drives, the world economy’s gears are slowly starting to turn once again, and the oil industry is looking to bounce back bigger than ever.
The International Energy Agency (IEA) has increased its forecasts for oil production, and the total demand this year is forecasted to grow to around 99.7 million barrels a day. The IEA is expecting this year’s oil production levels to be similar to pre-pandemic levels.
The nature of the Coronavirus plays a major part in shaping these trends. Omicron, the current variant of concern of the Covid-19 strain, is a variant which is able to spread extremely quickly but has milder symptoms than its predecessors such as the Delta variant. This has resulted in much looser Covid restrictions, and it has given countries and their economies a chance to breathe once again. The IEA also commented that because of Omicron’s milder nature, it should help people gain immunity faster and aid a quicker return to pre-covid economic activity and oil demand.
“At the current rate of transmission, a large part of the population will likely have gained immunity by infection or vaccination by the end of the first quarter. As a result, restrictions to mobility could be minimal in the second half of the year”, commented the group.
The global energy crunch is another factor which has influenced the IEA’s forecasts for oil production growth this year. As the world struggles with a shortage of natural gas, it has caused the price of natural gas to skyrocket, and consequently the demand for a cheaper alternative fuel has grown substantially. Thus, the demand for oil has been further boosted by 100,000 barrels per day to meet the extra demand.
Picture Source: Pixabay
The future of oil seems to be bright, with demand being predicted to grow past pre-pandemic levels in the near future as well, but is that a good thing?
Whilst oil demand growth shows that the world economy is slowly recovering, it also means that we are headed right back to our old habits of pollution as well. On average just one (42 gallon) barrel of oil releases 431 kg of CO2 into the atmosphere upon combustion, we can imagine how much CO2 is released into the atmosphere if more than 99 million barrels are used every day. As the demand for oil continues to grow, more and more investments will be allocated to improving and expanding oil refineries to meet that demand, when those investments should be going into developing sustainable sources of energy such as biofuels instead.
So, the big question on everyone’s mind is, when will fossil fuels ever become a thing of the past?
January 24th 2022 | 4:00 PM