How Covid-19 Impacted the Industries that Support Your Commute
Authored by Ayesha Rajan, Research Analyst at VIKRITI Management Consulting
As the Covid-19 Pandemic continues and remains at the forefront of our lives, companies and businesses are realizing that many of the adaptations and changes they have made over the past few months could be permanent. The pandemic has changed the face and processes of many industries; last week we looked at the effect Covid-19 had on the pharmaceuticals industry and in this article we will explore its effect on the oil, gas and transportation industry and if these industries can or will bounce back.
Let’s begin with some industries where changes seem intuitive: the oil and gas industry has been heavily impacted by the Covid-19 Pandemic. You may have noticed lower gas prices at your local gas stations and this is directly related to decreases in demand for gas due to the fact that at one point travel came to a complete halt. At the beginning of the pandemic, air travel saw nearly immediate impact with significant numbers of planes being completely grounded. Additionally, with people no longer going to work in an office, commutes via cars, buses and trains have all seen their utility decrease as well. It is being reported that “WTI/Brent crude oil benchmarks already decreased by more than 50 per cent”. This, in combination with the fact that many companies and employees are seeing immense benefits to working from home, means that there is a lot of uncertainty regarding if and how the oil and gas industry will bounce back to its level of performance before Covid-19.
The oil and gas industry is a natural transition to discussing the automobile industry which has also been impacted by the pandemic. The main disruption in the automobile industry has been in the supply chain with Covid-19 affecting every step of the chain. Similar to the oil and gas industry, it is very hard to tell whether or not this industry will bounce back. The outcome will be highly dependent on whether or not the many societal changes that have been made in response to Covid-19 are here to stay. This has also had direct impact on the sales of electric vehicles – with gas at a recent low, many consumers are now incentivized to lean towards petrol vehicles. This is evidenced by the fact that Tesla’s stock has plunged below 50% of its standing in February while the general market has seen drops closer to 40%.
Things such as working from the office and in person meetings were once considered irreplaceable and absolutely necessary however, the Covid-19 Pandemic has proved that, not only can these things happen remotely, but businesses can function just as effectively without these things happening in person. As many companies push for working remotely to be a continuously available option to employees, there is a good chance we will see a permanent change in work culture by way of no longer working in the office, fewer networking events and so on. As a result, the need for transportation to and from the office and work events will greatly decrease and because these were such an integral part of people’s everyday lives, these industries will likely see a permanent change in expected demand.