Well, it’s been 365 days since the unthinkable happened: the price of WTI at Cushing went negative last April 20, and by a solid $37.63 a barrel at that. The insanity didn’t end there, though. The pandemic that many thought would be behind us in a season or two at most had a second wave, then a third and, some say, a fourth. U.S. refinery demand for crude oil, which plummeted by more than 3 MMb/d last spring, still has only recouped only half that loss. E&Ps, who shut in thousands of wells when oil demand and prices tanked, still are only producing 11 MMb/d — 2 MMb/d less than they were pre-COVID. LNG exports took a big hit too, another victim of demand destruction. As if all that weren’t enough, a couple of months ago, just as new vaccines were providing hope that everything would soon be returning to normal, the Deep Freeze put the Texas economy on ice and slowed production and refining once again. Strange times indeed. But we’re learning from it all, right? Today is the one-year anniversary of oil price Armageddon, so we take a look back at 12 months of market madness that no one could have predicted.
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Imagine if, at the start of 2020, someone in our line of work (energy consulting) told its clients to buckle up because the world was about to be turned upside down. “Listen up, folks! Within a few weeks, economies around the globe will be going into lockdown, air travel will be grinding to a halt, oil will be selling at negative prices, hundreds of millions of workers will stop commuting and start working in their pajamas, and toilet paper and Clorox wipes will become hot commodities. Oh, and everyone will be wearing surgical masks, so stock up on those too!”
The prescient consultant would have been called a total wacko or more likely a fearmonger. But of course, there were no such warnings. Because there’s no way that a lot of what’s happened over the past 12 months could have been anticipated. Sure, there was a global pandemic a century ago, and there have been a number of major disruptions in energy markets, but this has been different from the beginning. Within a three-week span from mid-March to early April last year, implied U.S. demand for gasoline dropped by almost half: from 9.7 MMb/d to less than 5.1 MMb/d (left graph in Figure 1), according to EIA, and refinery utilization dropped from near 90% to less than 70% (dashed red circle in right graph). (Refinery utilization also spiked downward in February 2021 during the Deep Freeze.)
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About the song
“Crazy” is a classic country ballad written by Willie Nelson and sung by (among others) Patsy Cline, LeAnn Rimes, Linda Ronstadt — and Willie himself. Willie Nelson had spent most of his young life traveling around as a country singer, sometimes DJ, and fledgling songwriter. He released his first self-penned single, " No Place for Me," on his own Willie Nelson Records in 1956. It is unknown how many of the 500 pressed sold at that time.
In 1960, Willie moved to Nashville, where he quickly fell in with the up-and-coming young songwriters who hung around in the upstairs back lounge at Tootsie's Orchid Lounge, across from the back alley of the Ryman Auditorium, where the Grand Ole Opry was held. Many Opry stars would steal a drink or two at Tootsie’s between their performances at the Ryman. Willie hung out with the fraternity upstairs at Tootsie's that also included Roger Miller, Kris Kristofferson, Mel Tillis, Harlan Howard and Hank Cochran.
Willie met Patsy Cline's husband, Charlie Dick, at Tootsie's and pitched him a demo of "Crazy.” When Charlie first played it for Patsy, who was riding high on the success of "I Fall to Pieces," she didn't think it fit her style of singing. After her producer, Owen Bradley, heard it he convinced Patsy to give it a try. Her single was released in October 1961 and made a fast ascension to #2 on the country charts, and #9 on the pop charts. When Patsy previewed it on the Opry stage, she received three standing ovations.
To this day Patsy’s “Crazy” remains Willie's favorite of any of his songs ever recorded.
