The oil prices in free fall as a warning sign and symptom of the crisis

A comment by Dr.-Ing. Ralf Feierabend, ConMoto’s founder and Managing Director

The price of oil falls below EUR 0 per barrel! In the U.S. market on Monday, oil sellers had to pay the buyer up to 37 U.S. dollars per barrel: for the first time, the “black gold” has a negative price. Now, the U.S. government wants to push the price by purchases. President Trump is talking about 75 million barrels to increase the strategic oil reserve from 635 to 710 million barrels. Therefore, the maximum allowable reserve quantity is reached. This short-term, one-off measure does not change the structural imbalance between oil supply and oil demand.

Because the negative oil price is such a clear symptom of the economic slump, the Dax posted a minus of 2.4 percent as a result. THE EU Social Commissioner Nicolas Schmit fears that unemployment will rise even further, especially in countries with economic difficulties: before the effects of the Corona crisis in February, it was already at 9.7 percent in Italy, which is now significantly affected, and 13.6 percent in Spain. It is understandable that there is talk of increasing the short-time working allowance to 80 percent in Germany. Simultaneously, the German Chancellor is promising a significantly higher EU budget for 2021 and 2028 in order to show solidarity with ailing EU members.

We must face the consequences of the most serious world economic crisis of recent decades. The World Trade Organization expects world trade to fall by around a third. Germany’s public debt will rise by at least 25 percent, possibly even more than 40 percent, due to the enormous aid packages. It is going to take generations for the deficit to fall back below 60% of the GDP. The negative consequences for the German economy are not confined to Germany itself. Just one example: the largest BMW factory is located in the USA – where the number of unemployed has risen by 22 million in just a few weeks, whilst the production lines stand still.

We need a goal now. Basically, according to my perception – at least this is how I understood doctors and virologists – there are two ways:

  1. Either we decide on another extensive shutdown of about four weeks with the aim of drastically reducing the reproduction rate of the virus, or

  2. We pursue a consistent strategy that enables a life with the virus through strategies in occupational health and safety as well as smart distancing

It makes no sense to mix these two options. But that is precisely what we are doing with the gradual relaxation of measures.

Even if all the experts are shaking their heads now: we need a significantly increased number of tests. It should be possible to test the entire German population in ten months’ time. That would be 250,000 tests a day. In Bavaria, 18,000 tests a day could be carried out already, which would equal 105,000 tests in Germany. We know of productivity increases of 50 percent or more because of surprisingly simple measures. Why should this not be possible in laboratories and regarding testing? Why is there no concept for this? If other laboratory capacities were used, e.g. in the food and meat industry or in dairies, the number of urgently needed tests could be further significantly increased.

A goal of increasing the corona testing capacity to 150,000 per day within two to three weeks is not a Utopian dream. Targeted testing of people at risk could then be used to curb the spread of infections. This must be combined with the well-known protective measures.

Super-optimists expect a vaccine to be available this fall. Others predict the fall of 2021. In any case, it takes too long to sustain the shutdown until then.

Right now, I am also following the press conference of the Robert-Koch-Institute. In the meantime, I must consider their statements to be dangerous! They do not follow a clear rationale.

The overall picture must be significantly broadened. We need a strategy that is virologically sound, but also takes account of economic, social and political aspects. We do not need this new perspective soon, but now.