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Opec and it's implication
Opec and it's implication
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The oil and natural gas industry is a part of an oligopolistic market structure with an undeniable competitive fringe. It is very clear to society that the oil and natural gas industry's past, present, and future production is somewhat controlled and relied upon by OPEC "cartel" decisions. There are few countries that dominate global oil and natural gas production that are outside of the OPEC organization.
OPEC, The Organization of the Petroleum Exporting Countries believes that their mission "is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry" (OPEC). In reality, OPEC's mission statement means nothing to me. In my eyes, it basically sums up the words "international cartel." Oligopolistic firms (or in this case Member Countries) join a cartel to increase their market power, and members work together to decide the level of out...
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...
One of these factors was the logistical nightmare of redeveloping the infrastructure needed to transport oil to the refinery. As early as 1881, Standard oil operated approximately 3,000 miles of pipelines, eventually owning ninety percent of the nation’s pipelines. Although transcontinental railroads were an available alternative, pipelines were cheaper, reduced handling and storage fees, and were more efficient. The fact that modern oil companies invest hundreds of millions of dollars into speculating for sustainable natural oil deposits implies that such deposits are rare and hard to identify with a passing glance. If the spurts of oil proved to be isolated incidents, the capital invested in building pipelines and reestablishing a monopoly would have been squandered.
Exxon Mobil is world’s largest publicly traded integrated oil company serving companies in more than 200 countries worldwide. Standard and Poor’s stock report for Exxon Mobil indicates that Exxon’s global functional organization and substantial diversification helps mitigate its exposure to business risk and margin volatility.
The financial perspective for Exxon, it decreased revenue due to dropped price of barrel, oil. However, it has future development plan, and the outlook for exploration plain in Russia is favorable. The company applied new technologies that efficient drilling and extracting technologies to provide cheap and reliable oil and natural gas. Because of indiscriminate exploration, the company took a claim about pollution that occurs while drilling and processing to provide oil and gas. Exxon is also invested for human resources that creating environment that its employees have the opportunity to learn based on
Exxon Mobil is a great example of a corporate giant. It all started in 1870, when JD Rockefeller founded U.S. Standard oil a company that will go on to be the most profitable in the world. In 1911 the company split up into 34 different companies, amongst these companies was Vacuum oil company that will later be called Mobil Oil and Jersey Standard which was renamed to Exxon corporation. In 199 the two companies decided to work together again, this was the birth of Exxon Mobil.
Prior to the year of 1999, Exxon and Mobil were the two largest American oil companies, which were direct descendants of the John D. Rockefeller’s broken up Standard Oil Company. In 1998 Exxon and Mobil signed an eighty billion dollar merger agreement in hope to form Exxon Mobil Corporation, the largest company ever created. Such a merger seems astonishing, not only because it reunited parts of Rockefeller’s Standard Oil Company, but also because it would be extremely difficult for the Federal Trade Commission (FTC) to approve this merger due to its size and importance in the oil market. In fact, it took the FTC an entire year after the merger was proposed to make a decision due to its rigorous analysis in the product and its geographic market, the concentration of the oil market, the potential anticompetitive effects of the merger, the effects towards their growth and labor force, and lastly, the likelihood of entry and the efficiencies that may affect anticompetitive concerns. Although all of these notions are played a role in the analysis of the merger, it is important to remember that the merger’s result efficiencies did outweigh the the anticompetitive risks that were involved, especially since the oil market was headed towards decreasing prices to expand production.
Almost every single nation in our world today, the United States included, is extremely reliant on oil and how much of it we can obtain. Wars have started between countries vying for control of this valuable natural resource. The United States as a whole has been trying to reduce its reliance on foreign oil and has had some success, especially with the discovery of the Bakken formation and projects like the Keystone Pipeline. Projects like the Keystone Pipeline are important as they will allow us to transport more oil than we would be able to in train cars, and grant larger access to oil reserves in the United States and Canada. The Keystone Pipeline itself is an oil pipeline which runs from the western Canadian sedimentary basin in Alberta, Canada to refineries in the United States.
The risk associated with these countries being the top oil producers is twofold. One, they are located half way around the world, making it expensive to transport the product logistically to a desired destination. And two, the U.S. has weak, if not contentious, relationships with them. The risks continue to mount, as America imported over 58% of its imported petroleum in 2013 from the Persian Gulf and OPEC. The players in OPEC are known globally to be hostile actors who do not have the best interest of any Western country....
Texas has prospered with many business such as through the cattle, cotton, and technology industry to keep the economy on top. One business in particular has set Texas economy a part from all the other businesses. The oil and gas industry has significantly changed Texas economy from the first discovery in the twentieth century until this exact moment.
The Bakken formation ranks as one of the largest oil developments in the U.S. in the past 40 years. There has been many changs in and around my small hometown of Mohall, North Dakota since the recognition of how large the Bakken formation is and what opportunities it brings to everyone. Many of the articles that you have read about the Bakken formation has been about Williston and other areas closer to the western part of the state, but the effect of the boom is being felt farther out than that. I will discuss the changes that have been both helpful and hurtful in my hometown of Mohall.
Currently, the most important factor in the rise of gas prices is the increasing cost of crude oil. Unfortunately, the United States has three percent of the world’s oil reserves. (Horsley) In 2009, the United States was third in crude oil production as well as the world’s largest petroleum consumer. (e. I. Administration) Such consumption required and still requires the United States to import petroleum/crude oil from other countries.
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.
The CSD (carbonated soft drink) industry is one that is very competitive. A few firms dominate this industry, most notably Coca Cola and Pepsi Cola. This is due to substantial barriers to entry. Cadbury-Schweppes, producer of products such as 7up and Dr. Pepper is the third leading company in this industry. Due to the dominance of Coca Cola and Pepsi, Cadbury-Schweppes faces the daunting task of having to fight for market share and survive in this fiercely competitive industry. Using economic analysis for support, Cadbury-Schweppes will need to use its strengths in the non-cola categories to compete in this CSD industry.
With the government eventually breaking up the trust into thirty-eight companies, the world of petroleum products was about to change. Few companies could survive. They lacked focus and sustainability, basically they needed a strategic plan. When first broken up the companies needed to sever from their Standard ties while remaining a brand name that people recognized. With so much competition one company had to find an edge over the other. They needed to be the low-cost leader in the industry. Out of this struggle is where three of the biggest oil companies emerged. They are Exxon, Mobil and Chevron.
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: