Mark P. Mills, City-Journal: The Global Economy’s Fuel Gauge
Oil powers almost all transportation—and Covid-19 will only intensify its dominance.
China is about one month ahead of the United States in exiting the Covid-19 shutdown. That country’s rush-hour traffic jams now equal or exceeded pre-lockdown levels, even in Wuhan. This quick reversal happened despite claims that telecommuting would “change everything,” especially old-fashioned commuting and, thus, oil demand.
At a global level, the pandemic didn’t change the fact that oil powers 97 percent of transportation. All commerce requires moving materials, food, finished goods, and people. Thus the oil used by planes, trains, and automobiles serves as the fuel gauge for the economy. The reaction to the coronavirus was, effectively, an x-ray of this reality.
The March lockdowns, which kept so many people and goods from moving anywhere, crushed global oil demand by 30 percent. Shortly thereafter, data showed that global GDP had collapsed by nearly 10 percent. Now that U.S. gasoline demand is starting to rise, many claim we are headed for a long, slow rise back to pre-crisis levels of congestion and oil use. But perhaps not.
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WNU Editor: I agree. Covid-19 will intensify the importance of oil in our energy driven global economy. Prices for gas in my part of the world (Montreal, Canada) have been edging upward for the past two weeks, and I have been told that the traffic jams have returned in Beijing and Shanghai.