Industry report Essay Example | Topics and Well Written Essays - 2500 words

Industry report - Essay Example The term petroleum industry refers to all industrial activities associated with exploration, mining, refining, transporting, and selling of petroleum products. This paper will present an overview of the petroleum industry giving specific focus to the evolution of the current trends in the industry, key players and their strategic objectives, the scope for new entrant. This will also analyze the demand and supply ratio of the fuel and major challenges the industry is facing today. This report will help one understand how complex the operating environment of the petroleum industry is amidst the growing economic uncertainty, regulatory pressures, and commodity price instability. 2. Industry overview As mentioned in the introduction, numerous activities from exploration to marketing constitute the modern petroleum industry. Although fuel oil and gasoline are the major products of the industry, it involves other chemical materials like pharmaceuticals, solvents, fertilizers, pesticides, a nd plastics. Petroleum is a natural but complex liquid mixture of hydrocarbons and several organic compounds found underground in geologic formations (Petroleum and Petroleum Products). Although the fossil fuel in the natural form was used by humans before around 5000 years, it evolved to be an important industry in the world economy by 19th century. The history of commercial oil wells and refineries could be traced back to 1800s when imperial Russia emerged as the largest producer of oil. By the beginning of the 20th century, Apsheron Peninsula became the hub of oil from which Russia drilled out half of the world’s total oil production and became the leader in international oil markets. Industrial revolution played the key role in enhancing the petroleum industry. The invention of fuel run machines and transportation intensified the demand for fuel, and thereby the developing world’s exploration for oil. The result was that several economies across the world discovere d their own oil fields. By 1850s both Canada and the United States developed their own oil wells and refineries, and the continued exploration in the industry enabled the US to outsmart Russia by becoming the largest producer of oil by the first quarter of 20th century. The industry has been amazingly vulnerable to change and instability that by the World War II US lost its leading position in the market to the new entrants of the industry, Middle East. Subsequently, the industry underwent tremendous changes. Huge oil tankers, pipelines, deepwater drills, drillships etc became the major characteristics of the petroleum industry, and multi-governmental organizations like OPEC and OAPEC emerged to be the most powerful bodies that cold control the oil prices and policies. Concerns over environmental issues related to oil and gas operations are also increasing across the globe as new projects have adverse impacts on the earth, water, and air due to the possibility of oil spills and the effect of pollutants such as CO2. 3. Key players Petroleum industry has turned to be a great phenomenon that the number of players and their positions in the market is highly subject to change. Although in general sense, international oil companies are perceived as the main players who determine the oil prices and