Petroleum Industry

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Last updated 5 years ago

Energy & Environment

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Petroleum Industry

Number of firms in Singapore's petroleum industry- Shell- Exxon-Mobile- Caltex Singapore- Singapore Petroleum Company

Petroleum Industry - Petrol retailers in Singapore

FYI: World Petroleum Industry-There are less than 190 companies in the world petroleum industry.- More than 84 million barrels of oil are produced per day.

What is Petroleum Industry?A supply chain of fossil fuels for industrial and household consumption.

Factors that affect price of petroleum- Price of crude oil (factor input) e.g. Relation between price of gasoline and crude oil.(refer to the graph on top)- Government interventions Policies implemented by the government : -> The emission trading scheme / Kyoto protocol Tax:-> USA_ 1950, tax on a gallon is 1.5% of the price. Now 2011, tax on a gallon is 20% of the price - Change in trends in global economy Inflation: -> In 1950, gas cost $0.30 per gallon. Now, it costs $2.79 per gallon, that is assuming that taxes, supply and demand , and inflation rates all stay the same. - OthersInstability of the society-> Wars in the countries that have natural resources. (Enjoy the video below!!!) (The vedio may not be played if your Adobe Flash cannot work properly, the link to Youtube is below it)


Reasons for providing similar goods and services The process of converting crude oil to petroleum (fractional distillation) produces other types of oil products at the same time. By selling most of the distillates (goods in joint supply), companies are actually using the resources more efficiently and thus earn more profits.

Why is it difficult for new companies to enter the industry?Petroleum industry is an oligopoly.- Characteristics of the industry -> There are few large dominant firms. -> Products are homogeneous. -> There are difficult barriers to entry. - Shortage of land and lack of natural resources.- Rival firms lower prices to eliminate new firms with lower economic power that are selling petroleum.

Goods and services provided - Petrol - Diesel - Natural gas - Lubricating oil

Strategies to attract customers- Collaborate with banks to provide discounts off petroleum with credit cards- Provide gifts (e.g. vouchers, free services etc.) to the customers after purchasing petroleum- Point system to improve the loyalty of customers.

ConclusionPetroleum industry has following advantages and disadvantages:- Advantages: ->Being dynamically efficient in terms of innovation and new product and process development. -> Price stability may bring advantages to consumers and the macro-economy because it helps consumers plan ahead and stabilises their expenditure, which may help stabilise the trade cycle.- Disadvantages: ->Limited number of firms reduces consumer's choice. -> Cartel-like behaviour reduces competition and can lead to higher prices and reduced output. -> New firms can be prevented from entering a market because of deliberate barriers to entry. -> Potential loss of economic welfare. -> May be allocatively and productively inefficient.

4F Valerie Ng(11), Pan Ya Ting(12), Tu Anqi(17), Sean Chan Hin(20), Peng Bohan(32)


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