A Super-Contagious New COVID-19 Strain Overshadows Stimulus Success

By: Justice Clark Litle

Dec 21, 2020 | News

Republicans and Democrats finally got their act together and came to agreement on a $900 billion stimulus effort for struggling Americans and small businesses. Congress is rushing to finalize the bill alongside a last-minute effort to fund the U.S. government for the remainder of the fiscal year.

There were compromises galore, and many were disappointed with various aspects of the final result.

Still, at $900 billion or so, it will be the second-largest relief effort in history (behind only the $2.2 trillion of relief authorized in March 2020) and will include lifelines like direct stimulus checks and topped-up unemployment coverage.

The markets had no time to celebrate the stimulus, however, because of VUI-202012/01.

VUI-202012/01 might sound like the vehicle identification number (VIN) for a luxury sedan. But it isn’t.

VUI-202012/01 is an epidemiologist nightmare come to life — a mutated strain of COVID-19 that could be 70% more transmissible than the original version, due to a much higher “viral load” (a measure of how much virus you take in when breathing infected air).

The acronym itself is fairly straightforward:

  • VUI stands for “Variant Under Investigation.”
  • “202012” marks the month of investigation (December 2020).
  • “/01” means it is the first variant of the month (so far).

The U.K. is apparently ground zero for this new and super-transmissible COVID-19 strain. It has been reportedly detected in all parts of the U.K. other than Northern Ireland.

Countries around the world are banning U.K. flights and U.K.-related travel to keep the new variant from reaching their local population. Per Sky News, here is a partial list of countries that have either enacted U.K. travel bans or have preparations to enact them shortly:

India, Russia, the Netherlands, Denmark, Norway, Israel, Belgium, Italy, Austria, Germany, Spain, Portugal, Bulgaria, Switzerland, Lithuania, Latvia, Estonia, France, Malta, Sweden, Greece, Turkey, Hong Kong, Canada, Saudi Arabia, Oman, Kuwait, Jordan, El Salvador, Ireland, the Czech Republic, Colombia, Morocco, Chile, Finland, and Argentina.

The travel ban efforts may be coming too late.

U.K. citizens have been traveling globally for weeks (from early December onward) and variants of the new strain have likely already been found (verification is still underway) in countries as far away as Australia and South Africa.

According to current estimates, the mutated strain has been in the U.K. at least since September. It took time not just to identify the mutation, but to verify the stepped-up rate of spread.

Why does this matter, even with vaccines on the way? Because overwhelmed hospital systems are still the critical danger point in many Western countries. Even in Sweden, which for months had appeared to sidestep the worst of the pandemic, ICU beds in the Stockholm region are full.

If you take a COVID-19 strain that is 70% better at transmission and combine it with pandemic fatigue among weary citizens, coupled with active disinformation campaigns and a sense of complacency based on the nearness of the vaccine rollout, you get a recipe for a kind of COVID-19 tsunami that overwhelms hospital systems to the point of no return (with many already on the brink).

The threat of this new COVID-19 variant explains why oil prices got crushed to start the week, with West Texas Intermediate and Brent Crude oil futures contracts both trading down 4% or more.

The problem here is not just newly enacted travel bans across dozens of countries — which we are already seeing in respect to the U.K. — but the increased possibility of harsh new lockdown measures within various countries as the super-transmissible VUI-202012/01 starts showing up across borders.

If the rate of infection for COVID-19 starts moving higher globally with this new strain, the timeline for global economic recovery will be pushed back. That would be a double negative for energy demand, as the anticipated recovery timeline could be delayed with crude oil stockpiles building up in the meantime.

It remains to be seen how things will play out, and it is possible the widely enacted U.K. travel bans will isolate and contain the new strain in time for most of the world to avoid harsh new lockdown measures.

If not, though, we could see harsh emergency responses eat into recovery activity (or destroy strained hospital systems if no such measures are taken) as the virus opens up a new front in the Covid Winter battle that is now front and center, as the world waits desperately for the vaccine cavalry to roll in.


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