The price of oil has recovered fully from its decline during the pandemic. Oil production and consumption are also forecast to reach pre-pandemic levels soon. Despite the world’s policies turning greener, life without oil remains difficult in the 21st century.
When the COVID-19 pandemic hit, oil consumption dropped abruptly. Production did not follow suit immediately because it is more difficult to shut it down quickly. Hence, the difference between the two led to one of the most incredible charts in the financial world during the pandemic – the price of oil turning negative in April 2020.
Since then, it has been a one-way street only. Not only that the price recovered all the lost ground, but it remains bid, trading at $73 at the time this article was written.
Production still lags behind consumption, fueling the case for even higher prices. The OPEC+ meetings that start this week will be decisive for the short-to-medium term price fluctuations.
Like it or not, the world remains dependent on oil. How will life without oil look in the 21st century?
Life Without Oil – Not Easy to Imagine
When talking about oil or the price of oil, many of us tend to think of petrol and the auto industry. After all, the industry is responsible for most of the oil consumption – but not all of it.
About 46% of oil goes into making petrol. What about the rest of it?
Products derived from oil are everywhere. The petrochemicals industry is huge and rising, and it will remain a growing consumer of oil. Cosmetics like makeup and shampoo that have oils, perfumes, waxes, etc., need petrochemicals to produce. Almost all plastics are made from petrochemicals too. It is estimated that plastic is responsible for about 5% of the total petroleum consumption.
Moreover, petroleum is used in making synthetic rubber, out of which thousands of products are derived. Think of shoes, gloves or tyres. Furthermore, asphalt is the by-product that glues the mineral together for paving millions of roads in the world.
Oil is crucial for the society we’re living in, and it goes beyond the auto industry. It remains a key element in the energy mix, despite greener policies.