Oil prices plunge amid omicron variant concerns

The Trans-Alaska Pipeline is seen running alongside the Dalton Highway, next to a small mountain.
The trans-Alaska pipeline runs alongside the Dalton Highway, carrying oil from Prudhoe Bay to Valdez. (Abbey Collins)

After months of increases and a short plateau, oil prices in Alaska and worldwide have plunged in the last week. A barrel of Alaska North Slope crude was about $71 on Monday, $11 less than the week of Thanksgiving. 

This is the largest monthly decline in prices since the start of the pandemic.

Longtime Alaska journalist and former federal coordinator of Alaska Natural Gas Transportation Projects Larry Persily said the new omicron variant of the coronavirus is at least partly to blame for the drop. It could translate to fewer people traveling or going to work, and therefore lower demand for oil. 

“The economy slows down, factories close, people go home because they can’t work because of the new variant. They don’t travel as much. They don’t burn as much,” Persily said.

At the same time, he said, supply continues to be high, which could mean a surplus of oil for 2022.

“Market participants look at the market and say ‘I’m nervous about demand with the new variant.’ And, you know, U.S. producers are pumping more. And OPEC+ is not cutting back their production increase plan,” he said.

Persily said oil prices will need to stay down for a few weeks before consumers see lower prices at the gas pump.

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Kavitha George is Alaska Public Media’s climate change reporter. Reach her at kgeorge@alaskapublic.org. Read more about Kavitha here.

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