AOC: The collapse of oil prices is great news (Update)

AOC slipped a bit today when oil prices dropped below zero. First she retweeted this claim from “ecosocialist” Eric Holthaus that “oil is now worthless.” He added, “The is a turning point in the climate movement.”

Then AOC quote tweeted someone else talking about oil prices going negative. She wrote: “You absolutely love to see it. This along with record low interest rates means it’s the right time for a worker-led, mass investment in green infrastructure to save our planet. *cough*”

As you can see from Caleb Hull’s tweet, AOC deleted that pretty quickly and replaced it with this similar sentiment minus the part about absolutely loving it:

The problems with this are pretty obvious but since AOC doesn’t see them, let’s think about this for a moment. For starters, this sudden drop in oil prices likely means many thousands more people will soon be out of a job. Even if you think that’s good in some long-term global sense it’s pretty insensitive to be cheering for those people to be out of work in the midst of a pandemic. Maybe that’s why she deleted her tweet.

The other problem with this is that the reason we have a glut of oil right now is that significant parts of the world have stay-at-home orders in place. As the Wall Street Journal explained, this has created a glut in the market and a recent agreement between Russia and Saudi Arabia to cut output wasn’t enough to account for serious decline in demand for oil:

Physical oil prices have been hit hard by the collapse in demand and surge in supply. The price of some regional crudes in the U.S. recently fell below $10 a barrel and on Monday also sank below zero.

The drop in oil prices comes despite output reductions agreed on between countries of the Organization of the Petroleum Exporting Countries and the Group of 20 nations.

“The deal was nowhere near enough to prevent us running out of storage,” said Hani Redha, a portfolio manager for PineBridge Investments. “That’s going to lead to a violent shutdown of production.”…

Oil prices have collapsed this year, with governments around the world attempting to slow the spread of the coronavirus pandemic by banning travel and directing billions of citizens to stay in their homes. Those measures have prompted forecasts of a deep global recession and delivered an enormous hit to global oil demand.

So we’re in this mess because of the global shutdown caused by the virus. The lax demand for oil is directly connected to the jumps in unemployment around the world. People aren’t driving and factories aren’t producing, but eventually we want to put people back to work. Maybe that’s in a month or maybe it’s on and off for another year or more until we have a vaccine or treatment. Whatever the case, the return of jobs and the economy is directly tied to the return of demand for oil. So for most people, the goal is to get out of this rut as quickly as possible without kickstarting the virus again. And the sooner we get out the better for millions of people around the world.

But AOC looks at this disaster and sees a silver lining. We should embrace her ten year plan for rebuilding the entire economy without fossil fuels. But again, no one thinks the demand for oil is going to remain low for a decade. It should start to pick up in a matter of months. There’s no way our economy comes back without it.

The current plunge in oil prices is nothing to be excited about because unless the plan is for everyone to stay at home under lock down until the new solar farms are complete (several years from now), gas and oil are a stand in for jobs. We should all be rooting for a quick return to higher demand not being excited by a further sign the global pandemic is doing damage around the world.

Update: She’s still going.

I started to say this above and decided it was a distraction. Does AOC realize this same thing could happen even if we had 100% renewable energy? In 30 years if there’s another new coronavirus and we’re all trapped at home and can’t drive our electric cars, factories stop because they are non-essential and people aren’t supposed to be out shopping. The result would be a very similar energy glut. Suddenly solar and wind farms have no customers for their energy. Prices drop. Companies lay people off and have no way to pay off their huge investment in panels/windmills. Maybe they go out of business or maybe they apply for a bailout. The point is that a sudden disastrous decline in demand for energy doesn’t mean the energy itself is a failure or that it’s time to transition this future world to a new energy grid powered by earthworm farts. It means the world economy is being strangled by a virus.