What's going to happen to crude oil

The following article discusses whether after the pandemic is over fossil fuel consumption will resume to the same level as before, or whether there will be permanent changes in the market leading to only a partial recovery of demand.
COVID-19 wipes out demand for fossil fuels — will they bounce back?

The article does not come to any definite conclusions on this, but rather presents several arguments on either side of the discussion.

On the lower demand side, working from home may become a more permanent feature of life, reducing both commuting and the need for large offices. Working from home may become more practical for many people once the children go back to school.

On the other hand, people will still have their cars and will resume travelling for recreation and tourism again.

Another factor is that the economic recession and higher government debt levels will mean that governments will have less money to spend, either directly or indirectly, on climate change issues.

However, the recession may last for several years and act to depress demand. I will add that there were signs of an oncoming recession before COVID-19 hit, so the pandemic may have acted to accelerate a process that was already underway.

So there are no conclusions to be drawn a this time and there will be continuing uncertainty about the future.
I would imagine usage will decrease for the time being, as people will work from home and watch their spending. Tourism is dead for a few years so that impact will be felt. Nobody will be traveling much.
 
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There are a few more factors that will come into play here. Working from home is showing some very strong signs of being permanent:


From Gartner - 74% of CFOs think working from home will become permanent


Barclays boss thinking big offices are a thing of the past.

This means the commute to work will be reduced. I think this will also cause a diaspora of those information and remote workers wondering why they're paying £500K for a 2 bed flat in commutersville when that could get them considerably more in more regional areas. How many of those in lockdown wish for a back garden to utilize?

Demographically, this will cause a reduction of commuter oil expenditure, but an increase in home delivery demand - how long until Amazon becomes an centralized oil consumer for their delivery driver business? One thing they do well is supply chain.

I'm assuming the carbon footprint for delivery drivers vs commuters is more efficient to the former, therefore we'll see in an overall drop in demand for pertroleum.

I don't agree that tourism will drop as dramatically. Perhaps low cost tourism might as the more price sensitive low skilled sector will find it more difficult to afford flights, but the more skilled, higher disposable income will still want their 2 weeks in Italy yah? Upshot - Ryanair's "We hate our customer" business model will fail and a more comfortable aviation proposition will become more attractive. Therefore aviation volumes will drop as the no frills guys re calibrate (or go to the wall).

In short - drop in demand for business commuter fuel and drop in JetA1 for the low cost carriers. Increase in delivery driver consumption, but not enough to offset the commuter drop.
 
I don't agree that tourism will drop as dramatically. Perhaps low cost tourism might as the more price sensitive low skilled sector will find it more difficult to afford flights, but the more skilled, higher disposable income will still want their 2 weeks in Italy yah? Upshot - Ryanair's "We hate our customer" business model will fail and a more comfortable aviation proposition will become more attractive. Therefore aviation volumes will drop as the no frills guys re calibrate (or go to the wall).
Ryanair will always find a way to be cheaper, they will survive because even well off people will use them if they are half the price of a decent airline. People will put up with short haul hell if it saves them cash.
They don't seem too arsed about the current crisis (Other than they don't want to make the middle aisle empty without compo from the Government), possibly because they know they will be still standing while their competitors go to the wall.
 
Ryanair will always find a way to be cheaper, they will survive because even well off people will use them if they are half the price of a decent airline. People will put up with short haul hell if it saves them cash.
They don't seem too arsed about the current crisis (Other than they don't want to make the middle aisle empty without compo from the Government), possibly because they know they will be still standing while their competitors go to the wall.
I think this is correct, but also, for the business traveller not based in the SE of England, Ryanair and to a lesser extent, Easyjet, operate in an empty space, long ago vacated by BA, with direct flights from regional airports to a huge variety of European destinations.

Oh, I know that we all joke about the creative naming of some airports like Brussels-Charleroi and Dusseldorf-Weeze, but they also fly directly to lots of other useful airports such as Krakow, Bucharest and Lisbon.
 
Ryanair will always find a way to be cheaper, they will survive because even well off people will use them if they are half the price of a decent airline. People will put up with short haul hell if it saves them cash.
They don't seem too arsed about the current crisis (Other than they don't want to make the middle aisle empty without compo from the Government), possibly because they know they will be still standing while their competitors go to the wall.
There is definitely some merit in what you say - some of the routes that Ryanair has opened up has been very attractive to the second home people, travelling to their countryside estate in Bergerac etc. However looking at some of the comments by @Banker and @Toastie on the Billionaire's thread, there is a lot of questions in the short term about the survivability of some of the low cost carriers. I see Norwegian are over the first hurdle: Norwegian Air shareholders back rescue plan - reports but not out of the woods yet.

OK, I admit, there is no love lost between me and Ryanair...
 
There is definitely some merit in what you say - some of the routes that Ryanair has opened up has been very attractive to the second home people, travelling to their countryside estate in Bergerac etc. However looking at some of the comments by @Banker and @Toastie on the Billionaire's thread, there is a lot of questions in the short term about the survivability of some of the low cost carriers. I see Norwegian are over the first hurdle: Norwegian Air shareholders back rescue plan - reports but not out of the woods yet.

OK, I admit, there is no love lost between me and Ryanair...
I see this a lot on arrse, and I have to admit that I dislike flying Ryanair myself, not just because it feels scummy, but I really don't like O'Leary's attitude to his customers. At the end of the day, though, when the choice is between spending less than £100 on a return trip to a regional airport in France, with a (one way) flight time of 1hr40min and spending £300+ and 6hrs on a connecting flight through CDG or AMS (BA don't fly there), then I'm going to suck it up.

I know that I am in the minority on arrse, because most arrsers will instruct their butler's to only book business class, and Ryanair don't do business class.
 
I see this a lot on arrse, and I have to admit that I dislike flying Ryanair myself, not just because it feels scummy, but I really don't like O'Leary's attitude to his customers. At the end of the day, though, when the choice is between spending less than £100 on a return trip to a regional airport in France, with a (one way) flight time of 1hr40min and spending £300+ and 6hrs on a connecting flight through CDG or AMS (BA don't fly there), then I'm going to suck it up.

I know that I am in the minority on arrse, because most arrsers will instruct their butler's to only book business class, and Ryanair don't do business class.
Business class? what's that? It's turn left for first only daarhling!
 

goodoldboy

MIA
Book Reviewer
In February I paid 47p a litre for domestic heating oil, now it's 16.75p a litre. As for Shell unleaded petrol it was £1.16 per litre this morning which is the lowest for a long while. The heating oil is at a freak low but I wonder if petrol will go lower yet?
 
There is definitely some merit in what you say - some of the routes that Ryanair has opened up has been very attractive to the second home people, travelling to their countryside estate in Bergerac etc. However looking at some of the comments by @Banker and @Toastie on the Billionaire's thread, there is a lot of questions in the short term about the survivability of some of the low cost carriers. I see Norwegian are over the first hurdle: Norwegian Air shareholders back rescue plan - reports but not out of the woods yet.

OK, I admit, there is no love lost between me and Ryanair...
Personally I think trying to predict the shape of the aviation sector post Covid is like taking a running feck at a rolling doughnut.

All of the points put forward here have merit and have weaknesses in their argument but which comes out on top is anyone’s guess?

I’ll confess I haven’t read the whole thread so don’t know if anyone has raised it yet but aviation in the context of oil prices is perhaps one of the more stable of the spinning plates. Most companies hedge on fuel prices, employing whole teams of very clever (and expensive or they’d be in The City) people who essentially gamble on predicting fuel prices. Notice I say “fuel” rather than “oil” because oil prices are undoubtedly a large part of it, there are many other factors affecting fuel prices specifically.

I know very little about it but hedging generally looks at gross movements in price rather than “short term” fluctuations. The problem comes when the unexpected is big in impact, 9/11, Covid etc. This is because the gamble bit kicks in here and hedging will have been looking at green shoots of post EU growth, upturns in consumer confidence etc etc etc. Prices will have been fixed a year+ out as the further out you gamble, the better the price. Then along comes Covid and the only certainty is suppliers will be doing everything they can to hold airlines, and others to the hedged price in the face of spot prices collapsing below that hedged price.

I have absolutely no idea of where any airline stands in terms of how much fuel they’ve hedged (most don’t go much beyond 75% to offset the above potential scenario) or at what hedged price -v- spot price ratio they are at. Details of such are as closely guarded as nuclear launch codes!

As to who will survive? God alone knows. Everyone says Jet2 will go bust every winter but they’re still here. I think RYR, EZY, BA and TUI will survive because of scale but there’s a big difference between surviving and surviving in a post Covid structure. VS are shaky but will probably make it, Norwegian will probably go, there are just too many holes in the dyke and they’re running out of fingers. Jet2 are an enigma but investors seem comfy, their share price is holding up well and on days where others go down, Dart Group goes up. VS will need big cash as they were wriggly before all this.

Summary: I don’t know!
 
There is definitely some merit in what you say - some of the routes that Ryanair has opened up has been very attractive to the second home people, travelling to their countryside estate in Bergerac etc. However looking at some of the comments by @Banker and @Toastie on the Billionaire's thread, there is a lot of questions in the short term about the survivability of some of the low cost carriers. I see Norwegian are over the first hurdle: Norwegian Air shareholders back rescue plan - reports but not out of the woods yet.

OK, I admit, there is no love lost between me and Ryanair...
Norwegian has gambled (Lots of debt to expand) and was looking like it lost until the virus hit, now it has a slim chance of surviving by blaming all its woes on the virus and it can get its begging bowl out.
It wouldn't surprise me if Ryanair started taking over the routes of the bankrupt airlines and actually come out of this time as a stronger/bigger airline.
Yes, they are a pain in the arse, but there is no shortage of people willing to put up with shite service if they can save 50 quid on a seat.
 

Goatman

ADC
Book Reviewer
'Stale' only if not in air-tight container - volatiles evaporate and water & hungry bacteria/enzymes absorbed

UK has small reserve capacity - thanks Green twats & Blair/Brown. USA has large and Trump announced they would top to brim during low price. China allegedly has large reserve capacity too and buying
The RN used to have storage depots ashore dotted around the UK, and in places other than Guzz and Pompey.
Most have been sold off.

Majority of modern ships run on Dieso. ( the last of the RN's FFO driven fleet IIRC was HMY Britannia)

Back in the 90's if a small vessel put into a port with no permanent RN presence, they would whistle up a road tanker which would park on the jetty alongside for bunkering.
Slurp, slurp.....Chief of the Boat says 'Job's a good 'un' and away we go.

When the price of crude is low, refining it for future use becomes an option....but with no organic tank farm storage facilities the RN would just have to go to the market.

I would beg to suggest that strategically this is a tad short-sighted.....

'Just In Time' - what a miracle of cost analysis......
 
In February I paid 47p a litre for domestic heating oil, now it's 16.75p a litre. As for Shell unleaded petrol it was £1.16 per litre this morning which is the lowest for a long while. The heating oil is at a freak low but I wonder if petrol will go lower yet?
its about 85p in Norway. Its great shame i cant bulk buy it.

I seem to recall that if a petrol company sold liter in the UK for its tax price only it would still be about 75p a liter.
 

goodoldboy

MIA
Book Reviewer
its about 85p in Norway. Its great shame i cant bulk buy it.

I seem to recall that if a petrol company sold liter in the UK for its tax price only it would still be about 75p a liter.
Is heating oil piped into homes there from a communal depot?
 

goodoldboy

MIA
Book Reviewer
its about 85p in Norway. Its great shame i cant bulk buy it.

I seem to recall that if a petrol company sold liter in the UK for its tax price only it would still be about 75p a liter.
Just looked at the duty on domestic heating oil and it's 10.7 p per litre. VAT is 5%.
 
Just looked at the duty on domestic heating oil and it's 10.7 p per litre. VAT is 5%.
Petrol is 57.95p plus VAT at 20% (11.59p) so 69.54 if there was no other costs involved.
 
Saudi Arabia are cutting another 1 million barrels of oil per day production in June in an attempt to prop up the market.
Saudi Arabia orders state oil company Aramco to cut another 1 million barrels in June
Saudi Arabia has directed national oil company Aramco to cut its crude oil production for June by an extra voluntary amount of 1 million barrels per day, on top of a reduction already committed by the kingdom under the OPEC+ cut deal, a Saudi energy ministry official said on Monday.

"This brings the total production cut that will be carried out by the Kingdom, to around 4.8 million barrels per day, from the April production level," the official said.

"Therefore, the Kingdom's production for June, after both its targeted and voluntary cuts, will be 7.492 million barrels per day," he added.
 
Yesterday it was 99.9p in a Jet petrol station in Hastings.
I think petrol prices have hit the bottom at that price. The oil market has stabilised at just under $30/barrel and should stay stable in the short term. Opinion is still divided on the longer term, though.
 

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