Bailout or subsidy: Oil in the age of pandemic
Friday, April 10, 2020 - 09:30
in Mathematics & Economics
COVID-19 is disrupting all sectors of the global economy, and the energy sector is far from immune. As economic activity slows precipitously on its way to catastrophically, the fossil energy sector that drives part of that activity is responding. With crashing demand due to the pandemic, the first response is seen in prices. A barrel of oil now sells for $25 or less, down from over $60 at the beginning of 2020. The second response is seen in production. So far production has remained stable in the last two months, but companies have announced massive spending cuts that will soon constrain production.