Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic
The outbreak of COVID-19 and the wide-ranging measures needed to slow its advance triggered an unprecedented collapse in oil demand, a surge in oil inventories, and a record one-month decline in oil prices in March 2020. This paper examines the lik...
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| Format: | Working Paper |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/284371594670190475/Adding-Fuel-to-the-Fire-Cheap-Oil-during-the-COVID-19-Pandemic http://hdl.handle.net/10986/34129 |
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okr-10986-341292022-09-20T00:10:52Z Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic Wheeler, Collette Mari Baffes, John Kabundi, Alain Kindberg-Hanlon, Gene Nagle, Peter S. Ohnsorge, Franziska COMMODITY PRICES OIL PRICES CORONAVIRUS COVID-19 PANDEMIC IMPACT DEMAND SUPPLY OIL PRODUCTION PRICE ELASTICITY OF DEMAND The outbreak of COVID-19 and the wide-ranging measures needed to slow its advance triggered an unprecedented collapse in oil demand, a surge in oil inventories, and a record one-month decline in oil prices in March 2020. This paper examines the likely implications of the 2020 oil price plunge for emerging market and developing economies. It presents four main results. First, the record plunge in oil prices was predominantly driven by demand factors as wide-ranging measures to stem the pandemic precipitated an unprecedented collapse in oil demand, but the surge in oil inventories also exerted downward pressure on oil prices. Second, this latest oil price decline was preceded by six previous plunges over the past half-century, during which energy exporters and importers suffered similar initial output losses (about 0.5 percent) that were unwound within three years. Third, the current episode of low oil prices holds limited promise to boost the global economy amid widespread restrictions and narrow room for fiscal support in energy-exporting emerging market and developing economies. Fourth, many emerging market and developing economies entered the current public health crisis with precarious fiscal positions; current low oil prices are thus an opportunity to review energy-pricing policies, including remaining energy subsidies, to mobilize domestic resources. 2020-07-16T16:42:55Z 2020-07-16T16:42:55Z 2020-07 Working Paper http://documents.worldbank.org/curated/en/284371594670190475/Adding-Fuel-to-the-Fire-Cheap-Oil-during-the-COVID-19-Pandemic http://hdl.handle.net/10986/34129 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
COMMODITY PRICES OIL PRICES CORONAVIRUS COVID-19 PANDEMIC IMPACT DEMAND SUPPLY OIL PRODUCTION PRICE ELASTICITY OF DEMAND |
| spellingShingle |
COMMODITY PRICES OIL PRICES CORONAVIRUS COVID-19 PANDEMIC IMPACT DEMAND SUPPLY OIL PRODUCTION PRICE ELASTICITY OF DEMAND Wheeler, Collette Mari Baffes, John Kabundi, Alain Kindberg-Hanlon, Gene Nagle, Peter S. Ohnsorge, Franziska Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic |
| description |
The outbreak of COVID-19 and the
wide-ranging measures needed to slow its advance triggered
an unprecedented collapse in oil demand, a surge in oil
inventories, and a record one-month decline in oil prices in
March 2020. This paper examines the likely implications of
the 2020 oil price plunge for emerging market and developing
economies. It presents four main results. First, the record
plunge in oil prices was predominantly driven by demand
factors as wide-ranging measures to stem the pandemic
precipitated an unprecedented collapse in oil demand, but
the surge in oil inventories also exerted downward pressure
on oil prices. Second, this latest oil price decline was
preceded by six previous plunges over the past half-century,
during which energy exporters and importers suffered similar
initial output losses (about 0.5 percent) that were unwound
within three years. Third, the current episode of low oil
prices holds limited promise to boost the global economy
amid widespread restrictions and narrow room for fiscal
support in energy-exporting emerging market and developing
economies. Fourth, many emerging market and developing
economies entered the current public health crisis with
precarious fiscal positions; current low oil prices are thus
an opportunity to review energy-pricing policies, including
remaining energy subsidies, to mobilize domestic resources. |
| format |
Working Paper |
| author |
Wheeler, Collette Mari Baffes, John Kabundi, Alain Kindberg-Hanlon, Gene Nagle, Peter S. Ohnsorge, Franziska |
| author_facet |
Wheeler, Collette Mari Baffes, John Kabundi, Alain Kindberg-Hanlon, Gene Nagle, Peter S. Ohnsorge, Franziska |
| author_sort |
Wheeler, Collette Mari |
| title |
Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic |
| title_short |
Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic |
| title_full |
Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic |
| title_fullStr |
Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic |
| title_full_unstemmed |
Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic |
| title_sort |
adding fuel to the fire : cheap oil during the covid-19 pandemic |
| publisher |
World Bank, Washington, DC |
| publishDate |
2020 |
| url |
http://documents.worldbank.org/curated/en/284371594670190475/Adding-Fuel-to-the-Fire-Cheap-Oil-during-the-COVID-19-Pandemic http://hdl.handle.net/10986/34129 |
| _version_ |
1764480376827281408 |