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SHELL warns of $22 BILLION hit from coronavirus slump
Key excerpts from this article: https://tinyurl.com/y9z7yx3q
" The company (Shell) said the changes to its price forecast reflect the economic trauma caused by the coronavirus pandemic, which has plunged countries around the world into recession and sharply reduced demand for energy.
Some analysts think global demand for oil may never return to its 2019 record high, expecting instead that the the pandemic will permanently reshape the way people live and travel — and that consumers will push companies and governments to address climate change with more urgency.
Other companies are making changes, too.
BP (BP) agreed to sell its petrochemicals business for $5 billion on Monday, saying the company's resources would be better deployed elsewhere as it tries to achieve net zero emissions by 2050 or sooner.The huge slump in demand for oil and gas this year is pushing many of the industry's biggest companies to accelerate a shift to cleaner fuels. Shell has committed to achieving net zero carbon emissions from its own operations by 2050.
Said Parker, "But make no mistake, the corporate landscape is changing, and the [major oil companies] are changing with it."
Going forward, notwithstanding the risk of continued covid-19 restrictions and possibly worse in the fall, we can expect international travel to continue to be greatly suppressed and even regional travel. Thus a continuing trend for much reduced demand for oil....which inturn places several oil companies in peril, let alone all the service suppliers and subsequent portions of local economies relying on a heathy, vibrant oil industry. I expect more bankruptcies in this sector, including suppliers and small businesses reliant on them. That means increasing unemployment.
Reduced travel will hurt the tourism industries and travel industries. Airlines will continue to hemorrage cash. Tourism/travel companies will fold. Airports and the businesses within them will continue to suffer to the point of collapse in many cases. Hertz went bankrupt, but other companies relying on rental revenues at airports will hurt. Cruise lines are already teetering on bankruptcy. Even taxi companies, many of whom rely heavily on fares from air travellers, will also take a big hit.
While I expect travel and tourism to rebound slowly in 2021, and almost fully in 2022, the oil industry will never recover fully. The Biden government needs to focus on moving the nation toward renewable energy. Not entirely of course, but a great deal more than now.
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