One big question emerging from the pandemic is whether it will speed up the global shift away from oil. Life under lockdown gave a taste of a world that burns less petroleum, with consumption down by about a quarter and city dwellers from Los Angeles to New Delhi relishing the cleaner air. As restrictions eased, things weren’t exactly returning to normal. Many workers had given up on commuting and there was talk that air travel might never recover. On the other hand, rock-bottom oil prices and the desire to avoid crowded public transport had some people driving to work for the first time or taking road trips instead of flying.

1. Has demand for oil peaked?

Possibly. As the pandemic halted trains, planes and automobiles, even the heads of big energy companies hinted at a turning point in the world’s thirst for oil. Earlier, executives with the most aggressive forecasts had “peak oil” arriving in the late 2020s, while others anticipated it decades later. Now it’s unclear whether the appetite for oil, and the prices that went with it, will ever return. Ben van Beurden, the chief executive officer of Royal Dutch Shell Plc, said in May that demand might be “lower-for-longer” than previous downturns. Still, the International Energy Agency, which advises nations on energy policy, is sticking with its forecast that demand will still rise past its peak before plateauing around 2030.

2. Who’s right?

A lot depends on how the pandemic hampers mobility and trade in the months and years ahead, since more than 60% of oil is used for transportation. And there are intriguing questions about how new habits might become ingrained. Much of the forecast growth in oil demand was based on people getting richer and wanting to fly more, yet jet-fuel demand has declined more than any other petroleum product as a result of the Covid-19 crisis. Boeing Co. Chief Executive Officer Dave Calhoun expects a three-year wait before passengers, wary of squeezing into airports and airplanes, make as many journeys as in 2019. At the same time, Tesla Inc. displaced Toyota Motor Corp. as the world’s most valuable automaker in 2020, underscoring investor enthusiasm for a company betting on the future of electric vehicles and trying to transform an industry that’s relied on internal combustion engines for more than 130 years.

3. What has the pandemic changed?

The outbreak has disrupted supply chains dependent on diesel-guzzling trucks and ships burning heavy fuel oil. Politicians are now urging less reliance on long-distance transport and the World Trade Organization predicts trade will slump by at least 13% in 2020. Pre-virus, the push to ditch oil was gaining momentum from the 2015 Paris Agreement on climate change and a surge in investment in green projects. The IEA sees carbon dioxide emissions likely falling this year, though measurements showed swift rebounds as lockdowns eased. Cars made something of a comeback as city-dwellers avoided buses and trains and holiday-makers shunned overseas travel. Cheaper oil could slow the switch to electric vehicles, and shrinking economies may mean less money for new technologies. On the other hand, pandemic stimulus packages such as Germany’s include more money for EV charging stations, and more commuters decided to give e-bicycles a try.

4. What about the price of oil?

A price war exploded in March just as lockdowns were biting into economic activity. Having started the year near $70 a barrel, oil plunged below $25 as storage tanks neared capacity. The price of U.S. oil futures even briefly sank below zero as speculators got caught out. The turmoil was fueled by the dramatic collapse of an alliance between the Organization of Petroleum Exporting Countries cartel and Russia, a pact that had underpinned world oil markets for three years. As American producers began idling rigs and laying off workers in April, U.S. President Donald Trump called Russian President Vladimir Putin and Saudi Arabia’s King Salman to broker output cuts, helping to lift prices to around $40 in June.

5. What does this mean for oil producers?

Energy companies are resetting their sights. Shell cut its dividend for the first time since World War II and BP Plc said it would review projects against price forecasts that are 20% to 30% lower. Ryan Lance, chief executive officer of ConocoPhillips, said the U.S. may never return to the record 13 million barrels a day it produced early in 2020. (OPEC’s Middle East members can pump crude at about a third of the cost of U.S. shale.) Lower prices are crippling for nations including Nigeria and Venezuela that depend on oil for most of their government revenue. Other oil-dependent nations, including Saudi Arabia and Russia, have sizable foreign currency reserves to help tide them over.

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