Impact of COVID-19 pandemic on oil consumption in the United States: A new estimation approach

Abstract

The COVID-19 pandemic broke the balance of oil supply and demand. Meeting these oil market challenges induced by the pandemic required a more accurate assessment of the impact of the pandemic on oil consumption. The existing measurement of the impact of the pandemic on oil consumption was based on year-over-year calculation. In this work, a new measurement approach based on a comparison of simulated and actual oil consumption was proposed. In this proposed measurement model, the actual oil consumption was from the official statistics, whereas the simulated oil demand came from business-as-usual (without pandemic) scenario simulation. In order to reduce the simulation error, three hybrid simulation approaches were developed by combining the simulation technique and machine learning technique. The mean relative errors of the proposed simulation approaches were between 1.08% and 2.51%, within the high precision level. An empirical research on the US oil consumption was conducted by running the proposed measurement model. Through analyzing the difference between the simulated and real US oil consumption, we found the impact of the epidemic on U.S. oil consumption was obvious in April–May 2020 and January–February 2021. At its worst, the oil decline in the United States reached 973 trillion British thermal units, compared to the state without the epidemic. During the entire survey period (January 2020–March 2021), the US oil consumption under the epidemic was about 18.14% lower than that under the normal epidemic-free situation, which was 5% higher than the 13% inter-annual decline rate reported. This work contributed to understand the impact of the pandemic on oil consumption more comprehensively, and also provided a new approach for analyzing the impact of the pandemic on energy consumption.