MARY LOUISE KELLY, HOST:
The global economy is powered by petroleum in cars and planes, power plants, plastics. The pandemic sent demand for fuel plummeting, and now some major energy groups say the decline will stick around into next year. In fact, NPR's Camila Domonoske reports the change might be permanent.
CAMILA DOMONOSKE, BYLINE: The International Energy Agency issues a monthly report on the state of the oil market. Every decimal point is closely watched. Neil Atkinson is the head of the Oil Industry and Markets Division at the IEA.
NEIL ATKINSON: We'd be agonizing about changing the growth up or down by 0.1 million barrels per day.
DOMONOSKE: That was before the pandemic. In the report that came out this morning, the numbers are a lot bigger than that, and they're going down.
ATKINSON: So there's some negative vibes out there.
DOMONOSKE: It's not just the IEA. OPEC, the global oil cartel, just revised its expectations down. Also this week, Trafigura, the world's second-largest oil trading company, said there's a huge glut of oil on the way. Things were bad for the oil market this spring when the coronavirus caused a collapse in oil as lockdowns put a halt to travel.
ATKINSON: Doesn't matter if the price is zero. If you can't drive anywhere, there's no demand response.
DOMONOSKE: A price of zero sounds hypothetical, but at one point, prices actually went negative. Still, this summer, many in the industry were feeling optimistic. China's economy seemed to bounce back. There was hope the global economy would recover and demand for fuel would come surging back. Now...
ATKINSON: It just doesn't - to be a simple case of this horrible thing comes along in the first six months of the year and then mercifully goes away again, and we can all go back to normal. It's just not happening like that.
DOMONOSKE: And this immediate pandemic-driven drop in demand - it comes in the middle of huge uncertainty about the future of oil and gas because of climate change. In fact, there was another big report on the future of energy this week from BP, the British energy giant that's planning for a future with less petroleum. BP says it's possible this drop in demand is the start of an even bigger shift, and the world will never again use as much oil as it did in 2019. That's if the planet moves to take action on climate change.
CAROLYN KISSANE: Let's say BP is correct, right? And, you know, BP's not the only one that sort of sees the peak demand is in the past, right?
DOMONOSKE: Carolyn Kissane is an energy expert at New York University's Center for Global Affairs.
KISSANE: You have a - you know, an industry that is - we could say it's in decline, right? It's changing very rapidly.
DOMONOSKE: For a while now, the oil industry has considered what a future of declining demand would look like. That might have seemed like a distant future, but the pandemic is raising questions right now.
KISSANE: I think the idea that - you know, that we've passed peak demand - and I think once that gets into people's heads and especially into, like, the corporate heads, then they're like, wow, if that's the case, then maybe everything I was thinking six months ago has to be revised because now we're looking at a very different future.
DOMONOSKE: It's hard to predict exactly what happens next, especially these days. A lot depends on government policies and, of course, the pandemic. But Kissane says one thing is clear. Whether demand comes back eventually or declines from here on out, the months and years ahead will be tough for oil producers.
Camila Domonoske, NPR News.
(SOUNDBITE OF DIRTWIRE'S "SAILING THE SOLAR FLARES") Transcript provided by NPR, Copyright NPR.