The fossil fuel industry is banking on the expectation that once people get a Covid-19 vaccine, they’ll start driving and flying again. And it looks like the market shares that view: On the morning of Monday, Nov. 9, after Pfizer announced that its vaccine appeared to be 90% successful in preventing infections, oil companies got one of their biggest stock boosts in months.
Exxon’s share price jumped more than 10% between Friday close and Monday, outperforming the S&P 500. Chevron, BP, ConocoPhillips, the oilfield services provider Schlumberger, and other major oil companies all posted similar gains—as did United Airlines and other travel-related companies.
The price of oil also jumped around 10%, to just above $40 per barrel, although it remains stubbornly low compared to pre-pandemic levels and is still barely scraping the minimum most producers in the US need to turn a profit.
Still, the oil industry boost is even more pronounced given the other big news of the weekend: Joe Biden’s election as US president. Biden’s administration will represent a tectonic shift on energy policy compared to Donald Trump, one that is likely to eat into oil company profits through new restrictions on where they can drill and the volume of greenhouse gases they can emit (not to mention stricter fuel efficiency standards for cars and planes and support for electric vehicles). Meanwhile, Biden may also pursue a softer diplomatic tack with Iran and Venezuela; lifting sanctions on those countries would likely boost their oil production and further depress prices. By that standard, it would have been no surprise to find the sector off-kilter this morning.
But the vaccine-related rally underscores a key fact of the pandemic: Although global oil consumption nosedived in response to lockdowns, the world is still addicted to oil. The International Energy Agency expects demand to grow for several more decades. Emissions, likewise, are fated to rise next year.
The renewable energy industry, meanwhile, had a more milquetoast post-election opening—despite its forthcoming advantages under Biden. Shares of major solar companies Sunrun and Sunnova gained around 5.5%, less than the S&P; NextEra Energy, an electric utility that’s the country’s biggest purveyor of wind energy, gained 7.2%. But the next four years will offer plenty of opportunities to catch up.