As the worldwide economy continues to slow at a record pace because of the coronavirus, a new problem is on the horizon.
And that problem is the world could soon run out of places to store barrels of crude oil.
With millions across the globe ordered to stay home, industry analysts say supply could outpace demand by more than 12 million barrels a day as early as later this month.
At that pace, storage capacity will be full by June.
If that happens, it would be the first time since 1998 that the world has run out of places to store crude oil.
Here in North Dakota, we pump one and a half million barrels of oil per day, but the North Dakota Petroleum Council says that could be changing as less and less oil is needed.
“You’re going to a substantial decrease in the amount of drilling rigs, the amount of completion crews, and now as a result of some of this storage filling up and some of these big discounts that we look at into May. You’re going to see a lot of barrels shut-in, so you will actually see Bakken wells getting shut-in,” said Ron Ness, the President of the North Dakota Petroleum Council.
Global demand for oil has fallen 25 percent since the coronavirus outbreak began, and that’s hurting companies.
Even today, Denver-based Whiting Petroleum filed for bankruptcy, and gas prices are free-falling, too.
According to AAA, the statewide average for a gallon of regular is down to $1.84. Last year at this time we were paying about 70-cents a gallon more for gas. It’s even cheaper in nearby Wisconsin where some stations at selling gas under a dollar, and all these cheap prices have a ripple effect on some things you may not have thought of.
“AG commodities typically track oil, so when oil is down the value of AG commodities is going to be down also, so a recovery in the commodity market for North Dakota is critical to our economy and we need to see that happen, the sooner the better,” said Ness.
Oil prices fell again Wednesday on the New York Stock Exchange closing down 17-cents to $20.31 per barrel.