The Center for International Environmental Law (CIEL) warns in a just-released report that the oil, gas, and plastic industries are an “unfillable sinkhole for recovery funds” toward which these industries are aggressively striving. The report says that these interwoven industries have been in a long-term economic decline long before COVID-19 emerged. Several interacting forces have put the oil, gas, and plastic industries under sustained financial stress over the last decade. Reasons include the increase of electric vehicles and renewables, the decline in single-use plastic, an unusually mild winter in the US and Europe. The COVID-19 pandemic intensifies these weaknesses. However, according to the report, government bailouts and regulatory rollbacks will not reverse the decline of the oil, gas, and plastic industries.
“The pandemic adds to mounting and now overwhelming evidence that this sector has reached its end game,” says CIEL’s Carroll Muffett. “No amount of government intervention or taxpayer money can save these companies in the long term unless they fundamentally transform their business models. For governments to continue dumping money into these industries is throwing money down a hole at a moment when every moment and every dollar needs to be used effectively for the greatest possible public good.”
The report examines how COVID-19 and the resulting economy-wide shutdowns have collapsed demand for oil, gas, and key petrochemicals, including by shutting down the transport industries that are the lifeblood to petroleum sector revenues. It highlights the challenges that will make a return to pre-COVID-19 levels of consumption in these sectors slow, uncertain, and in some cases, unlikely. Global storage capacity for both oil and gas was already nearing its limits. The impact of this massive supply glut is forcing entire countries to cut production and freeze expansion plans. And the convergence of a market collapse with an industry facing more than $200 billion in corporate debt is pushing a growing number of companies into bankruptcy—or receivership, the report warns.
- Report: Pandemic Crisis, Systemic Decline: Why Exploiting the COVID-19 Crisis Will Not Save the Oil, Gas, and Plastics Industries 2020.
- Tracking Corporate Climate Lobbying in Response to the COVID-19 Crisis, InfluenceMap, London, UK, 2020.
- Center for International Environmental Law (CIEL), Washington, D.C., USA