Evaluate an article - Essay Example

Evaluation of An Article The Economist Newspaper article is about the effects of cost of production and how the cost of production can influence the profitability of the business and strategies of operating a business. The cost of operating business affects investor opportunities and operating strategies (1). Although a decline in prices of commodities can discourage investors and slow down economic growth, it offers business with an opportunity to explore other alternatives to improve competence.

Decline in oil prices causes reduction in the investments of the energy firms. It results to the reduction in production and consequent reduction in energy consumption thus stabilizing the oil prices. For example, the investments in energy production reduced by 20% following the Asian crisis of 1999. The investments reduced by 10% and later recovered a decade after the crisis (The Economist Newspaper 1). In order for the firms to survive in a competitive market they should engage cost reduction strategies.

Oil companies should employ strategies for reducing the cost of transporting oil and gas in order to survive the declining oil prices. They must utilize the most appropriate engineering techniques that can lessen the cost of production. For example, Wells deals with varieties of oil and gas that enables them to lower the prices of their products. They pipe oil from Eagle Ford Play in Texas because it is cheaper than using the train to transport it from Bakken formation in North Dakota (The Economist Newspaper 1).

In conclusion, the declining price of commodities can undermine the investors and result in a reduction in economic growth. However, it helps the management to come up new approaches for reducing production cost and increasing productivity. This article is suitable for assessing the effects of technological advancements on cost reduction and improving business efficiency.Works CitedThe Economist Newspaper, “Limited Shale oil in a bind: Will falling oil prices curb America’s Shale Boom? (LINDSAY, OKLAHOMA, Dec 6th, 2014).

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