British Petroleum
What we know today as British Petroleum is the result of several companies being bought and sold over many years. One of the companies, Standard Oil Company was created in 1870 by John D. Rockefeller in Cleveland Ohio. By 1892, while still not selling gas products, Standard Oil companies was providing lubricating products to keeps parts on horse drawn wagons moving friction-free.
One of the other companies, the Angelo-Persian Oil Company was formed in 1905. By 1908 they were producing gas products and in 1912 they discovered a way to double the output of gasoline produced from a barrel of oil. At the same time they were able to find a way to increase the octane level of the gasoline produced.
Industry Analysis
Today, British Petroleum is one of the largest energy companies in the world. They provide their customers with fuel for transportation, energy for heat and light, retail services and petrochemical products for everyday household use. British Petroleum is involved in exploring for oil and other natural resources that can be converted into power. British Petroleum is committed to finding fuel sources that reduce green house gases and reduces the carbon footprint. They hope to accomplish as they research and refine alternative fuel sources such as fossil fuels, solar power, wind power, hydrogen, and natural gas.
Competition in the oil and energy industry is furious. British Petroleum competes with companies like Exxon-Mobil and Chevron in three major sectors; Energy and Utilities, Chemicals, and Retail. These major players have been able to keep the competition high by finding economies of scale in production, and finding more and more ways to automate the processes.
The output in the industry is expected to grow at an annual compounded rate of 5-7 percent between 2007 and 2012. Domestic production was slow in 2007 as compared to 2006 rising 0.5 percent. This is the slowest production rate since the last U.S. recession.
Profitability Measures
Return on equity:
22.2%----2007 26.4%----2006 27.4%----2005
Return on equity has decreased over the last three years and as much as 5%. Despite the decrease, BP is right on track with than the industry average of 22%.
Return on asset:
8.8----2007 10.3----2006 10.6----2005
The ROA has decreased over the last three years and is less than the industry average of 13.8.
Book value per share:
$29.71---2007 $26.02----2006 $23.14----2005
The industry average of $36.26 per share, indicating that BP has less assets to be able to turn into cash.
When John D. Rockefeller merged with the railroad companies, he had gained control of a strategic transportation route that no other companies would be able to use. Rockefeller would then be able to force the hand on the railroads and was granted a rebate on his shipments of oil. This was a kind of secret agreement between the two industries. None of the competition knew what the rates were for the rebates or the rates that Rockefeller was paying the railroad. This made it hard for the competition to keep up with the Standard Oil Company. The consequences led to many oil companies getting bought out by Rockefeller secretly. All in all, 25 co...
Still, diluted EPS fell from $8.63 in 2014 to $5.77 in 2015 - a 49.6% decrease, which is a very discouraging sign.
As America’s first billionaire, few individuals in history can compare with John D. Rockefeller Sr. His wealth around the turn of the 20th century would be worth roughly twenty-two billion dollars in modern United States dollars. It is undeniable that Rockefeller changed the landscape of the American petroleum industry by defining the nature of oil production. By 1883, Rockefeller was laying the foundations for what we now know as the vertically integrated company and the modern multinational. The fruit of Rockefeller’s labor, the Standard Oil companies, controlled ninety five percent of petroleum refining and transport by 1880.
Exxon and Mobil were two big competitors in the oil industry. In the 20th century, Exxon and Mobil operated with relatively low-price, and in low-margin environments. The market in the United States and Europe have grown and matured, allowing them both to grow with great success. The competitiveness has tightened worldwide in the crude oil business. Both companies have continued to advance new technologies, introducing new marketing innovations. They have extend there reach into high-growth markets. The two companies became more efficient, reduced costs, and increased shareholder’s value by there merge.
...mpanies, it eventually came to the point where they couldn’t keep up and eventually became a part of Standard Oil. By the time Rockefeller had reached the age of 40, his company had controlled all national oil refining by 90% and about 70% of international export of said oil.
Rockefeller was an industrialist and philanthropist who made his fortune by founding the Standard Oil Company in 1870. Attempting to monopolize the industry and squeeze out the middle man, Rockefeller slowly gained almost complete control of the oil industry. He formed the powerful Standard Oil Trust in 1882, which united all of his companies and secured 95% of oil production in the United States for himself. Rockefeller was an industrialist who stamped out all of his competition with his trust, eventually leading to Congress intervention.
Return on assets is also decreasing and less than industry average. For example, in 1995 it was 4.7%, less than the average of 6.
Oil was first discovered in the mid-seventeenth century by Spanish explorers. July of 1543 Spanish explorer Luis de Moscoso saw oil floating on the water in the Galveston Bay (Olien 1). In the beginning there was no market or demand for oil until following the Civil War period, entrepreneurs begin digging wells. The first significant oil discovery in Texas was in 1894 in Navarro County near
Return on equity (ROE) measures profitability from the stockholders perspective. The ROE is a calculation of the return earned on the common stockholders' investment in the firm. Generally, the higher this return, the better off the stockholders are. Harley Davidson's return on equity was 24.92% for 2001, 24.74% for 2000. They have sustained consistent, positive, returns for their shareholders for the past two years.
Although, British Petroleum is one of the most well-known oil companies throughout the world, they have had many problems in their past. “In Alaska, home to one of BP’s longest-standing and most important business units, the company produced nearly twice as much oil as ConocoPhillips, the other major company operating there, but since 2000 it has also recorded nearly four times as many large spills of oil, chemicals or waste” (Lustgarten 2). That was just one example of how BP has bee...
The main contributing factor to the decline in the return on stockholders’ equity (25.37% to 8.73%) was the decline in the profit margin (11.79% vs. 5.08%). The decrease in asset turnover (1.11 to 1.00) made a small contribution to the decline, as did the decline in the debt ratio (48.4% to 41.8%).
In the 1870’s, J. D. Rockefeller’s Standard Oil Company was established as a monopoly in the petroleum refining industry in the United States. How he managed to achieve this has always been an economic puzzle because the refining industry, at that time, had many small firms. Moreover, there were minimal barriers to entry into the industry. By 1879, Rockefeller was in control of more than 90 percent of the US’s refining capacity and “maintained a dominant share of refining, in spite of the fact that entry into refining remained easy” (Granitz and Klein 1996, p. 2). Over time, there have been many efforts to explain the Company’s growth; the most sophisticated economic discussion of the monopoly creation is by Elizabeth Granitz and Benjamin Klein in their 1996 article. In 2012, George Priest from Yale University offered an alternative theory for the success of Standard’s refining monopoly. This paper will provide a critical summary of the key issues raised in both the articles.
The current ratio declined from 2011 to 2012 but then improved from 2012 to 2013. The quick ratio declined from 2011 to 2012, but also improved from 2012 to 2013. The cash ratio improved from 2011 to 2012 and also from 2012 to 2013 (Walt Disney Co. (DIS) | Liquidity).
In conclusion, OPEC's monopoly of the petroleum industry has been a strong one since the 1960's since its members enjoy economies of scale. Its decisions concerning the output of petrol have always been strong affecting the rest of the world. This monopoly is socially inefficient due to the output and the deadweight loss that results. Interestingly enough, to break this monopoly, the new Iraq has the potential to turn the market power around.
Furthermore met more than 60% of worldwide vitality request by the oil and gas industry. Advancement undertakings and foundation as far and wide as possible, depend on the business. The oil and gas industry is a basic industry globally. The business might be isolated into five parts: