May 01, 2020
Every day is now a Sunday
Why is it relevant to call every day since the leap day of 29 February 2020 a Sunday?
First of all, Sunday is the day of mourning the dead, and since 29 February there have been more than 230,000 confirmed fatalities from Covid-19. Adjusting for underreporting, the true figure is likely above 340 000. In the United States alone, this pandemic will have taken more lives within a few months than the aggregated number of US military fatalities in conflicts over the past 70 years.
Second, Sunday is the day of worship and obedience. In this context I do not refer to any religious practice, but to the sudden need for global populations to obey rules and regulations restricting social life to an extent not seen since World War II.
Third, Sunday is the day of rest – also known as not working. This has been precisely the situation for millions upon millions of people across all continents over the past eight weeks. As a consequence, energy consumption from the industrial and commercial sectors has been perpetually similar to Sundays in many countries. Data from Germany shows that there is typically 17% less electricity consumption on Sundays versus the other days of the week. It is too early to quantify the aggregated effect of the coronavirus on energy demand, but it is likely to be among the largest drops in history.
Fourth, Sunday is the day of staying home. Again, this is what people have been forced to do over the past two months. Consequently, global car traffic has been down by 45% in April based on our global traffic crawler. Furthermore, in the wider sense are we also staying home in terms of international travel, has fallen by a jaw-dropping 95%. Since we are far from achieving so-called herd immunity in most societies, governments will maintain travel restrictions until an effective vaccination is available, which probably means that international travel will remain very low for the next 12 to 18 months. Not only will we see less international travel, we will also look more for domestic products in general as security of supply is back on the agenda. Thus, deglobalization could be the word of the day. The combined effect on oil consumption is unprecedented – both short and medium term. In April, global oil consumption contracted by 28 million barrels per day. Sure, demand will gradually come back, but the ongoing lockdown will still cause a deeper contraction than any downturn over last three decades.
Fifth, Sunday is the day of rejuvenation. This is also the case for the Covid-19 situation, as some technologies and practices will decline while others will see strong growth, like videoconferencing. Our preferences are also bound to change, with lasting effect on demand for some goods and services.
And finally, Sunday is literally the day of the sun. In an energy context, these are the days of solar PV. Despite seeing some project delays and auction postponements, solar PV and wind see net growth, while fossil fuel suffers. As current low oil and gas prices will lead to underinvestment and shortages of supply in 2022, prices will fly-up and further stimulate the renewable sector. Thus, the net effect of Covid-19 will probably be a strong stimulation for the green shift in the medium and long term.
Jarand Rystad, CEO