It is no surprise that the oil industry took a major hit when the COVID-19 pandemic hit. And falling oil prices may continue to impact your lifestyle.
Cities across the country went on lockdown issuing stay-at-home orders curtailing non-essential travel, canceling school, and encouraging companies to allow employees to work from home when possible.
All these factors put a major decrease in America’s demand for oil resulting in a major shock to the oil industry which is yet to fully recover.
The short-term joys of lower prices at the pump are now giving way to other consequences to the energy sector and the American economy at large.
The International Energy Agency reported that for the first quarter of 2020, oil consumption was down 2.5 million barrels per day compared to the year prior.
At one point, U.S. oil prices fell below zero to -$37.63 a barrel, which was the lowest number reported since oil futures trading was opened by NYMEX in 1983.
“It’s the worst oil price in history, which shouldn’t surprise us because it’s the inevitable result of the biggest supply and demand disparity in history,” said Ryan Sitton, commissioner at the Texas Railroad Commission (via CBS News).
In mid-June, the number of drilling oil rigs in the U.S. dropped by 10 to a total of 189, which is the lowest number since 2009, according to energy services firm Baker Hughes Co.
In addition, the number of U.S. gas rigs fell from 78 to 75, which is the lowest amount on record since 1987.
While all these numbers sound shaky, the oil industry has been slowly trying to rebound. The U.S. benchmark was up to $32 a barrel in mid-June, according to the New York Times.
This is a good indication that the oil sector is slowly clawing its way back up to normalcy. However, it’s not going to be an overnight recovery.
In the meantime, what does lower than normal oil prices mean for the average Texan?
The biggest impact you’re going to notice is lower gasoline prices.
You may have noticed that the deep gas cuts you got at the Texas pumps in April are slowly starting to diminish with summer now in full swing. Gas prices typically increase during peak summer months. The U.S. Energy Information Administration says this is because producers must refine gasoline with non-evaporative additives to neutralize summer heat.
However, you’re still getting a pretty good deal at the pump right now.
“Today’s national average is 19 cents more expensive than a month ago but remains significantly cheaper – 53 cents – than a year ago,” AAA said in a June 22, 2020 report.
Another plus for Texans is that the Lone Star State is currently ranked as one of the “top ten least expensive markets” with gas prices averaging $1.83 a gallon, according to AAA.
It’s hard to predict how long gas prices will stay down as medical experts are touting the possibility of a second wave of the pandemic. But Texans can enjoy them while they last.
A decrease in demand and a drop in fuel prices has resulted in cheap airline tickets to various destinations across the country, even if nobody else is admitting the correlation.
For example, Orbitz was advertising flights to Texas starting at $18 one-way and $35 round-trip on its website on June 23, 2020.
On the same day, a round-trip flight from Charlotte Douglas International Airport in North Carolina was $88 roundtrip on Southwest. A ticket from the same city to Orlando was $100 roundtrip for Fourth of July weekend, and just $95 roundtrip to Destin Florida in August.
While flights across the country were canceled when COVID-19 was at its peak, Fort-Worth based company American Airlines says they’re now ramping up for summer, and there seem to be lots of deep discounts if you do your research.
“In response to improving demand for air travel, American is planning to fly 55% of its domestic schedule and nearly 20% of its international schedule in July 2020,” American Airlines said in a statement on its website.
While this is only 40% of its July 2019 flying, the airline is seeing an increase in business after airline travel was nearly halted during the peak of COVID-19.
Approximately 110,000 passengers flew American Airlines daily in the last week of May, which is an increase of about 32,000 daily passengers in April, according to a report on the airline’s website.
In an effort to reclaim some of its business, American Airlines is currently advertising perks like extra airline points on qualifying flights, no change fees on flights booked in June and re-opening of their Admiral Club lounges in 10 U.S. cities, including one in the Dallas airport.
With many families putting vacation plans on hold and more Americans working from home, there are fewer people driving on the road, resulting in fewer accidents. As a result, many car insurance carriers are offering discounts right now.
Car insurance rates dropped 8.9% in May and were down more than 14% from the previous year, according to Moneywise. “Some insurers are even offering rebates, like Geico’s 15% credit for its customers,” the source said.
Texas is the top producer of both crude oil and natural gas in the U.S., so it’s sadly not surprising that oil and gas workers’ jobs in Texas were some of the hardest hit.
More than 26,000 Texas oil and gas workers lost their jobs in April 2020, according to the Houston Chronicle.
But sources say that you don’t have to be an oil or gas worker in Texas to feel the effects of the oil sector’s struggles.
“The loss of jobs and revenues have hurt the oil and gas industry, but the losses will be felt across the state,” The Texas Tribune reported. “Many local budgets, as well as the state budget receive various sources of funding from oil and gas taxes. As a result, residents are likely to feel the effects.”
Texas could lose more than $24 billion in oil profits due to the downturn in 2020, according to Oilprice.com.
Jackie Whetzel is a freelance writer who has been featured in newspapers and publications across the country. She has written on the topics of energy, education, government, and business. You can find her on Instagram.