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Essay on Big Oil
Essay on Big Oil
The supermajors in the petroleum industry are considered to be as the “Big Oil”, it explains their power in the industry and their share in the market. The term was coined by a businessman to describe the companies, which created a cartel to dominate the petroleum industry. The cartel had captured a huge market share; however, the growing influence of OPEC (Organization of the Petroleum Exporting Countries) the share of these companies and their beneficiaries have declined.
Challenges Faced by Big Oil
Threats have been alongside with the Big Oil but it has kept its position and played its role to boost the world economy. However, this time around they are facing their greatest challenge without a doubt. Big oil companies have developed regularly over the previous years as the demand for oil has increased worldwide. The challenges this industry is facing increased with the time too. The growth of the industry is not the same how it was predicted and it is now stagnant and even getting smaller with time. The main reason for the decline in the consumption of oil in the countries has something to with the recession. The prices are high and the efficiency in consumption is increased that reflect the reduced demand. The vehicles manufacturers are becoming fuel efficient. The major chunk of customers was in the developed countries; however, now that the alternatives are easily available the demand will continue to fall. During the course of their history, there were two competitive advantages. The fuel supplied was dominating the transportation system, and the access to crude oil was immense. Both the advantages are at risk today. Large organizations are no longer in the position to be called as the producers of crude oil. The small and middle-sized organizations are learning the business and are agiler in revising their strategies according to the demands. The commitments by the Government on the emission of carbon dioxide will be a barrier to the growth of oil. The battery technology is advancing rapidly and that eventually will impact on the demand for oil.
Response by Big Oil
If they look to still maintain their position in the industry they will have to re-think and re-do their strategy for operation. There are various opportunities that an oil manufacturer can seize. Big oil has proved itself in the past by showing the adaptive nature, the challenges created by the Standard Oil in 1911, the movement of nationalization by OPEC committee in 1970.They have massive potential for reducing the carbon dioxide by switching the production processes from coal to gas.
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