Where Is Our Oil and Gas Industry Headed????

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  • Topic: Petroleum, Petroleum industry, Oil well
  • Pages : 11 (3640 words )
  • Download(s) : 135
  • Published : October 7, 2008
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TABLE OF CONTENTS

Executive Summary………………………………………………………………3 Introduction……………………………………………………………………….4
Description………………………………………………………………..4
History…………………………………………………………………….4
Organization……………………………………………………………….5
Governmental or Environmental Factors…………………………………..6 Market Structure……………………………………………………………………6 Industry Demand…………………………………………………………………..7
Key Determinants of Demand……………………………………………..8
Future Expectations of Demand……………………………………………8 Industry Analysis………………………………………………………………….10
Threat of entry by new competitors……………………………………….10

Rivalry among existing competitors ……………………………………..11

Pressure from substitute products ……………………………………….11

Bargaining power of buyers……………………………………………..11

Bargaining power of suppliers …………………………………………..12

Conclusion……………………………………………………………………….12

Footnotes…………………………………………………………………………. 15

References………………………………………………………………………..18

Appendix…………………………………………………………………………19

EXECUTIVE SUMMARY
The United States is a leading producer of refined petroleum and a major player in the global decision regarding this industry. Our country is beset by a shrinking supply or decline in production, pressures of environmental concerns, yet increase in demand. These problems are not unique to our country. Globally, we are dealing with a resource that will eventually be depleted. Increasingly, avenues for other countries to offset the demand of the United States have caused the domestic industry to burden the need of increasing supply. The main areas of the large entity of the petroleum industry analyzed were: •Government and environmental regulations

Decline in US production
Increase in global demand
Competitive forces of the industry
The oil and gas industry is an oligopoly with regards to OPEC and there are few countries who dominate global oil production. By definition, an American firm with desire to enter the industry, must first evaluate the major sectors of the industry and determine their philosophy considering them. The focus of entrance should incorporate a common ground where the concerns within the areas analyzed are corrected or compromised. After analyzing the aforementioned factors, there is doubt as to whether entrance into this industry would be a) sustainable and/or b) appropriate. Though initial strategy derived through analysis varies, the action attained by prospective is to avoid the pitfalls faced by the industry. Due to thorough investigation of the government and environmental implications with the decrease in supply due to regulations, the recommendation is to avoid the industry as a potential and perhaps delve into alternative fueling resources for long-term sustainability.

INTRODUCTION
Description
Petroleum is the single largest source of energy used in the U.S. The petroleum industry, crucial to the U.S. economy, is extensively reported, measured, and analyzed. The industry includes the global processes of exploration, extraction, refining, transporting and marketing petroleum products. Before petroleum can be used it is sent to a refinery where it is physically, thermally, and chemically separated into fractions and then converted into finished products. The largest volume end-user products of the industry are fuel oil and gasoline. Refineries also produce non-fuel products, including petrochemicals, asphalt, road oil, lubricants, solvents, and wax. Petrochemicals are shipped to chemical plants, where they are used to manufacture chemicals and plastics. The U.S. is the largest producer of refined petroleum products in the world, with 25 percent of global production and 163 operating refineries. In 1997, refineries supplied more than 6 billion barrels of finished products and employed about 65,000 people [DOE 1998, DOC 1997]. U.S. refineries are also the largest energy consumers in manufacturing and spend $5-$6 billion annually in pollution abatement costs [MECS 1994, DOE 1998]....
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