BP's Chief U.S. Economist Examines Impacts of COVID-19 on Global Oil Markets, Roles of Alternative Fuels | Asia Society Skip to main content

Unsupported Browser Detected.
It seems the web browser you're using doesn't support some of the features of this site. For the best experience, we recommend using a modern browser that supports the features of this website. We recommend Google Chrome, Mozilla Firefox, or Microsoft Edge

  • Visit
    • Plan Your visit
    • Health and Safety
    • Java Lava Cafe
    • About the Building
    • Ticketing Policies
  • At Home
    • At Home
    • Webcasts
    • Spotlight Asiatown
    • Houston's Asian American Journeys
    • Visit from Home
    • Learn from Home
    • COVID-19 Series
    • Family Activities
    • Encore Series
    • Staff Picks
    • Around the World
    • 1,000 Cranes for Hope
  • Events
    • Upcoming Events
    • Virtual Events
    • Family Events
    • Special Events
    • Past Events
    • Event Recaps
  • Exhibitions
    • Current Exhibitions
    • Upcoming Exhibitions
    • Permanent Exhibition
    • Past Exhibitions
  • Education
    • Family Programs
    • Student Programs
    • Teen Programs
    • Educator Programs
    • Japan Outreach Initiative
    • Adult Programs
    • Community Programs
    • Bold New Initiative
  • Support
    • Donate Now
    • Become a Member
    • Education Project
    • Special Events
    • Endowment
    • Planned Giving
    • Corporate Partners
  • About
    • About Us
    • Unity in Diversity
    • Our People
    • Our Board
    • Our Supporters
    • Get Involved
    • Work With Us
    • Financial Statements
    • Frequently Asked Questions
  • News
    • All Posts
    • Event Recaps
    • Press Releases
  • Space Rental
  • Shop
Texas
Search
Texas
  • Visit
    • Plan Your visit
    • Health and Safety
    • Java Lava Cafe
    • About the Building
    • Ticketing Policies
  • At Home
    • At Home
    • Webcasts
    • Spotlight Asiatown
    • Houston's Asian American Journeys
    • Visit from Home
    • Learn from Home
    • COVID-19 Series
    • Family Activities
    • Encore Series
    • Staff Picks
    • Around the World
    • 1,000 Cranes for Hope
  • Events
    • Upcoming Events
    • Virtual Events
    • Family Events
    • Special Events
    • Past Events
    • Event Recaps
  • Exhibitions
    • Current Exhibitions
    • Upcoming Exhibitions
    • Permanent Exhibition
    • Past Exhibitions
  • Education
    • Family Programs
    • Student Programs
    • Teen Programs
    • Educator Programs
    • Japan Outreach Initiative
    • Adult Programs
    • Community Programs
    • Bold New Initiative
  • Support
    • Donate Now
    • Become a Member
    • Education Project
    • Special Events
    • Endowment
    • Planned Giving
    • Corporate Partners
  • About
    • About Us
    • Unity in Diversity
    • Our People
    • Our Board
    • Our Supporters
    • Get Involved
    • Work With Us
    • Financial Statements
    • Frequently Asked Questions
  • News
    • All Posts
    • Event Recaps
    • Press Releases
  • Space Rental
  • Shop

BP's Chief U.S. Economist Examines Impacts of COVID-19 on Global Oil Markets, Roles of Alternative Fuels

Asia Society at Home

We're bringing Asia Society directly to you! Learn, have fun, and explore as we continue to present and produce videos, family activities, interactive webcasts, and more.

Learn More

HOUSTON, May 1, 2020 — In the fifth week of its COVID-19 webcast series, Asia Society Texas Center (ASTC) welcomed Michael Cohen, Chief U.S. Economist at BP, to discuss the future of oil and gas in light of the COVID-19 crisis. In conversation with Eddie Allen, ASTC chairman, Cohen explained how the coronavirus pandemic has affected global oil markets in the short term and how it may impact investor and industry behavior in the future, and also touched on the roles of natural gas, hydrocarbons, and renewables.

How has COVID-19 affected oil markets in the short term?

Allen began by discussing the precipitous decline in oil prices, which dropped from around $60 a barrel at the beginning of the year to, briefly, below zero in late April, before rebounding to around $15 a barrel. Cohen noted two major contributing factors to these fluctuations: demand shocks as unprecedented stay-at-home orders led to reduction in use of cars and planes, and the adequacy of storage capacity for oil.

Though BP has delayed its annual Energy Outlook due in part to the impacts of COVID-19, Cohen said he expected the worst of the effects to be seen in the second quarter. According to the International Energy Agency, oil demand could drop from 100 million barrels a day to 75 million barrels a day as people largely work from home and cancel travel.

Cohen explained that despite the fall in fuel consumption, suppliers don’t want to shut down output for a variety of reasons, including the perception that price will rebound. Furthermore, the pressure to shut in production is more tied to logistics — that is, having no place to put barrels of crude — than to economics. If supply does have to decline due to the impact to demand from coronavirus and from lack of storage, Cohen said, it would largely take place in the U.S. and Canada in the short term, where prices are falling below operational breakeven costs and where storage utilization is rising. Additional lockdowns over the next two months could create additional price pressure, but OPEC countries have significant amount of leeway in production levels.

Where will oil markets be in the medium term? In the long term?

When considering the longer-lasting effects of the coronavirus crisis on the oil markets, Cohen said much would be dependent on how permanent the changes in demand would be after the world emerges from the COVID-19 crisis: Will people travel less and work from home more? What lifestyle changes will be lasting? Cohen said it is unclear how enduring those behavioral and economic factors will be. They may not significantly affect oil over time, looking to 2050, but he said they could very likely result in a big change to 2030 expectations.

Cohen noted that the price war between Saudi Arabia and Russia in March also spooked investors, though both countries have since come to a new agreement. It proved that the worst-case scenario of a price war could happen, and now is an additional risk factor that investors in any energy asset must consider going forward. Cohen went on to say that, on a long-term basis, what really determines the ability of Saudi Arabia and other key producing countries to affect oil prices is their ability to reform their fiscal situation, whether they try to diversify away from oil as the primary source of revenue and the speed at which they do that.

Overall, Cohen said he believed that the future will have steady demand for fuel. Though he acknowledged that investors will need to consider the place of oil and gas amid new energy sources as well as the instability in OPEC structure and the volatility that could result, he indicated that peak oil demand is still ahead of us and that we will see an oil plateau in 2030–2035 timeframe.

What roles will natural gas, hydrocarbons, renewables play?

Cohen explained that a significant share of the growth of the U.S. natural gas supply over the past few years has come from oil: when oil is produced, some of that associated natural gas has been marketed. As such, the contracting supply for oil has led to lower supply for natural gas as well, meaning that prices need to be high enough for producers to jump into dry gas plays. Outside of the U.S., emissions prices have been declining, leading to lower costs of generating electricity from coal and necessitating lower natural gas prices to compete.

Cohen said his long-term view on natural gas is complicated due to different scenarios, and could be affected by decarbonization scenarios. If striving for net-zero emissions, the role of natural gas would be reduced while renewables would take on a much larger share. Cohen said that clean energy sources were already becoming increasingly competitive with hydrocarbons because of their role within electricity mix and reliability.

How will this downturn affect Houston? Should the state take measures to help the industry?

In responding to audience questions about how the energy downturn might affect Houston, where energy is a large part of the local economy, Cohen said he could not speculate on specific impacts to the energy job market. He did reiterate that long-term effects from the shutdown of production will largely depend on how lasting some of the short-term behavioral changes are, which will lead companies to weigh whether or not it makes sense to continue production output.

“The industry is flexible in its ability to supply,” he said. “It really comes down to a question of permanence in demand destruction.”

Finally, Cohen refuted proposals for the government to mandate cuts to oil production. He pointed to the Texas Railroad Commission — which oversees the state’s oil and gas industry — and a recent Houston Chronicle op-ed by its chairman against pro-rating production. Cohen said he believed market principles are working, leading to declines in production without the need for the government to get involved.


Business and Policy programs are endowed by Huffington Foundation. We give special thanks to Bank of America, Muffet Blake, Anne and Albert Chao, ConocoPhillips, ExxonMobil, Nancy Pollok Guinee, United Airlines, and Wells Fargo, Presenting Sponsors of Business and Policy programs; Nancy C. Allen, Chinhui Juhn and Eddie Allen, and Leslie and Brad Bucher, Presenting Sponsors of Exhibitions; Dr. Ellen R. Gritz and Milton D. Rosenau and Wells Fargo, Presenting Sponsors of Performing Arts and Culture; and Mitsubishi Corporation (Americas), Presenting Sponsor of the Japan Series. General support of programs and exhibitions is provided by The Brown Foundation, Inc., The Hearts Foundation, Inc., Houston Endowment, Inc., the City of Houston through Houston Arts Alliance, McKinsey & Company, Inc., National Endowment for the Arts, Texas Commission on the Arts, Vinson & Elkins LLP, and Mary Lawrence Porter, as well as Friends of Asia Society.


About Asia Society at Home

Though Asia Society is temporarily closed, we are dedicated to continuing our mission of building cross-cultural understanding and uplifting human connectivity. Using digital tools, we bring you content for all ages and conversations that matter, in order to spark curiosity about Asia and to foster empathy.


About Asia Society Texas Center

With 13 locations throughout the world, Asia Society is the leading educational organization promoting mutual understanding and strengthening partnerships among the peoples, leaders, and institutions of Asia and West. Asia Society Texas Center executes the global mission with a local focus, enriching and engaging the vast diversity of Houston through innovative, relevant programs in arts and culture, business and policy, education, and community outreach.


Asia in Your Inbox

Enter your email address.

* indicates required
 
 

More from Asia Society

Deep Dive Into Star Wars APAH Month 2023

Deep Dive Into Star Wars With Michael Buening

Celebrate Asian Pacific American Heritage Month, Star Wars-style! In honor of May the Fourth, Performing Arts and Culture Director Michael Buening dives into AAPI representation in the galaxy we all know and love.
31 Ways to Celebrate APAH Month 2023

Asia Society Texas Celebrates Asian Pacific American Heritage Month 2023

Asia Society Texas celebrates Asian Pacific American Heritage Month! Enjoy a curated calendar of live events, recommendations, and on-demand content highlighting the traditions, talents, and contributions of Asians and Asian Americans.
APAH Month 2023 Staff Picks Read

Asian Pacific American Heritage Month 2023: What We're Reading

Add to your bookshelf with this Asian Pacific American Heritage Month 2023 edition of Staff Picks! Find recommendations for fiction and nonfiction alike to enjoy in the month of May and beyond.
APAH Month 2023 Staff Picks Watch

Asian Pacific American Heritage Month 2023: What We're Watching

Find a new-to-you show or film with this Asian Pacific American Heritage Month 2023 edition of Staff Picks! Add to your watchlist with our team's recommendations, from to anime to thrillers.
APAH Month 2023 Staff Picks Listen

Asian Pacific American Heritage Month 2023: What We're Listening To

Expand your playlist with our Asian Pacific American Heritage Month 2023 edition of Staff Picks! Enjoy recommendations for Asian and Asian American artists and podcasts our staff are listening to.
31 Ways to Celebrate APAH Month 2023

Asian Pacific American Heritage Month 2023

Join us for 31 ways to celebrate Asian Pacific American Heritage Month! Enjoy a curated calendar of live events, recommendations, and on-demand content highlighting the traditions, talents, and contributions of Asians and Asian Americans.

Pagination

  • Current page 1
  • Page 2
  • Page 3
  • Page 4
  • Page 5
  • Page 6
  • Page 7
  • Page 8
  • Page 9
  • Next page Next
  • Last page Last

Connect with Us!

Join us on social media and sign up for our e-newsletter so you're always up-to-date with our latest programming and content!

Facebook | Twitter | Instagram
LinkedIn | YouTube


Asia in Your Inbox

Enter your email address.

* indicates required
 
 
About
  • Mission & History
  • Our People
  • Become a Member
  • Career Opportunities
  • Corporate Involvement
visit us
  • Hong Kong
  • New York
  • Texas
global network
  • Australia
  • France
  • India
  • Japan
  • Korea
  • Northern California
  • Philippines
  • Seattle
  • Southern California
  • Switzerland
  • Washington, D.C.
resources
  • Arts
  • Asia Society Magazine
  • ChinaFile
  • Education
  • Policy
  • Video
shop
  • AsiaStore
initiatives
  • Arts & Museum Summit
  • Asia 21 Next Generation Fellows
  • Asia Arts Game Changer Awards
  • Asia Game Changer Awards
  • Asia Society Museum: The Asia Arts & Museum Network
  • Asia Society Policy Institute
  • Asian Women Empowered
  • Center on U.S.-China Relations
  • Coal + Ice
  • Creative Voices of Muslim Asia
  • Global Cities Education Network
  • Global Talent Initiatives
  • U.S.-Asia Entertainment Summit
  • U.S.-China Dialogue
  • U.S.-China Museum Summit
Connect
Email Signup For the media
Asia Society logo
©2023 Asia Society | Privacy Statement | Accessibility | Terms & Conditions | Sitemap | Contact

Asia Society takes no institutional position on policy issues and has no affiliation with any government.
The views expressed by Asia Society staff, fellows, experts, report authors, program speakers, board members, and other affiliates are solely their own. Learn more.

 

 

  • Visit Us
  • Hong Kong
  • New York
  • Texas
  • Global Network
  • Australia
  • France
  • India
  • Japan
  • Korea
  • Northern California
  • Philippines
  • Seattle
  • Southern California
  • Switzerland
  • Washington, DC