Stories about oil production and the changes in its market value are followed diligently by the people worldwide, considering it often influences the price hikes and roll-backs that other products will be subjected to. The topic is especially interesting for a family, which needs to budget their income based on these changes. After all, it can affect how much money they have for food, clothes, tuition, and gas.
The current forecasts regarding the oil drilling industry are more favorable to the consumers now than ever because of the pandemic that continues to affect us all. Since most significant countries have barely gotten out of national lockdowns, fewer people have been topping up their car fuel. The oil supply in the world, therefore, will continue to overpower the demand for it. The regular wage earners may then expect to purchase more groceries and various items with their current salary until next year.
How Does It Affect The Oil Industry?
What seems to be good for the consumers is not always ideal for the producers, of course. Too much supply is particularly bad news for the owners of oil companies, as well as for the workers who remain offshore most of the time to extract the substance. The pieces of machinery and the vessels used on the job cost more than a fortune. Not to mention, they still have to pay the employees who have families depending on them back home. If the producers continue making use of the laborers’ services, although fewer entrepreneurs will venture into oil drilling soon, the number of barrels left untouched in their storage facilities will escalate. Alternatively, in the event that they opt to sell all of them first before the work resumes, it means that the labor force will end up jobless for months.
The probable outcome is that the Eastern and Western rig firms, which do not have an established footing in the market, will have no other choice but to close the business to avoid the oil price collapse. A few companies like Atwood Oceanics, Diamond Offshore, and Shelf Drilling Midco are about to have their equipment downgraded to cut expenses even further.
Still, downgrading is not the worst update for oil companies, considering it means that they are somewhat thriving. According to the news, some oil rigs for gas and drilling in Canada are no longer filing for recertification of their equipment. They may have done it in the past when there was a high demand for oil in various parts of the world. However, no thanks to the coronavirus outbreak, it seems like a massive gamble to pay for that. Thus, to date, only 18 rigs are functioning in the said country, and that is a significant downsizing compared to the 120 platforms they used to have in 2019.
How Can It Change?
Lifting the travel ban is the quickest way to overcome this oil drilling problem that companies are dealing with. Once everyone can come and go wherever they want, they will undoubtedly use some sort of transportation (e.g., car, bus, or airplane), which requires fuel. Factories will be able to function, and they happen to need oil for the machinery, too.
It will also be great if an anti-coronavirus vaccine becomes available. In truth, it is only the virus that prevents people from coming out of their houses and going everywhere. Back then, the oil supply tends to deplete because of the extensive number of car owners globally. Once the demand returns, more drilling companies may reopen, and so their workers will have a stable source of income again.
How Can Families Help The Oil Industry?
I know it sounds like an odd suggestion, but perhaps you can increase your fuel-powered items around the house. For instance, using electricity may help since companies require oil to produce a high level of electrical energy. When you get groceries and other essentials, you should take your car instead of your bike. The latter is eco-friendly, yes, but the former is more laborer-friendly than that.
2020 may not be the best year for oil corporations. The demand for their products is a little too low; everyone has been ordered to stay at home since the beginning of the year. Thus, no one feels the need to top up their cars or go on a trip. In case the demand for oil continues to go down, it may not be impossible for companies to start closing more rigs in the next few weeks.
The fewer rigs can operate, the more people may end up jobless—that’s the sad reality. Nevertheless, these predictions will persist as such until they do happen. Let’s show some faith in the scientists who are still trying to find a vaccine against coronavirus and hope that a balance in the world market will occur soon.