Lawmakers Brainstorm About Restoring Energy Industry To New Normal
The current crisis has cost many jobs in both renewable and non-renewable energy industries. However, the renewable energy industry seems to have been hit the worst with around 600,000 job losses. Oil demand went down and buried, resulting in negative demand and pricing of petroleum products in the market.
Although lock downs and stay home orders are being eased in a phased manner, the damage has already been done. People are abstaining from traveling as much as possible, and it is not going to change for the time being.
According to David Turk, acting deputy executive director at the International Energy Agency (IEA), the energy industry is now suffering the biggest drop in business and demands since world war II. In his appearance before the Senate Energy and Natural Resources Committee, his concerns about the economic fall out were loud and clear.
IEA gave dire estimates about the global demand drops. It has predicted that the global energy demand drop will be 6%, which is equal to that of India. In the US alone, the demand for energy will plunge by 9%.
With lesser usage and people on the road, oil demand is all set to drop by 8%. Since industries are wide shut, electricity demand has also gone down by 5%.
Turk also expressed his worry about plummeting the renewable energy industry, which was forecasted to grow faster than ever in 2020. It is still in the growth stage, but at a much slower pace than predicted.
Lawmakers in the US Senate and the House hope that future stimulus bills will help. They are of the opinion that stimulus bills can boost the business.
The future stimulus package will certainly consider the present and the future impacts, so we can expect a better outcome.
However, in front of industry groups, ideas are conflicting.
Some Highlighted Opinions
Sen.Lisa Murkowski (R-Alaska) is confident that energy bills will spur investment in R&D of the sector and was all set to leave a long-lasting impact on the industry.
Sen. Steve Daines (R-Mont.) believes that cutting government taxes companies pay for oil extraction can be a great temporary relief to the companies.
Democrat Ernest Moniz, who is also the former Obama administration Energy Secretary, advocates for the massive action by the federal government and also believes that only a huge number of jobs can bridge the deficit.
“Given the demonstrated track record of the energy sector in having considerable leverage for job creation, major investments now in the clean energy transition, and any further stimulus and appropriations, should have a high priority,” Moniz said.
Environmental Industry V/S Petroleum Industry
Environmental groups have repeatedly requested tax benefits for carbon-containing companies(who contain CO2 before releasing it into the air). The petroleum industry, however, wants the government to avoid any tax benefits and refrain from taking relief efforts.
They argue that reopening the economy will restore the demand as the lock down eases and more industries are up and running.
Frank Macchiarola with the American Petroleum Institute, said that “In terms of asks going forward, our major request would essentially do no harm, to prevent short-term measures that are maybe put in place with good intentions” but long-term risk impacts, said Frank Macchiarola with the American Petroleum Institute, which represents the oil and gas industry.
What Is The Immediate Future?
Experts have warned that it will take years to restore the oil industry to the pre-pandemic era. Oil prices will not return back to $50, which is also when demand will stabilize.However, there is a long way to go to come out of these crises.