Over the past few weeks, the price of crude oil barrels plummeted to less than $1 per barrel. In some markets, crude oil prices reached negative levels, forcing refineries to pay facilities to buy and store barrels. The COVID-19 crisis obviously accelerated the downfall in crude oil prices, but the result presents new opportunities for innovation. A basic tenet of antitrust law is that businesses tend to stagnate and innovate less with reduced competition. As such, falling crude oil prices may cause investment in renewable energy-related intellectual property.
Interestingly, patent application filing numbers stayed relatively stable during the financial crisis of 2007. In addition, according to the World Intellectual Property Organization (WIPO), renewable energy-related patent applications soared after 2007. Renewable patent application numbers fell after 2012, but started rebounding again in the past few years. A possible explanation for the slow rebound of renewable patent applications is the healthy market for fossil fuels in recent times. However, as crude oil prices fall, renewed opportunities for renewable energy technologies arise.
As Crude Oil Prices Fall, COVID-19 May Accelerate Renewable Shift
COVID-19 impacts every person and every business in some way. The effects of the crisis will be felt for generations, establishing new norms for society. Shaking hands and reusing glasses in restaurants may be remnants of the past, even after social distancing finishes. Similarly, COVID-19 may decelerate the prevalent use of fossil fuels, and specifically crude oil.
As businesses review their holdings and patent portfolios, investment in renewable technologies presents a unique opportunity. With fewer people commuting to work or school with increased distance working and learning, crude oil prices may never fully recover. As such, incentives exist for companies to innovate rather than stagnate, such as by investing in renewable technologies. Such investment will grow their patent portfolios, serving the goals of the US patent system – promoting the progress of science.