What is the COVID-19?
(Previously referred to as 2019-nCoV or more broadly, the coronavirus)
According to the CDC, COVID-19 is a new respiratory virus first identified in Wuhan, Hubei Province, China. On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the outbreak a “public health emergency of international concern” (PHEIC). The potential public health threat posed by the coronavirus is high, both globally and to the United States. The fact that this virus has caused illness, including illness resulting in death, and sustained person-to-person spread in China is concerning. For the general American public, who are unlikely to be exposed to this virus, the immediate health risk from the coronavirus is considered low at this time.
The intent of this blog is to inform any of you who may be more curious about the coronavirus aka 2019n-CoV aka COVID-19, and more specifically (since Texas Flange has no epidemiologists or any health care specialists on staff) how this virus is affecting industrial flanges, the Oil and Gas industry, and the economy overall. While a serious subject matter without a tremendous amount of clarity available, this overview will bring us to early February 2020 (when this article is being written), and due to the rapidly-evolving nature of the situation, we plan to update this blog as warranted.
• First Cases detected, and World Health Organization (WHO) Alerted.
Jan 2020: Week 1
• Wuhan seafood market suspected of being the hub where the first cases were contracted.
• Medical screen at Wuhan airport implemented on Jan 3rd, 2020.
• WHO advises against travel/trade restrictions based on current evidence
• SARS, MERS, and bird flu determined to not be culprits
• New Virus Identified as a betocoronavirus and officially named 2019n-CoV
Jan 2020: Week 2
• First potential 2019n-CoV cases appear outside of China
• 2019n-CoV genetic genome was sequenced and made available to study worldwide
• First death reported
• Cases confirmed in Thailand and Japan
• At this point, less than 50 cases are confirmed worldwide
Jan 2020: Week 3
• Second Death Reported
• First Confirmed Case in South Korea
• First Confirmed Case in the United States (Washington)
Jan 2020: Week 4
• Stricter health screenings implemented in Airports across the world
• China implements travel bans in multiple cities
• Chinese New Year celebrations cancelled in Beijing
• First robots used to treat infected patient
• Hong Kong announces health emergency
• Canada, Nepal, Sri Lanka, and Mexico report first cases. More cases reported around the world.
• Countries around the world work to extract their citizens from the immediate danger in Wuhan.
• China suspends trading on two major stock exchanges
• Russia closes 2,700 miles of border
• WHO updates virus risk level to “HIGH”
Jan 31st, 2020:
• Approximately 10,000 Cases confirmed worldwide
• Death toll rises to 213 individuals (may they all rest in peace)
• WHO declares global health emergency
Feb 2020: Week 1
• Incoming travel restrictions set in place by America and Australia to protect their citizens.
• Chinese Health Authorities announce that 243 individuals affected by the coronavirus were discharges after recovering.
• First death outside of china announced in the Philippines.
• More cases popping up around the world.
• Over 30,000 Cases confirmed worldwide
• Death toll rises to over 600.
Feb 2020: Week 2 – Present Day
• First U.S and Japanese Nationals pass away in Wuhan from coronavirus infection.
• Multiple temporary hospitals being erected in China to help care for those infected.
• Over 60,000 cases have now been confirmed worldwide (90+% within mainland China)
• Death toll rises over 1,100; Surpasses the SARS epidemic from 2002-03.
• 420 United states citizens investigated for coronavirus
• 13 tested positive, 347 tested negative, and 60 test results are still pending.
• States with confirmed cases: CA, WA, AZ, WI, IL, MA
• We imagine “Coronavirus” has and will be a simple and clear enough term, but the WHO for some reason renames 2019-nCoV Coronavirus as COVID-19
• CO – Corona
• VI – Virus
• D – Disease
• 19 – Refers to 2019 (year it was originally discovered)
***UPDATED MARCH 18, 2020***
FEB 2020 WEEK 3:
• Death toll rises to 2,247, with a majority of death occurring in mainland China. Total number of confirmed cases increases to over 76,000 with recoveries at around 18,200.
• Passengers who have tested negative for the virus begin disembarking from the Diamond Princess cruise ship, despite evidence from infectious disease experts that they may be unknowingly carrying the virus back to their communities.
• CDC changes criteria for counting confirmed cases of COVID-19 in the US. Begins tracking two separate groups: those repatriated by the US Government, and those identified by the US Public Health Network.
FEB 2020 WEEK 4:
• Italy’s Lombardy region issues a list of towns and villages that are in complete lockdown. Nearly 100,00 people are affected by travel restrictions.
• Patient infected with COVID-19 in Washington state dies, marking the first death in the US due to the virus.
MARCH 2020 WEEK 1:
• Death toll reaches 3,450 globally, while the number of cases of infection increases to more than 101,731 with approx. 57,390 recoveries.
• In the US, Washington, Florida, Kentucky, New York, Maryland, Utah, and Oregon declare a public health state of emergency.
• EU raises risk level from “moderate” to “high” following 2,100 reported cases and 38 related deaths.
MARCH 2020 WEEK 2:
• WHO declares outbreak to be a pandemic on March 11, 2020. It is the first pandemic to be caused by a coronavirus.
• Death toll reaches 4,700 globally, with more than 128,330 infections and approximately 68,300 recoveries.
• US President Donald Trump declares a national emergency, plans to use $50 billion to combat spread of COVID-19.
MARCH 2020 WEEK 3:
• Death toll increases to over 8,000 globally by March 18. Total reported cases stand at ~207,500 with ~82,000 recoveries.
• WHO calls for “aggressive action” in Southeast Asia to control spread of the virus.
Has COVID-19 affected oil and gas?
To put it simply. Yes, it has affected the Oil and Gas Industry.
The lower demand in China is affecting not only Oil & Gas companies the Houston area, but globally. The US Energy Information Administration recently reduced its oil demand growth forecast by ~300,000 barrels per day to account for travel restrictions and reduced fuel consumption in mainland China.
If we look at the price per barrel of WTI more specifically, we started 2020 at around $58 per barrel, however after COVID-19 was discovered to be a potential global issue, Oil prices fell 10-15%. If we look at the chart below and compare the number of new cases being announced, we can make a loose correlation between reduced infection rates (i.e. hopefully the virus is slowing down) and oil prices rebounding ~1-3%. This provides a bit more optimistic outlook for the future of oil and gas; however, we will have to monitor the situation as it continues to unfold.
**March 18, 2020 UPDATE **
Global demand for oil is expected to drop in 2020 as the coronavirus continues to spread globally, restricting travel and other economic activity. According to the IEA, “The situation remains fluid, creating an extraordinary degree of uncertainty over what the full global impact of the virus will be. In the IEA’s central base case, demand this year drops for the first time since 2009 because of the deep contraction in oil consumption in China, and major disruptions to global travel and trade.” While many different sectors of the energy market are being adversely affected by COVID-19.
How has COVID-19 affected local and global economies?
While some outlets report instances of unfair generalizations, please check your sources, and do not let misinformation sway your decisions. Continue to support local businesses and make sure your news sources are reputable.
Because of globalization, companies have built supply chains across national borders, making economies much more interconnected. In recent years, China has become a vital part of the global market. Therefore, economic hits in China caused by the spread of COVID-19 cause a ripple effect in the larger global economy as well. The biggest factors that may affect the US are going to be a drop in sales to China, disrupted supply chains (due to the economic globalization mentioned earlier), and a large drop in Chinese tourism to the US. Still, only time will tell how severe the impact of the virus and its affects will be to our economy. “The outbreak has the potential to cause severe economic and market dislocation. But the scale of the impact will ultimately be determined by how the virus spreads and evolves, which is almost impossible to predict, as well as how governments respond,” said Neil Shearing, group chief economist at Capital Economics.
Economists say the current level of disruption is manageable. If the number of emerging coronavirus cases begins to slow, and China’s factories reopen soon, the outcome will be a momentary hit to the Chinese economy in the first quarter and small dip in global growth. However, if “pandemic” status is reached, it will certainly depress the economy as countries implement restrictions on commerce/trade to protect their citizens. Additionally, vacation/travel industries have been and will continue to be affected until the virus can be conquered. According to certain sources, Chinese tourists spend ~130 billion annually vacationing and many industries will feel the effect of COVID-19 this year if we cannot get it under control.
With a coordinated effort on a multi-national level, there is hope for a swift and effective response to the outbreak of the coronavirus COVID-19. If a “pandemic” is prevented, the effects on a global (and even local) economy can remain manageable (and we hope that we may report back that this was indeed the case). As we have reiterated throughout this brief review of the events and effects of the coronavirus COVID-19, only time will tell. In the meantime, remember to take regular preventive measures; wash your hands regularly, get your flu vaccine, and stay home if you feel ill.
**March 18, 2020 UPDATE**
Unfortunately, earlier this month COVID-19 was officially been labeled as a pandemic by the World Health Organization. This could affect the global and US economy in many ways, and in some ways already has. International Monetary Fund Managing Director Kristalina Georgieva says the outbreak is the world’s “most pressing uncertainty.” The economic disruptions caused by the virus and the increased uncertainty are being reflected in lower valuations and increased volatility in the financial markets. While the precise impact of the coronavirus on the U.S. and global economies is still unknown and unpredictable, it undeniably poses huge risks.
Click here to view the John Hopkins dashboard that is monitoring global COVID-19 cases in nearly real time.