Though the COVID-19 pandemic has affected all economic industries, few have been hit as hard as the oil industry. A steep decline in demand due to reduced travel has forced oil-drilling to stop, and the stock prices of oil companies have dropped drastically.

Under social distancing, the demand for transportation has decreased substantially. With fewer private vehicles on the streets and fewer modes of public transportation operating, the need for oil has plunged. Companies continue to extract oil, requiring extra tankers to store the surplus of crude oil; however, since the stockpiles are growing every day, companies are running out of storage space. In some cases, the price of oil has dropped into the negatives for the first time in history. Two weeks ago, the price per barrel of West Texas Intermediate oil fell to $-37.63. 

Several countries have demanded that oil companies halt production, while some companies are still pumping crude oil to alleviate their deficits. The Energy Department predicts that two million fewer oil barrels will be pumped each day. The Trump administration has told American companies to cut production. The Organization of Petroleum Exporting Countries, or OPEC, including Saudi Arabia, the United Arab Emirates, and Venezuela, who are the largest influencers of oil price and production, agreed to cut production last month to try and stabilize prices.

People have stopped investing in stocks as the oil prices continue to drop. Governments have expressed willingness to pump trillions of dollars into the market, and the S&P 500 has soared over 25 percent. Nevertheless, millions of jobs in the industry have disappeared, and, according to The New York Times, on April 22, the oil market “continued their record slides” while “some holders were ready to pay people to take a barrel off their hands.” The market continues to deteriorate as stakeholders fear that crude oil output is remaining far too high, while storage is running low. 

The drop in oil prices has benefited consumers, but has come at the cost of large companies. Adam Lang, instructor in economics, said, “A drop in oil prices is good for most consumers as oil is now cheaper, but not good for producers who earn less profit or shut down. Oil is a big input for everything that our economy produces, so it affects lots of industries.” 

Governments are currently working on relief plans to boost the market and aid businesses in the oil industry.