The COVID-19 Pandemic : Energy Market Disruptions and Resilience
and transportation more expensive than oil , with the implication that most natural gas markets are regional in nature . With the arrival of U . S . shale production and a concurrent large increase in global liquified natural gas ( LNG ) trade , natural gas markets are increasingly global .
The resulting decline in natural gas demand due to the pandemic , as well as the crash in oil prices , has had severe effects on global LNG markets . 12 For many importers , oil competes with LNG as the marginal fuel source , and so prices are tightly linked . At the height of the pandemic , Asian LNG import prices fell below $ 3 / MMBtu , barely 1 / 3 of the level that exporters planned for when making exports decisions . A lack of demand among the largest importers caused declarations of force majeures , pushing LNG cargoes into the spot market . The long-term implications remain unclear , but visions of constantly growing LNG demand may now appear ephemeral . 13
Although oil and gas markets experienced major disruptions from pandemic response measures , they did not experience particularly severe restrictions on operations from COVID-19 personnel risks . In part , this is due to the collapse in oil demand and prices immediately reducing marginal production . In effect , there was no need to drill additional wells , so personnel were not needed and not exposed . Nevertheless , isolated oil operations , namely offshore oil platforms , posed severe risks to personnel . Their limited medical facilities , great distances from shore , close personal contact in tight quarters made them potential hotspots for infections . 14
Electricity Sector Resilience Operational Resilience
Like oil and natural gas , electric demand was reduced by unprecedented levels by pandemic response measures . 15 Nevertheless , the scale of the reduction was less compared to oil , as primarily commercial and industrial demand fell as residential demand increased due to stay-at-home orders . Estimates vary , with peak demand in Italy and Spain falling as much as 21 % during the first week of lock downs . 16 In
12 Gilbert , A ., and Bazilian , M . “ The Oil Price Collapse Could Reshape Global Natural Gas Markets .” Georgetown Journal of International Affairs . March 2020 . https :// gjia . georgetown . edu / 2020 / 03 / 27 / the-oil-price-collapse-could-reshape-global-natural-gas-markets /
13 Tsafos , N . “ How COVID-19 Will Reshape Global Gas .” CSIS March 2020 . https :// www . csis . org / analysis / how-covid-19-will-reshape-global-gas
14 Conca , J . “ Offshore Oil Rigs Are A Special Case for COVID-19 .” Forbes , April 2020 . https :// www . forbes . com / sites / jamesconca / 2020 / 04 / 28 / offshore-oil-rigs-are-a-special-case-for-covid- 19 /# 7a1541e66b82
15 Gilbert , A ., & Bazilian , M . “ The effects of coronavirus measures on electricity markets .” Utility Dive , April 2020 . https :// www . utilitydive . com / news / the-effects-of-coronavirus-measures-on-elec tricity-markets / 576296 /
16 Electric Power Research Institute . “ COVID-19 Bulk System Impacts : Demand Impacts and Oper-
77