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Oil and Petroleum industry in UK - Essay Example

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Oil and petroleum industry in UK Table of contents 1. Introduction 3 2. Oil and Petroleum industry in UK 3 2.1 Current supply and demand conditions 3 2.2 Collusive behaviour in the industry 4 2.3 Price leader(s) 5 2.4 Abnormal profits 5 2.5 Barriers to entry and exit 6 2.6 Competitive behaviour and theoretical models 7 3…
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Oil and Petroleum industry in UK
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Download file to see previous pages However, there are industries, like the oil and petroleum industry, which have managed to keep their competitiveness and remain intact from global market pressures. Current paper focuses on the oil and petroleum industry of the UK. The specific industry is considered as highly profitable, as analysed further below. Still, the industry has been related to anti-competitive behaviour, supporting the development of oligopolies. The characteristics and the competitive behaviour of the above industry are explored in this paper. Emphasis is given on the industry’s potentials to control anti-competitive behaviour and promote the equal development of its members. 2. Oil and Petroleum industry in UK 2.1 Current supply and demand conditions The oil and petroleum industry of UK is highly developed, a fact related to the country’s high efficiency in terms of oil and gas. Indeed, it has been proved that a percentage of 99% of oil and gas produced in UK is extracted from ‘the seabed surrounding the country’ (Oil & Gas UK 2012). The producing fields of the oil and petroleum industry of UK have been estimated to 383 (Oil & Gas 2012). ...
For example, the country’s oil and gas production of 2009 reached high levels, covering ‘the two-thirds of the local energy needs’ (Department of Energy and Climate Change 2012). The particular industry also supports that UK economy; the contribution of the industry in the UK economy has been estimated to ‘an average of ?8 billion annually’ (Department of Energy and Climate Change 2012). In the context of the global market, the performance of the oil and petroleum industry of UK can be characterized as quite satisfactory, leading to the classification of UK as one of the most powerful oil and gas producers worldwide. Indeed, ‘in 2008 UK ranked 14th’ (Department of Energy and Climate Change 2012) in terms of its oil and gas production. It should be noted that the industry’s key firms have been estimated to 30 (see Table 1, Appendix); however, among these only 3 are those that share the key part of the oil and petroleum industry of UK (see those firms highlighted in Table 1, Appendix). 2.2 Collusive behaviour in the industry Collusive behaviour reflects the use of practices that are opposed to market ethics or to the law. In the oil and petroleum industry of UK such practices may have occurred but have not clearly reported or identified. However, there are signs that indicate the existence of such practices. For example, in a report published by the Department of Energy and Climate Change of UK (2012) it is explained that the production of oil in UK has reached up to now ‘the 40 billion barrels even if the potential for 20 more billion barrels existed’ (Department of Energy and Climate Change UK 2012). ...Download file to see next pagesRead More
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