Microeconomics and macroeconomics Name: Institutional Affiliation: Introduction The purpose of this research is to analyze various financial issues that face or faced BP pipeline related to micro and macro economics. The research covers information on opportunity cost, national debt, and budget deficit, money supply in the economy and monetary options and tools…
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Micro economics involves policies for enhancing equity and efficiency in the economy via the judicial and the regulatory mechanism. Opportunity Cost Opportunity cost is one of the mostly used concepts in economics. The opportunity cost is the highest valued alternative of something that must be forgone when making a choice. Thus it can be defined as the cost paid when something is given up in order to get something else. Assessing opportunity cost of any event is important in establishing the real cost of any action. BP pipeline should consider the opportunity cost of constructing a pipeline in order to reduce shipping through road transport as suggested by Mankiw (2011). As the company sets its various routes on the table it has to consider the concept of opportunity cost thus assessing why a given route is preferred over the other. Budget Deficit Budget deficit refers to the amount by which a company or government expenses exceed its income for a given period of time as suggested by Dyker (1992). Budget deficit is major point of controversy in BP Pipeline Company given the various expenses the company has suffered due to oil spills. As a result, Congressional republicans are against the tougher oil and gas pipeline safety standards as they are bound to hinder economic growth. This is following the frequent budget deficits that the BP pipeline company has suffered. For instance BP’s latest incidences of oil spills have left the republicans devastated as their contra regulation arguments have been curtailed. This has resulted in the incurrence of huge budget deficits and the republicans and the house representatives have proposed bills to reduce the budget deficits faced by EPA due to such oil pollution. This will lead to a situation where BP pipeline will compensate EPA (Environmental Protection Agency) in case they experience oil spills Leading to a higher budget deficit for BP pipeline . Although BP has proofed successful in stalking the waste, the increasing spending in compensation of damages caused by the spills largely increases its budget deficit. In addition BP is bound to suffer cost of repair and clean-up operations liabilities thus increasing the company’s deficit spending. However BP has promised that everyone affected by spills will be compensated. The Company has thus signed several agreements with local municipalities and shrimpers following the spill effect. It is no doubt thus BP pipeline has suffered huge budget deficits which are affecting the countries economy to a great extend. National Debt National debt is also referred to as government or public debt and it is the money owed by the central government. In the United States national debt can also refer to a municipal or local government debt. National debt reflects on all government liabilities such as pension payment as well as payment for goods and services received and not yet paid according to Cavanaugh (1996). In many cases government tend to borrow funds in a currency with strong command for debt security. National debt can be caused by various aspects such government spending on disaster like the BP oil spill. Following the Alaska oil spill by the Bp pipeline company, the government has suffered great losses which have led to national debt. As a result, the central gover
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The research uses secondary data collection methods to develop a literature review of the oil industry, environmental impact and legal framework for the oil industry, and a case study method for evaluating BP on its vision, organizational structure, products, commitment to environment and its actual performance.
BP, the largest producer of oil and gas, reached its current position after many years of its existence. It was formerly associated only with the British Government, and had not put in much effort towards growth or expansion.
The country’s beginning and growth are attributable to the entrepreneurial skills of William Knox D’Arcy who obtained a concession to search for oil in the Persian Empire. Various challenges including political instability and poor infrastructure marred his venture leading to depletion of initial capital.
President Richard Nixon signed the Trans-Alaska Pipeline Authorization Act into law on November 16, 1973, which authorized the construction of the pipeline. Although the pipeline is actually about 799 miles long, it is usually referred to as 800 miles long.
The company has until now focused solely on shareholder wealth maximization at the cost of other stakeholders of the company.
The corporate level strategy of BP should focus on having all kinds of oil &
The present research has identified that the exercise to cut down the costs was the main ethical issue facing the BP oil company. This was presumed to be necessary following the situation which the company was in. The main concern was the means with which the cost cutting exercise was being conducted.
The goal of the company is to be focused oil and Gas Company that offers value over volume. The goal is pursued through clear strategies and employment of distinctive capabilities. The company operates in over 80 countries, having its head office in London,