There is a great deal of debate about how the mundane daily commute to work will change in the post-pandemic epoch. While commentators and politicians are voicing their opinions, the data that is starting to emerge points to commuters themselves making their opinions clear through their actions. There are changes afoot that could have profound impacts on businesses, workers and urban planners. This may well translate into significant investment opportunities, suggests Kay Rieck, an experienced market observer and investor.

It’s an unfortunate fact but even after two and a half years, and despite massive social upheaval and a truly historical vaccination drive, mutation still presents a clear and present danger and the Covid-19 pandemic is not over. That’s the bad news.

The good news is that we are getting to the point where the shape of our new reality is becoming clearer, and one of the most interesting ways that many of our lives have been transformed is in the realm of transportation.

For many jobs, working from home has become the new normal, and as a result, the daily commute has changed massively. For some, the commute was the bane of their existence, for others an opportunity to get ahead of work emails or simply revel in some peace and quiet. For most, if we are honest, it has been a mixture of the two.

No return to the rat race

While there are some people that are arguing that it is time for everyone to get back to working the way that we used to three years ago, the reality that most businesses appear to be accepting is that, depending on the specific role and industry, many people are changing their pattern of work so that they are only physically present in the office for a couple of days each week.

There are several reasons for this, but one of the most pressing is the commute time itself. Prior to the pandemic, average commute times around the world had been rising for some time. In the US they were estimated to be around 25 minutes each way, in Germany around 40 minutes, while in the UK they were estimated to be around 55 minutes. That is a lot of time that people have reclaimed by working from home, and many of them are likely to be quite resistant to giving it up.

So farewell to the old certainties

We are starting to get a clearer understanding of how the world of work and its attendant commute is evolving, with people returning to the office but perhaps not for the full five-day weeks that we knew up to 2019. Technology has matured in such a way that many of us can now work as productively at home for at least a few days each week, and companies are having to look at their office plans and work out how much space they actually need if only half of their staff are using a desk at any one time.

It’s not just office manages and the individual workers that need to work out how they can make the best of the situation for themselves in the short term, for their careers in the long term and their organisations overall. Urban planners, and even the oil and gas sector, which provides the fuel for the whole caravan to run on, are changing the way that they think about the commute.

Hub versus spoke…

What appears to be emerging is a commuting structure that is going to be based around spokes rather than hubs. This is to say that commutes are going to rely far less on heading into the centres of major cities and far more on connecting smaller local centres often on the outskirts of those cities and other smaller populations.

Transport policies are going to need to respond and look far more at connecting these smaller local hubs so that small numbers of people can connect across the spokes rather than expecting large numbers of people to move down one spoke to a hub and then back up another spoke.

One interesting aspect of this is that the aviation industry went through a similar process at the turn of the century. The Airbus A380, mighty behemoth of the sky, was designed to fly large number of people between a small number of regional hubs where people could then connect to smaller routes that took them to their actual destination.

The size of the aircraft meant that it needed longer runways that any of its predecessors, and as such it was only ever going to be physically possible to fly it into a small number of airports

…or something bespoke?

The Boeing 787 Dreamliner meanwhile, which went into development at around the same time as the A380, was developed to move people more directly from where they were to where they wanted to be. It was planned to be able to move between regional airports and operate with existing infrastructure so that passengers could move between regional spokes and new routes could be developed as demand changed.

Now in many ways of course, the debates in the aviation industry a quarter of a century ago might seem to have very little relevance to the discussions taking place about commuting today, but there is one point that is worth making: The A380 strategy is not seen as a commercial success. That is not to say that it was a commercial failure, but most aviation experts agree that orders didn’t reach the levels that were originally projected and many of the hub airports that were expected to make infrastructure investments to accommodate the A380 decided to spend their money elsewhere. There are estimated to be more than 1,500 787 aircraft currently on order. Production of the A380 ended in 2021.

The fantasy and the reality

While travelling by air tends to be quite a different proposition to the average urban commute, there are parallels. The main one is that while the journey is important, most people are trying to travel to somewhere rather than traveling for travelling’s sake, so the quicker that the journey can be over, the better.

The second parallel is that while any journey can be novel and even fun the first few times you do it, whether you are being flown on a plane, sitting on a bus or driving a car, the chances are that after a while it will become a slog. There will be delays, and they will be frustrating and there will always be dark, bleak rainy days in Autumn when you’d far rather be doing pretty much anything other than commuting.

One big or many modest?

This means that any project that improves people’s commute time can have a material impact on their quality of life, but in the post-pandemic environment where the nature of commutes appears to be evolving, it is more important than ever that transport planners are careful that they are answering the needs of people today and tomorrow rather than yesterday.

If the current trend continues and the move towards work travel between spokes around the centre of cities carries on, then potentially several grand infrastructure projects are going to need to manage their ambitions.

In many ways it is simple for the oil and gas sector: there is increasingly broad acceptance that the fuel mix is changing, that less petrol is going to be needed for the current generation of cars, but energy is still going to be needed for their electric successors. There are still infrastructure details that are being worked out, but overall, the role of the oil and gas sector remains consistent.

From the point of view of the markets though, the evolution of transport projects could make things interesting over the next few years. The best way to manage these changing needs is likely to be through innovation, and innovation is more likely to thrive in smaller organisations. That has the potential to create a lot of opportunity for investors of all sizes over the next few years.

Ultimately the A380 was an awe-inspiring technical achievement, but in many ways its time was over before it even launched. The more mundane changes in patterns of commuting may have a similar impact on some of our major infrastructure projects over the next few years. Investors would do well to take note.


About the Author

Kay Rieck has been an investor in the US oil and gas sector for more than two decades. He was a financial advisor and stockbroker on the New York Stock Exchange (NYSE) for many years.

He quickly developed his interest in the oil and gas sector and related assets, building his expertise in investment banking and asset management at the New York Board of Trade and the Chicago Board of Trade.

Leveraging his exceptional network of global contacts, he founded his first oil and gas development company in the U.S. in 2008, selecting investments in the Haynesville Shale, Permian Basin, Eagle Ford Shale, Dimmit County, and anywhere else that offered and continues to offer exceptional return prospects.