After a year of severe trials, the long-awaited vaccines to the coronavirus are now being distributed, thanks to Operation Warp Speed. It may take months for enough of us to be vaccinated to blunt the spread of the virus and allow restrictions to be lifted, but the end is in sight. Congress is now debating whether the stimulus checks included in that bill should be increased.
Our industry has several reasons to look ahead with hope. The omnibus relief bill, which includes the Water Resources Development Act as a rider, has been finally signed into law. It provides improved funding for many key waterways and port projects, including major dredging projects that should keep the dredging fleet humming for many years. Important waterways infrastructure projects will be speeded up.
The oil industry’s future is hard to forecast. The demand reduction from the coronavirus dropped consumption of world crude and liquid fuels to 92.4 million barrels per day (bpd) for 2020, a 9 percent drop from 101.2 million bpd at the same point in 2019, according to the Energy Information Administration. The price crash and refinery backups led to about 1.5 million bpd of refining capacity being taken off the market. An end-of-year report from Mitsubishi UFJ Financial Group Markets noted that the oil markets have been “tumultuous and disorderly over the last 12 months with long-lasting implications, as we begin to form new contours of normality towards a post-virus equilibrium.”
What those “new contours” will look like no one can say with certainty. Most analysts expect some oil price recovery in 2021 but are cautious about when the profitability threshold of $40 a barrel might be reached and how long it can be sustained, as Russia and the OPEC countries are expected to turn on the spigots again. For end-users, of course, low oil prices are a relief.
Oil aside, though, America’s economy has shown a resiliency and robustness that has surprised some analysts—even in the face of restrictions and a sharp slowdown. To be sure, the burdens have not been equally borne. Small businesses suffered while the tech giants increased their wealth and dominance. Stock prices seem to have become untethered from Main Street. Economists wonder whether the market recovery will be shaped like a “W,” a “V,” a “U” or some other letter of the alphabet. But surely when Americans are free to move around again, to drive, shop and travel as they wish, what economists call “animal spirits” will take hold. Squeezed sectors will see a rebound.
As the USDA noted in an end-of-year report, U.S. farm incomes actually rose slightly this year, albeit mostly due to government payments. After years of trade tensions, the end of the year saw a sharp rise in exports of U.S. corn and soybeans, mostly to China, as it rapidly rebuilt its hog herds and vacuumed up feedstocks worldwide. Soybean farmers in particular made money, leading some agricultural observers to suggest that farmers might be upgrading some of their equipment this coming year. Most predict increased soybean acreage.
Delayed demand for commodities, including those transported by barge, should rise. More of those commodities will be moved by containers over water, as efforts in several quarters to make container-on-barge (or on-vessel) a permanent reality now are coming to fruition.
Whatever the new normal looks like on the waterways, we have good reasons for thinking it will be better than 2020.