It has been almost two months since the world entered an unprecedented pandemic which is proving to be more challenging to stop than we initially thought. It started in China’s Hubei province from the wildlife market and quickly spread first across the country and later all over the world. This Chinese region is home to over 58 million people, roughly the same size as Italy or the United Kingdom. Therefore, the spread of the virus became practically unavoidable. 

The capital of the province, Wuhan, has more than 11 million inhabitants. The city features a major international airport with regular flights to London, Paris and other international hubs. Moreover, it is just a few hours away from other big cities across China. Mobility is what truly contributed to the vast spread of the virus. 

At first, the novel coronavirus infection cases were recorded in other Asian nations, such as South Korea and Japan. Their response is praised as some of the best around the world. These countries managed to stop a large scale spread of COVID-19 by implementing timely measures. Testing also played a crucial role in this process since both of these nations prioritized early-stage testing for various different communities. Their algorithms covered a lot more people than those of western European nations. 

Later on, the global epicenter of the pandemic became Italy’s northern Lombardy region. This area is known as the economic powerhouse of the country, as well as of Europe as a whole. The biggest city of Milan is a global fashion, commercial and financial center, attracting millions of tourists each year. Therefore, stopping this great machine affected not only Italy but other countries tightly linked to its economic dynamics. 

Italy also became the first country to introduce a strict nation-wide quarantine as no one was been able to leave the house unless absolutely necessary. This went on for more than 8 weeks as Italy is now attempting to move back to Normal. Yet, other countries in Europe and beyond repeated the same patterns and now, the United Kingdom has overtaken Italy in terms of the number of total deaths as its toll passes 30,000. 

The United States lockdown and the oil dilemma 

The United States is the world’s largest economy and one of the biggest oil producers and consumers. The country imports crude oil from a number of nations in Africa, the Middle East, and Asia. It as well is one of the most oil-dependant economies as the vast majority of people drive and some of the biggest businesses are major oil-users. Therefore, the coronavirus pandemic is absolutely detrimental to the American economy, threatening millions of jobs and sources of income across the nation. 

After officially changing the government advice to ‘stay at home’, thousands of major businesses across the United States started coming to a standstill. The Forex trading markets which are widely popular in America became overwhelmed by a growing number of visitors. FX indices for some currencies started to shrink while others remained at a strong point. Many Americans decided to purchase European currencies, which they thought would be more stable throughout this turmoil. 

However, the biggest hit for the national economy was the plunge of crude oil prices which for the first time in history, dropped below 0, an unprecedented record. This process was accelerated by the decline of demand for oil as the nation remains at home. Therefore, major oil importers from a range of countries started running out of the storage space, which could have caused a catastrophic outcome for the industry. Therefore, crude oil went on sale for a negative price, meaning, that companies were willing to pay in order to empty their storage space. 

Santa Clarita is struggling through the crisis 

Los Angeles County is one of the richest and most influential regions not only in California but all across the United States. GDP per capita in the area is more than $67,00, surpassing the national average.

Santa Clarita is a small city with roughly 176,000 inhabitants, close to Los Angeles. Its economy is mainly revolved around luxury products, real estate, and tourism. However, medium-sized oil corporations and cruise companies also represent major chunks of the city’s economy. Therefore, for a small urban area with a more fragile economic environment, the oil plunge might end up being absolutely catastrophic. 

The important factor to consider is that California is known for its high rate of drivers. In fact, the rate is much higher than an already absurdly big figure across the entire nation. Therefore, oil in this region is a sensitive topic to discuss. However, with the vast majority of the economy stopped, oil companies are struggling to sell enough for survival. 

A smaller Santa-Clarita based California Resources Corp saw a major plunge in its stock price as the company’s price dropped by over 28%. The company is in such a difficult position that they announced through Bloomberg’s report that they are considering all available options, at all times. Their representatives even said that the company was looking into filling for chapter 11 on protecting from bankruptcy.  

A similar situation is witnessed in many other Santa-Clarita based oil companies. Despite their smaller size, they represent a major driving force for an economy that is practically shut down. Other businesses that usually drove the city are now forced to remain closed amid the nationwide lockdown. Tourism and hospitality sectors are not expected to bounce back anytime soon, therefore, the plunge in oil prices is hitting the region even more. 

Moreover, Santa Clarita’s second-largest employer, Princess Cruises is also witnessing challenges. With a number of cruise ships stranded in the seas, the demand for this industry is set to reduce even further throughout the coming years. This current situation threatens jobs of over 2,000 Santa Clarita residents who are employed by the company. 

Yes, oil price plunge hits even small towns 

Many think that oil prices only affect major cities and big oil corporations. However, the truth is, that small cities, like Santa Clarita, without diverse economies and limited resources might struggle more than those with a range of different industries. 

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