As the government-ordered shutdown in response to the Chinese coronavirus continues to devastate the world economy, Texas’ businesses, workers, and families are being hit hard. And the man they elected to lead them appears to be doing little but watching.
On Monday, the price of a barrel of West Texas Intermediate plunged into the negatives—a rate never seen in history and a far cry from this year’s high of near $60/barrel.
While the causes of that price drop might seem complicated, it’s actually quite simple. There has been a momentous drop in consumer demand as a result of the government-ordered stay-at-home and shelter-in-place orders.
It’s those orders that have kept cars off the road and workers away from their businesses—meaning that the market for oil and gas products which was already oversupplied thanks to the Saudi Arabia-Russia supply war has faced a severe contraction in demand for crude oil.
Jet fuel, rubber, and other products made from crude oil are all seeing diminished sales, decreasing the price per barrel of crude.
Patrick De Haan, the head of petroleum analysis at Gas Buddy, says the volume of gasoline sold in March was down 20 percent with April on track to fall even more.
“COVID-19 lead to an unprecedented drop never before seen in U.S. gasoline demand, causing prices to sink like a rock in the first quarter compared to prior years,” said De Haan in an interview with The Hill. “Comparing the first 15 days in April to last year, we are looking at a 31.8 percent drop in gallons pumped.”
With Americans using fewer and fewer gallons of gas and jet fuel, that means we are massively oversupplied with oil, and producers are currently forced to pay others to take it off their hands and store it.
In the midst of this crisis, what is Texas Gov. Greg Abbott, the leader of the world’s 10th largest economy, doing?
Last week, the Texas Railroad Commission held a meeting to discuss the possibility of mandating limits on production. But even supporters of that plan admitted it is far from a long-term solution. As long as travel is restricted by shutdown orders, the demand for oil—and therefore, the prices—will stay low.
But while Alabama, Florida, Idaho, and other states across America are safely and responsibly opening their economies back up again, the governor of Texas has done little more than appoint a committee to determine when to reopen.
That committee won’t issue any recommendations for another week. Texans would be forgiven if trying to reconcile that with the routine boasts of the governor of the nation’s largest Republican (and oil-producing) state.
“In Texas, we don’t compare our economy to other states. We compare our economy to other countries!” Abbott said in 2018. “By comparison, the Texas economy is larger than Canada—it’s larger than Australia. And get this: the Texas economy is even larger than the economy of Russia. That makes me more powerful than Putin!”
Abbott holds a lot of power, should he decide to act. For now, he’s decided that power is better left in the hands of Washington bureaucrats and Texas’ local government Democrats.
As Abbott lingers, Texans will continue to suffer.