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Structural Characteristics of OIL Industry - Essay Example

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The paper “Structural Characteristics of OIL Industry” looks at petroleum and its close associate, Natural gas, which has been one of the key energy sources for the ever energy-hungry human race, and this industry has played a critical role in shaping the political, economic and social structure…
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Structural Characteristics of OIL Industry
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Download file to see previous pages The world oil exploration and refining industry are dominated by a few oil companies. While the top 10 oil firms own, directly or indirectly, about 80%of all oil reserves, they are also This Oligopolistic market structure enables the players in the oil industry to earn supernormal profit through monopolistic pricing.  By the end of the first world war, the oil industry had gained much traction and more so after the 2nd world war. Under the patronage of respective Governments, few companies took control of the whole value chain of oil production in the world. This was gained through complete hold over the resources of the petroleum producing countries. In this scenario, these companies were making the huge profit, huge tax collection was happening in Oil consuming countries but however, on the other end of the value chain, the oil-producing countries were loosing out. This occurrence gave rise to the formation Organization of Petroleum Exporting Countries, OPEC, which was a cartel of major Petroleum exporting countries.  Vladimir Putin the president of Russia has used oil & gas supply as a strategic tool to arm-twist those European countries who are not exactly in friendly terms with Russia. Recently on Jan-7th’2009 – Russia under Putin stopped the supply of Gas to Europe, through Ukraine. More than 25% of Europe’s gas supply is dependent on Russia & 80% of that comes through Ukraine. (Russia stops all gas supply to Europe via Ukraine, January 2009). Like any other industry, the oil & petroleum companies also come up with innovative marketing strategies which would give them a competitive advantage. For example Mobil North American Marketing and refining; how it changed itself from a commodity manufacturer to a customer-centric company. ...Download file to see next pagesRead More
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