Ce diaporama a bien été signalé.
Oil and petroleum industries are one of the largest
sector in the world and contributes greatly to boost
the economy of a country, creating lot of
employment opportunities. The industry is divided
into 3 major components:
Upstream - It is concerned mainly with
exploration and production sector.
Midstream – It is concerned with
transportation and storage.
Downstream – It involves refining, processing
The annual consumption of oil worldwide is 30
Billion Barrels. This accounts for the world’s largest
industry in terms of dollar value. Over 80% of the
world’s oil reserves are controlled by national oil
companies. Petroleum industry is the backbone for
the economical development of a country.
2. Trend in sales by the major companies in
United Kingdom and structure of the United
Kingdom Petrol Sector:
The 4 major dominating petrol companies in UK are:
2.Exxon Mobil (Esso)
British Petroleum: It enjoys 16% of the UK’s market
share of fuel.
Essoaccounts 12% of the UK’s oil and gas
Shell accounts for 16.5% of the market share.
Tesco accounts 15% of the market share.
1. What is OPEC?
The Organization of the Petroleum Exporting Countries is a
organization which is permanent and intergovernmental created
at the Baghdad Conference on September 10-14, 1960 by Iran,
Iraq, Kuwait, Saudi Arabia and Venezuela. The five founding
members were later joined by nine other members who are Qatar
(1961), Indonesia (1962), Libya (1962), United Arab Emirates
(1967), Algeria (1969); Nigeria (1971), Ecuador (1973). Its
headquarters were located in Geneva, Switzerland for the first 5
years and was moved to Vienna, Austria on September 1, 1965.
OPEC’s objectives are to co-ordinate and unify the petroleum
policies among Member countries.
2. Why is OPECoften referred as Cartel?
A cartel is a group of firms who collude together for the purpose of
avoiding a competition in the market in order to create economic
profit for themselves. According to the formation of OPEC, world
petroleum market has been differentiated by co-operative
arrangements among all the producers, starting from the cartel of
major international oil companies to the oil producers in the
United States. The Red- Line Agreement in 1914 is establishing the
international corporate cartel specified “All middle eastern
reserves would be controlled by the Turkish Petroleum Company
which was wholly owned by BP, Royal Dutch Shell and the French
Compagnie Française des Pétroles.” The Agreement divided the
sale of oil in world markets between what is now BP, Shell and
Exxon. Also, other oil companies were worked into the agreement
through the 1930s and the major MOCs dominated the industry
for a period that can be said to span from 1914 to about 1955. The
second cartel type arrangement was created and maintained from
1935 to 1970 by several state governments in the US which
adopted the market demand pro rationing system with the object
of limiting production.
Finally, as previously mentioned, OPEC was established in 1960 by
five leading exporters after a series of disagreements with the
MOCs over the issue of the price of oil and revenue accruing to the
owners of the resources.
From the foregoing, it may be deduced that cartels have featured
quite strongly throughout the history of the oil industry and the
practise of limiting output is in no way peculiar to OPEC.
U.K Pound Sterling againstother currencies:-
The chart below shows the average exchange rate of U.K pound
sterling against various currencies from 2007 to 2013 :-
Year U.S.D EURO YEN INR KWD
2007 2.00 1.46 236 78.17 0.54
2008 1.85 1.26 192 71 0.40
2009 1.57 1.12 146 75 0.46
2010 1.55 1.20 133 69 0.43
2011 1.55 1.19 120 82 0.43
2012 1.62 1.23 140 89 0.45
2013 1.65 1.20 174 102.52 0.46
Table 1. shows the fluctuating exchange rate of GBP against
different currencies as there is change in the demand and supply of
the sterling during these years. Excess supply of sterling have led to
the depreciation whereas excess demand of sterling has led to the
appreciation in the value of sterling.
Thus the chart above depicts the exchange rate of sterling being
Table 1. G.B.P against various currencies.
determined by the demand and supply of pounds.
The Future of PetroleumCompanies in UK:
Most of the people seem to agree that if the world has not reached
peak petroleum production, then it will do so within the next 20 years.
It is also said that peak oil does not mean that petroleum reserves have
run out but that the maximum rate of extraction of petroleum has been
reached and the methods of extraction cannot increase the rate
The total rate of petroleum output will decrease significantly and
create a question in the minds of many people whether we will have
enough fossil fuels for the remaining future. Many efforts have
already been made to control the consumption of petroleum. It is
already said that the easily extractable crude oil continue to decrease
and demand continues to increase all over the world.
Outline the 2012 Office of Fair Trading (OFT)
investigation into the UK petrol market. To
what extent do you agree with the OFT’s overall
On 28th March 2012, the Office of Fair Trading published a
consultation for revised draft on investigation into the
competition cases, which was published on 2nd March 2011.
This guidance clearly sets out the steps that is followed by OFT
during the Competition Act 1998 investigations from opening the
cases to the final resolution and results.
The main purpose of OFT’s proposal to introduce is to consult and
bring in new structure for the way the OFT makes decisions in
investigations under the Competition Act 1998. It has also planned
and announced its enhancements in making to its Competition Act
1998 investigation processes. This mainly includes the publication
of case opening notices, timetables and new arrangements for
internal checks and balances. The enhancements set out in this
documents are aimed to increase the speed of investigations and
improving the OFT’s decision making process. The guidance is
limited to the OFT’s investigations and does not increase to the
investigations by sectoral regulators.
The Office of Fair Trading investigated and said that it would take
a look at whether or not decrease in the cost of crude oil are
meant to be passed on to drivers at the pumps, who all are paying
near-record prices. It will look to consider if supermarkets and
most of the petrol retailers are keeping individuals and
independents out of the market and OFT will widely spread claims
and news that prices are higher at forecourts in rural areas where
is competition is even more.
Its review came after the increase of 38% in the price of petrol for
motorists between June 2007 and June this year. There was also
increase in the diesel costs over the same five-year period. Petrol
reached a record high of 142.5p a litre in April after the
threatening strikes by the tanker drivers led to panic and buying
was made worse by the political ministers saying that motorists
should hoard fuel in jerry cans. The OFT said it would try to spend
six weeks to find the evidence from the consumer groups before
publishing a report in the New Year. It is also important for
consumers to know that only one third of the pump price reflects
the wholesale price of fuel and of every £1 motorists spend on
fuel, more than 60p is just the tax (Beckford 2012).
We should agree with the OPT’s decision and conclusion as their
main target is to stabilise the prices of petroleum. It also creates a
impression for them and trust in people’s mind. The Office of Fair
Trading is also supported by government but serves as different
organization. It will also bring equal rights to the people of United
Kingdom and affordable to most of them. It is also called as
economic regulator in United Kingdom. It main goal is also to
make the markets work well for consumers and ensure fair
competition between the companies. It also helps in studying
markets and taking action wherever possible. It shows consumers
the knowledge and skills to make wise choices and get the best
value in the markets.
List of References:
Beckford, M. (2012) ‘Office of Fair Trading investigates UK's
£32bn petrol industry’. The Telegraph [online] 5 September.
industry.html> [5 September 2012]