As the coronavirus spreads through the US, all economic sectors are trying to figure out how the business can continue as normal as possible. In an article by Erwin Seba and Gary McWilliams of Reuter, they examined the energy industry.
The major companies Exxon, BP, Kinder Morgan, Shell all emptied their office buildings by having people work for home. The Pipeline companies which need to monitor their pipelines were working with the federal regulators to ease work rules, but still monitor the pipelines. Work at refineries, offshore rigs where people have to be in close quarters were being monitored with health checks.
On top of the virus, the other major concern is the falling price of oil and falling demand as people stay closer to home. Demand has fallen by 2.5 million barrels per day.
The refinery belt is in Houston, Texas area as well as in Lousiana, which are located in the hurricane path. Companies are used to dealing with hurricanes and have draft similar plans to deal with the virus. It is good to know most refineries can operate with half their normal staff, anything less means cuts in production.
Linking to dividend paying stocks, one of the advantages of investing in a large company is they have gone through many economic cycles and normal weather changes. The virus is different for no one knows when the end date is, but we are are hoping that measures to prevent the virus work and the affect is sooner rather than later. It is good the summer season is coming.
There are more questions than answers, till next time – to raising questions.