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Government intervention in business
Government involvement in business
The economic effects of the oil crisis
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In 1993, YUKOS, an oil producer and supplier, was created by the Russian government by resolution. It quickly became a major economic force in Russia, supplying 20% of the country’s oil and 2% of the world’s oil supply. In an effort to re-structure the oil industry, the government created four independent companies to refine and distribute oil of which YUKOS was one of them. BY 1995, YUKOS was already having management problems and the government put 45% of the company’s shares up for auction. Shortly after, YUKOS became Russia’s first privately owned oil company.
Under the direction of Mikhail Khodorkovsky, YUKOS restructured and became a very profitable company. This success did not come without difficulties as YUKOS’s delivery system could not keep up with the company’s increasing output. But Khodorkovsky was up to the challenge and by 2003, not only was LUKOS Russia’s largest oil company, but a company respected worldwide and lauded for its great management and organizational efficiency. Politics started becoming a factor in YUKOS’s growth plans and YUKOS was forced to fight with Russian authorities over the building of a new pipeline. Still a merger between YUKOS and competitor Sibneft gave YUKOS the world’s largest oil reserves. But things changed quickly in 2003 and not only were pipeline plans killed, but the fall of YUKOS was just beginning.
Mikhail Khodorkovsky was arrested on tax fraud charges and was forced to resign. The merger with Sibneft was undone. In 2004, YUKOS itself was charged with tax evasion and the company scrambled to try and file for bankruptcy protection. Eventually, the Russian government auctioned off the company’s remaining assets and many of YUKOS’s executives fled Russia in fear of being arrested. Just like that, the world’s third largest oil producer was in ruins.
YUKOS’s rise and fall was the result of many external forces. First, was the unstable nature of the Russian political system. The privatization of large companies was a relatively new concept in Russian history. Internal squabbles between first President Yeltsin and later President Putin and others around the Kremlin led to much turmoil. Government officials felt threatened by these new entities and bloody power struggles ruled the day. Powers they enjoyed under Yeltzin were being challenged under Putin’s administration. Even the aggressive prosecutions and arrests of Khodorkovsky and others can be tied to this political wrangling. In fact, many of the events surrounding the klegal issues that crippled YUKOS were blamed on a deliberate effort of Russia’s government to regain control of the mighty YUKOS empire.
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...
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
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.
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.
Pratt, Joseph A. “Exxon and the Control of Oil.” Journal of American History. 99.1 (2012): 145-154. Academic search elite. Web. 26. Jan. 2014.
The oil and gas industry in general is dominated by a few large firms, therefore it is set to operate in an oligopoly market. Due to acquisitions in the industry, the four largest oil companies in the United States control the market power. ExxonMobil, Chevron, ConocoPhillips and Marathon Oil dominate the oil industry in the United States. These four U.S.-based companies are actively and highly involved in a variety of venues to shape the oil supply chain in this country. They are focusing on investing in research and development, exploration and production as well as transportation, refining, and retail marketing, both in the United States and worldwide.
ExxonMobil is a multinational oil and gas company with its headquarters offices in Irving, Texas. It was formed in 1999 through a definitive agreement between Exxon Corporation and Mobil Oil Corporation to merge and create a new company. In essence, the corporation produces, distributes and sells oil and natural gas across the world. The structure and culture help it survive the price burst which often occurs in the global oil market. Notably, among its largest competitors, ExxonMobil generates high revenue and produces large volumes of oil for every penny it spends. Besides, the company publicizes the highest price of natural gas and oil, both in absolute terms and for every employee it hires. Significantly, even in good years, the top managers
Consequently, Russia offers U.S. businesses both high risk, and potentially high rewards. Russian firms and customers admire U.S. technology and know-how, and generally are interested in doing business with U.S. companies. At the same time, there is a tendency in some quarters to suppose that the U.S. is responsible for the changes which have occurred in Russia, especially those which have caused most hardship to individuals and to industry. This sentiment has attracted the support of some political leaders, and in given credence by a significant proportion of the populace. At the same time, a strong U.S. commercial presence is viewed in the Russian Far East as a counterbalance to other regional economic powers.
Although this phenomenon has been diminished in modern political history, it is still actively present in one country: the Russian Federation. Russia has always been seen as an exceptional country with its bizarre history and unfathomable politics, where the oligarchs are believed to possess most of the wealth of the Russian society. Their case is more than intriguing as they exercise enormous influence both on the economy and politics. How did these privileged people come into power? What is their actual impact on the economy and to what extent was their political influence restricted in the past few years in the Russian Federation?
The Soviet Union, which was once a world superpower in the 19th century saw itself in chaos going into the 20th century. These chaoses were marked by the new ideas brought in by the new leaders who had emerged eventually into power. Almost every aspect of the Soviet Union was crumbling at this period both politically and socially, as well as the economy. There were underlying reasons for the collapse of communism in the Soviet Union and eventually Eastern Europe. The economy is the most significant aspect of every government. The soviet economy was highly centralized with a “command economy” (p.1. fsmitha.com), which had been broken down due to its complexity and centrally controlled with corruption involved in it. A strong government needs a strong economy to maintain its power and influence, but in this case the economic planning of the Soviet Union was just not working, which had an influence in other communist nations in Eastern Europe as they declined to collapse.
...h or they had a large sum of cash from the buyout. These former refiners who were entrepreneurs had this buyout money and could move on to other ventures. This would free up their human capital to help move out the production possibilities of the nation. This obviously would increase social wealth and lifestyle of the country.
On April 20, 2011, an oil rig in the Gulf of Mexico exploded on British Petroleum’s (BP) Deepwater Horizon. As a result, of the 126 BP crew members aboard, 11-15 were reported missing. Six days later, underwater robots reveal at least two leaks are dumping 1,000 barrels of oil into the Gulf per day. Consequently, this would become one of the worst oil spills in the history of the United States and perhaps the petroleum industry. This recent Oil Spill portrays one of many dilemmas BP has faced as it scrambles to expand and globalize itself as a transnational corporation in the world economy against other oil and gas companies. Although this disastrous event has affected BP negatively, the company has found a way to overcome it, while still becoming the 6th largest in the world; it continues to do this by offshoring, outsourcing, and merging with other oil and gas companies, three key strategies BP has been using since its establishment in 1909.
The industry is divided into three distinct sectors including the upstream, midstream and downstream sectors. The upstream sector includes the exploration and production of crude oil as well as the exploration and production of natural gas. This sector has experienced the largest amount of deals in terms of mergers and acquisitions, which will be further discuss in section III. The midstream sector involves the transportation of extracted petroleum from the upstream sector through pipelines, rail, barge, truck as well as storage. Finally, the downstream sector connects the end consumers through derived products such as gasoline, liquefied natural gas (LPG), liquefied natural gas (LNG), kerosene (aircrafts), and diesel…
The Natural gas industry is divided into four sectors, called producers, transportation sector (pipelines), local distribution and marketing, and consumers. Before 1985, the industry was traditional and vertically integrated which supported monopoly in the industry. Distribution companies could not chose pipelin...
Ranked among the FORTUNE Global 500® largest corporations in the world, Petroliam Nasional Berhad, most commonly known as PETRONAS, is a Malaysian state-owned oil and gas company which ventures into a wide range of petroleum activities. Established in the year 1974, PETRONAS was incorporated alongside the enforcement of the Petroleum Development Act 1974 (Malaysian Explorer, 2012). Today, being owned entirely by the Malaysian government under the Ministry of Finance, PETRONAS is entrusted with the responsibility to manage the entire nation’s hydrocarbon resources (Rig Zone, 2013) and to ensure the sustainability and orderliness of the country’s oil and gas industry is prolonged.