Twitter, Facebook, and Shopify are among the companies that are allowing employees to work at home permanently. If the trend continues, there could be long-term reductions in oil use, congestion, and car pollution.
Environmental goals made possible by shifting from internal combustion vehicles to EVs could be achieved even faster with a concurrent reduction in driving. Nearly half of every barrel of refined crude oil goes to gasoline. S&P Global Platts believes that the pandemic-related shift to remote work could remove between 1 million and 1.5 million barrels per day from global demand.
Dan Klein, head of scenario planning at S&P Global Platts, told CNBC:
Pretty much every company out there with a sizable commercial real estate footprint is thinking about this now. While it’s probably too early to tell how prevalent this structural shift in working from home will become after the restrictions are lifted, it’s clear that a certain percentage of workers will never go back to commuting, at least every day.
Oil demand came to a virtual standstill in April due to lockdown measures. As the world returns to work, oil prices have rebounded, although remain rocky. But the market might not ever fully recover to the 100 million barrels-per-day level before the pandemic.
Klein said that permanent reductions in air travel could mean even more significant reductions in oil use.
Right now, you’re challenging that notion that business travel is the cost of doing business.
Other analysts believe that unemployment and remote education will further reduce demand. However, there are countervailing forces.
The nation’s top transit systems have experienced 70% to 90% declines in ridership during the pandemic. Analysts believe that some of these losses could be sustained for years. That could lead many people to ditch the subway and buses and start driving a personal automobile.
Also, it’s not certain how a sustained period of lower gas prices will affect the adoption of electric vehicles. Automakers with robust EV programs, including Volkswagen and General Motors, believe that low prices at the pumps will not forestall electric vehicle adoption.
Michael Jost, VW’s strategy chief, told reporters in March, “Dips [in oil and gasoline prices might] last a month, or some months, or maybe a year.” But he said, oil “won’t get cheaper” in the long run — and won’t alter the company’s CO2 reduction goals. Jost said:
We have a clear commitment to become CO2 neutral by 2050, and there is no alternative to our electric-car strategy to achieve this.
Ken Morris, vice-president for electric and autonomous vehicles at General Motors, earlier this month said:
If you can sell a vehicle that doesn’t use any gas at all for the same price of a vehicle that does burn gas, you don’t have to do that math of, is it worth the payback or not?
The long-term impact of the pandemic and work-from-home trends are hard to predict. But we welcome nearly any societal shift that results in reduced pollution and congestion.
That said, the reduction of a couple million barrels per day must be considered against the pre-pandemic level of global consumption of 100 million barrels every day.
The use of personal vehicles is not going away. So it will take multiple measures to get the necessary reductions in tailpipe emissions. More telecommuting and a massive shift to electric cars can and should work in tandem to help the world achieve long-term sustainability goals.
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