Oil prices have collapsed. On Monday, the price of West Texas Intermediate crude oil plunged as low as -$40.32. Producers began paying traders $40 to take oil off their hands. Or to put it another way, a full barrel of oil became cheaper than an empty one.
Fortunately, the WTI price rebounded early Tuesday, hitting a very modest $1.10. But it continued to fluctuate into negative territory, harassed by concerns that oversupply will persist for as long as the coronavirus pandemic continues.
It’s possible that oil will fight with negative pricing for the foreseeable future. But at least this has given the internet plenty of excuses to come up with memes celebrating just how bizarre the situation is.
No one is buying oil. Most of us are under lockdown. Millions of businesses have ceased operations.
To put this into perspective, sales of gas and petrol in the U.K. had fallen by 75% by the end of March. More broadly, the International Energy Agency has estimated that global demand for oil fell by 2.5 million barrels per day (bpd) in Q1.
Needless to say, this historic fall caused an explosion in internet memes, Twitter posts, and online commentary. The collapse of the global economy may be scary, but at least we now have something new to tweet about.
And yes, make no mistake, as soon as oil prices veered to zero, people were listing all the things in the world that are now cheaper than a barrel of oil.
Unsurprisingly, Netflix subscriptions were one of the first points of comparison. And this is kind of appropriate, seeing as how Netflix has, like oil prices, become a symbol of the coronavirus crisis.
It’s not only Netflix subscriptions that are more expensive than oil prices. It’s also now more expensive to buy a bottle of Coca-Cola, not to mention water and beer.
In perhaps the biggest twist of counterintuitive irony, negative oil prices mean that an empty barrel of oil is now more expensive than a full one.
Investors may have breathed a sigh of relief Tuesday when oil prices began rising. May WTI contracts opened at -$14, before rising as “high” as $2.54. As of writing, they currently stand at -$8.50.
And what do persistent negative oil prices mean? That’s right, more hilarious memes.
There are two reasons why negative oil prices have gripped the public’s imagination so much.
On the one hand, they’re an indication of just how unprecedented the coronavirus pandemic is. On the other, they’re also an indication of how dangerously unprepared the global economy is for anything significantly out of the ordinary.
As we’ve seen with stimulus packages that don’t offer enough funding to small businesses, and with 22 million Americans filing for unemployment benefits, it seems the United States and much of the world can’t respond to coronavirus without imploding. The global economy lacks adequate contingency plans. It prioritized short-term gain over longer-term stability and resilience.
That’s why, among other things, oil prices have fallen off a cliff. And they’ll continue to struggle for as long as the coronavirus shuts down the economy. But hey, at least we have memes.
Last modified: April 21, 2020 1:37 PM UTC