Any time stocks across an industry are down significantly, investors should be asking whether it's a good time to buy. And oil industry stocks have been plunging in 2020.

So far this year, the SPDR Oil and Gas Exploration & Production ETF and the SPDR Oil and Gas Equipment & Services ETF -- good proxies for those sectors of the industry -- are down 50.5% and 67.9%, respectively. 

However, you shouldn't buy a stock just because it's down: you also want to see a decent chance of a turnaround. We asked four Motley Fool energy contributors a simple yes or no question: is this a good time to buy oil industry stocks? Luckily, they each replied with more than a yes or no answer. 

Here's what they're thinking -- and more importantly, why.

A row of oil pumps.

Image source: Getty Images.

Run, don't walk

Travis Hoium: Is now the time to buy oil stocks? Absolutely not. 

We may be starting to get an idea of when economic activity will start to pick up again and what life might look like a few months from now, but we have no idea what the oil industry will look like a week from now, much less a year from now. 

On the demand side, I think travel will be down for a year or more as non-essential business travel declines, and consumers put off vacations while there's still a risk of COVID-19. On top of that, I think work is going to be forever changed as people and companies learn how to work from home. The commutes millions of workers used to deal with every day may be a thing of the past. 

On the demand side, we've seen Saudi Arabia flood the market with oil, and producers around the world are having a hard time finding places to deliver oil as storage fills up. That could lead to wells being shut in or the oil sold being unloaded at a loss because prices have plunged.

We don't know when this dynamic will change, because a country like Saudi Arabia has an incentive to inflict pain for as long as a year to make sure long-term supply declines. That will likely result in dozens of oil companies going bankrupt over the next year. 

I don't like any of the trends for oil companies, and given the tremendous uncertainty, I wouldn't be jumping into oil stocks right now. 

A glut of epic proportions

Matt DiLallo: The oil market is in shambles. Oil prices have cratered because of plummeting demand. That's coming at a time when supplies have surged due to continued growth in the U.S. and the collapse of OPEC's market support agreement with Russia. There's so much crude sloshing around these days that it's filling storage depots to the brim. At the current rate, the U.S. will run out of space to store oil by the middle of next month. These issues have put intense pressure on oil prices, including pushing them briefly into negative territory.

On the one hand, prices that low aren't sustainable. That drives the view that they will need to recover in the future. This eventual rebound could fuel a rally in oil stocks.

The problem with that thesis is that there's so much excess oil that it will take the economy months to burn off. According to some estimates, the COVID-19 outbreak will destroy 9.3 million barrels per day of oil demand this year. The industry, however, hasn't come close to matching that by reducing supply. While Russia and OPEC did make amends and agreed to a historic 9.7 million barrel a day supply reduction, that doesn't go into effect until May. Further, that rate only lasts through June, when the group will readjust its output to an 8 million BPD reduction for the rest of the year.

These numbers suggest that the oil market could remain chronically oversupplied in 2020, which will likely keep the pressure on oil prices. Those lower prices could force many oil companies to file for bankruptcy. It's not clear how bad things will get, which is why now's not the best time to buy shares of oil producers. 

A day for every three

Jason Hall: Yes, eventually oil demand will start to recover as the global economy starts ramping back up. Yes, oil prices will eventually start to go back up. But I expect it will take far, far longer than most people realize for oil markets to return to profitable levels for most companies. 

Global oil demand has fallen about 30 million barrels per day since mid-March, and is expected to stay down that much potentially until the end of May before we start seeing some recovery. Here's the rub: Global oil production from mid-March through the end of April is likely to have been close to where it was in January and February, as the U.S. has been very slow to back off output, and global giants like Saudi Arabia have actually increased oil production. 

At this point, there is more oil in storage worldwide than ever in history. The U.S. is likely to break the prior record for commercial storage by 200 million barrels between offshore storage, leasing commercial storage at the Strategic Petroleum Reserve, and filling up every container of conventional storage. 

And all this oil will take precedence on the market before any oil that's still in the ground. Next in line will be Saudi Arabia and Russia, who will have taken 6 million or more barrels of production offline and will have much cheaper oil than anything left in North America they can bring back to the market. 

Put it all together, and the U.S. oil industry is going to experience its worst year ever, and even big international companies could struggle. There will be opportunities, and plenty of companies will come through this just fine. But I really think right now the best thing to do is sit back and watch.

Oh, and what does "a day for every three" mean? That's how much extra oil is getting pumped right now. Every three days, enough extra oil gets produced to cover an entire day's global oil consumption. I told you it was bad. 

A ridiculous investment

John Bromels: I agree with Travis, Matt, and Jason. If there was ever a "good" time to invest in oil, now's not it. But let's be honest. Even in "normal" times, oil is an absurd investment proposition.

Think about it: it's this liquid gunk made from dead dinosaurs, and nobody knows for sure where it is because it's buried. So you have to guess where to find it, and then spend millions of dollars and months of time poking holes in some godforsaken wasteland to see if you're right. If you do luck out and find some, you have to spend more millions and more months (or years) dragging tons of equipment around the globe, getting ready to suck it out of the ground or sea floor.

Then, once you've extracted it -- this liquefied dino-gunk -- you can't actually make money off of it until you've spent more money to cart it away from whatever remote desert or ocean you found it under, still more money to have it cleaned, and even more money to ship it somewhere else, where hopefully someone will buy it to put into their snowmobile while also grabbing a six-pack from the attached convenience store. 

But if anything goes wrong during this process -- if the dino-gunk isn't where it's supposed to be, or it turns out to be the wrong kind, or there's no pipeline from here to there, or not enough pipeline, or too much dino-gunk on the market, or a refinery outage in Long Beach, or an argument among energy ministers in a conference room in Vienna, or Snowmobile Guy decides he's not thirsty, or practically any other thing at all -- suddenly someone's operating at a loss, and the stock price is plummeting.

It's risky business in the best of times. Why buy in the worst of times?

The one possible exception is that, as usual, the big oil majors will probably be just fine (eventually). Dividend investors may want to consider them on the strength of their current yields. But otherwise, I concur with my colleagues: the smart thing to do right now is steer clear of the whole dino-gunky mess.