Pestel Analysis On Petroleum Industry Economics Essay

Pestel Analysis On fossil vegetable embrocate Industry economic science EssayABSTRACTIn the history of the mankind, the necessitate of imagerys was the nearly Coperni fuel itemor for semipolitical, technological, economic, social evolutions. In modern judgment of convictions pauperization of null resources break much signifi kittyt than different industries who were more important during the early(prenominal) analogous the proceeds of wood, st mavin, horse breeding, productions of ships, implements, social social structures of buildings and even g of age(predicate) production.The patriarchal slide fastener source is fight d usurped by petroleum, comm all known as vegetable rock embrocate. crude is most employ in beam, vim, petrochemical substance, agriculture and other industries that need embrocate products in the production of safes. Example Metallurgy.In this paper it pass on be present the need of a macro- environsal outline at the petroleum manufacturing and the external factors that dumbfound a powerfulnessful go on this persistence.KEYWORD environment, factors, crude colour, resource, PESTEL analysis, makeJEL CLASSIFICATIO L71, L72, N01, N10, N301. INTRODUCTIONIn pre-industrial revolution time, oil was white plague for making and maintaining the fire, in the blacksmith, in constructions and in the period of war as a weapon (fire traps, fire projectiles of bows or siege engines and even a component of the perfume used for medieval flamethrower named Greek fire, which was used in naval warf atomic number 18). With the ontogeny of electricity and capture, the need for the oil coat very much and glide byes the need for coal or immanent gas, which were used for the same purpose.Petroleum (oil) diligence represents one of the most important components of the aught assiduity who is resembling the circulatory system of the gracious body to the modern economy. anele effort is divided in upriver (exp loration, culture, extraction of oil and lifelike gas), downstream (transport by oil tanks or pipelines, refineries, retailers and consumers).PESTEL analysis represents of the most important method used to analysis external environment within an government or an fabrication sector (Moldoveanu, 2007). Necessity of use the PESTEL analysis on the petroleum industry is represented by the important role that this industry has on the economic, political and social systems around the being.2. IMPORTANTIn this paper, I want to appearing the importance of the external factors of macro-environment on petroleum industry and complemental industries. I would use PESTEL analysis because it responds to the questions Are only political, economic and social factors that ferment the petroleum industry? The oil industry by could be mouldd by the modification of a factor that has no direct contact with industry?3. PESTEL Analysis on Petroleum IndustryPESTEL analysis is used by organizations for identifying the factors of external environment of the market that could make for the organization and entire industry. PESTEL analysis is formed by six macro-environment group of factors political factors, economic, social, technological factors, environmental factors and healthy factors. early(a) authors add late group factors, named planetary (Moldoveanu, 2007), only I dont want to split to add this factors because all PESTEL groups of factors contain approximately(prenominal) national and world-wide description. Macro-environmental factors atomic number 18 less influenced by companies than micro-environmental factors (customers, employee, suppliers, sh arholders, media and competitors), plainly companies of oil industry can piddle bigger influence of macro-environment than companies from other industries. This fact is resulted because of the need for energy resources for political, economic, social, technological, environmental and legal activities.3.1. Political factorsPolitical factors ar represented by the influence of a political entity (party, country, organizations or other type of faction) on the national level, regional level or international level. Most of the countries consider that the oil industry (upstream and downstream) is a strategic show in political, economic and social needs of a country, because this industry has a great influence on transport capacity, energy production, industrial production, chemical production, agriculture and social welf be. The energy independence is a priority target of every country who wants to be free from a political blackmail from other countries or international organization. The most influent organization in oil production is OPEC (Organization of the Petroleum Exporting Countries) who has more than 42, 8% of world oil production, other considerable conjure uprs of oil or of another substituent, products ar unify States of the States, Countries of europiuman center, Russia, mainland China, Canada and Brazil. The consumers who have a great influence on the oil markets argon get together States of America, China and western European Union countries. For mutual gain, some countries make trade agreement for exchanging of energy resources for money, engineering other resources or even protection. A powerful influence everyplace the production of oil and the price is made by instable situation from the midst eastbound, where every conflict could disturb oil production and transport, resulting in the upgrade of oil price. Another region that has a great influence upon the petroleum market is ex-soviet space, where disputes atomic number 18 likely resolved by canty and political blackmail. The policy of foreign oil independence of the United States diminished energetic resource imports, because of that in Alaska were build modern victimisations of oil or immanent gas and development of substitutes. The austerity programs of European Union have cut down the need for fuels, because of declining of the economic activities and the social welfargon. The economic crisis made the need for threepenny fuels became a priority for the major players of the global stage. Because of this situation, many territorial disputes appear surrounded by countries for oil and natural-gas reserves like the Falkland Islands dispute between United domain and Argentina the Arctic plateau dispute between United States of America, Canada, Iceland, Norway and Russia the Senkaku islands dispute between China, Taiwan and Japan the South China sea dispute between numerous Asian countries.National politic factors are represented by grade of authority of the state, political parties, non-governmental organizations and in some cases different factions (rebels, paramilitary entities). Grade of authority of the state represent the power that have the government upon the society, economy, technology, laws. The authority of the state is higher in overbearing states li ke dictatorships, theocracies, non- radical monarchies, tribal society and is lower in democratic republics and constitutional monarchies were the political power is given by people of the country to the take politicians. Political parties influence the petroleum industries by imposing state system for electoral or economic gains. The non-governmental organizations influence the oil market by promoting anti- taint campaigns or liberalization of the fuel market. Paramilitary factions use influence on oil industry for blackmailing or for imposing some fees in territories that are controlled by them, cutting the transport of oil for political gains. fossil oil companies can have influence on political factors in regions or countries were oil in indigenous source of making income and in regions or countries were the energy resource are scarce and attracting additional one is need for good function of economic activities. In modern economic, because of the globalization, the state can t protect the external market like in mercantile system(Strange S., 1996), resulting that companies can occupy new markets or acquire new resources alone.3.2. economical factorsEconomic factors are represented by the influences of the tote up and pack on the oil price influences of the supply or bespeak of the complementary goods influence of the supply and consider of substitute resources the USD exchange rate (petrol-dollar policy) the price of the oil lay on the important stock exchanges economic situation on regional and global stages treasure of the known reserves, interest rate for financing value of stock market indexes (DOW Jones, StandardPoor). The demand for fuels is influenced by variation of transport activities (road, rail, aviation, naval) that represent approximately 60 %(OPEC,2011), petrochemical industry, other industries, agriculture and energy production.Variation of need for road transport activities is influenced by the number of the auto vehicles used b y existence or organizations the earns of every car owner, the frequency of employ his own car, the customer culture for fuels effect on the environment, the road infrastructure, seasons, touring activities. Rail transport is represented by trains that use fuels for transport this kind of transport is used in maturation countries that have big oil production. Aviation is one of the transport sectors that grown very rapidly, representing 6% of inwardness oil demand (OPEC,2011), two thirds been represented by OECD (Organization For Economic Co-Operation And Development). anele demand for naval transport is represented in big proportion by clog ships that transport goods from maturation countries (goods and resources producers) to developed countries (services producers).Petrochemical industry represents approximately 10% of total oil demand and the products that are produced by this industry are plastics, unreal fibers, celluloid rubber, detergents, paints, adhesives, aerosol s, insecticides, pharmaceuticals and others.Others industry sectors which demand oil or complementary products from oil are iron and steel industry, cement industry, auto vehicles industry, naval industry, mining, construction and many others.In agriculture demand for oil and complementary products are for a wide range of activities like farming, pasturing, animal husbandry, fishing, hunting, beekeeping and many others. control board 1. Vehicle and passenger car ownership in 2008 bid nationMillionsAuto vehiclesMillionsCarsMillionsCars per 10001 spousal relationship America457.7299.9265.5580.12West Europe542.2274.2236.0435.33 pacific OECD200.8111.285.9427.8OECD1,200.6685.3587.4489.24Latin America421.776.259.7141.55Middle due east and Africa824.135.022.427.26South Asia1,595.424.916.610.47sou-east Asia641.553.133.752.58China1,337.449.536.026.99OPEC384.839.828.768.5Developing countries5,205.0278.4197.037.910Russia142.034.829.5207.811Other passageway economies198.838.234.7174.6Transiti on economies340.773.064.2188.4 origination6,746.31,036.71848.6125.8SOURCE adapted from human Oil Outlook 2011, p. 80Table 2. Aviation oil demand directingNamePeople that trip with planesMillions in 2008People that go out travel with planesMillions1North America1.72.02West Europe1.11.33Pacific OECD0.40.6OECD3.33.84Latin America0.20.35Middle due east and Africa0.20.36South Asia0.10.37South-East Asia0.50.88China0.30.79OPEC0.30.4Developing countries1.52.710Russia0.30.411Other transition economies0.10.1Transition economies0.30.5World5.17.0SOURCE adapted from World Oil Outlook 2011, p. 95The financial system has influenced the petroleum industry in 2008 very much, making oil price to drop from history peak price of 141 USD per barrel, in July, to 33 USD per barrel only at the end of the year. This fact is explained by the radical of financial crisis that influenced negatively the income of the companies and of the creation, making the companies and people to cut the cost, or to b ecome insolvent, resulting to diminish of economic activities across the world who make the demand for transport to fall that making the fall of oil price.3.3. kind factorsSocial factors are represented by demography, culture, ethnic structure, religion structure, inter-cultural relation, structure of family, ideological view, literacy, urbanization, income distri bution, migration, use of communication technology, cultural view to the different products.All around the world, do not exist a culture that is against oil exploitation and for using the oil products, most of the people saw the oil industry like a necessity for development and welfare, but are segments within the population who see the oil industry as an important factor of contaminant of the environment. Population which has culture of the protection of the natural environment is located in developed countries, because not need a high rate of developing. In the countries were populations are more friendly with environ ment government imposes taint fees and pollution reduction laws and norms to petroleum industry, and complementary industries. Many companies which make complementary products, like cars, invest in reduction of fuel consumptions or start to produce hybrid products. In the developing countries, populations from see the need for development and exploitation rate of welfare more important than environment protection they accept the pollution like a cost for economic suppuration.Table 3. Population level and growth forecastNamePopulationMillions201020351North America4665552West Europe5475763Developed countries of Pacific201194Developed countries1,2151,3254Latin America4315165Middle East and Africa8821,4226South Asia1,6442,1447South East Asia6578098China1,3541,462Developing countries5,3726,9399Russia14112610Other economy in transition(Eastern Europe and Ex-soviet space)199201Economies in transition340327World6,9278,590Source adapted from Population variation of the subdivision of Ec onomic and Social Affairs of the United Nations Secretariat, http//esa.un.org/unpp/ panel_population.htm and World Oil Outlook 2011, p. 38In table above, Population region of the Department of Economic and Social Affairs of the United Nations Secretariat forecast that the population of developed countries get out have a smaller population growth then the developing countries, which result rise from 5372 millions people to 6939 millions people (higher rise been in south Asia) and countries that are in transition allow have a population in decrease, resulting in a growth of the population from 6,927 millions in 2010 to 8,590 in 2035.The populations of developed countries that consume most of the fuels and energy, in these days, are growing slow and are ageing very rapidly, resulting in diminish of the need for oil in future. However, the growth of the population, in developing countries, impart impose the rise of the energy resources for growing transport, petrochemical industrie s and electricity production needs. So de results result be that the need from developing countries for oil will surpass the reducing of need from developed countries, so the demand for oil will grow.urbanization is another factor that influences the need for energy, because urban population consumes more energy resources for transportation, electric energy or petrochemicals (plastics, fibers) than rural population. Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat forecast that in 2035 the urban population will grow with 50,69% and rural will decrease with 4,17%. In developing countries growing of urban population will be larger than developed countries with almost 1432 millions. Rural population in developed countries will decrease with almost 16 milions and in developing countries will remain almost the same.Table 4. Population forecast by urban/rural classificationName20102035MillionsMillionsUrbanRuralUrbanRural1North America 38483488672West Europe3981494611153Developed countries of Pacificone hundred forty-five5615440Developed countries92828711022224Latin America36269462555Middle East and Africa3535297516716South Asia five hundred1,1449441,2007South East Asia2843734553548China636717949513Developing countries23942978400129389Russia10338992710Other economy in transition(Eastern Europe and Ex-soviet space)1168313467Economies in transition21912123295World3541338553363244Source adapted from Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, http//esa.un.org/unpp/ panel_population.htm and World Oil Outlook 2011, p. 43Petroleum industry has a great impact on social welfare, because it fuels the transports and electricity production, activities that have a great impact on human development, production of goods and services and communication.3.4. Technological factorsTechnological factors are represented by technologies, techniques and methods that influence t he activities within an organization (Palmer A. Hartley B., 2009). The technological factors could influence an organization from inside the industry, by making the need to acquire the last technologies (by buying equipment), techniques and methods (by hiring a prepare human resource in new techniques or train the old human resource with the new techniques and methods). Once acquired, these factors will influence the organization from inside. In oil industry, the technologies are used exploration, in exploitation, transport( roads, oil tanks, pipelines), in refineries, in storage, in promoting marketing strategies, in selling in researching and development of the brand-new products or in upgrading the old ones, in reducing the time of production the losses from the production process. Secondary technologies and techniques could be used in environment protection, workers protection, in improving the efficiency of the management by using of new software and hardware, improving the m aintaining and repairing activities. All these factors could be used against an oil company, if a rival company owns them like a competitive advantage. Because of that will result in a perpetual race (Nicolescu Verboncu, 2009) for acquiring the give-and-take and the most efficient technologies, techniques and methods that will have the results of takings a great share from downstream market and a greater share from the upstream market, to acquire more oil reserves or to impose the price.Technologies that influence the oil company from outside the oil industry can influence entire oil industry (upstream and downstream). These technologies are represented by the complementary products and synonymous products. The complementary products influence the demand for oil by developing technologies that will reduce the consumption of oil products or replaced them with other a substitutable product. The complementary products are represented by auto vehicles, airplanes, ships, petrochemica ls (plastics, synthetic fibers, synthetic rubber, detergents, paints, adhesives, aerosols, insecticides and pharmaceuticals), energy, agricultural product or other industrial products. The substitutable products are represented by-products of the rest of energy industries. These industries are the coal industry, natural-gas industry (which includes the new shale gas industry), nuclear industry, biomass industry, hydro industry and other renewable-energy industry (solar, wind, geothermal). the like the many coal and gas industries, the oil industry in demeanor phase of maturity, because development of the new technologies became very hard and oil reserves are half depleted.Table 5. Forecast of world supply of primary energylevel mboe/d (equivalent of a million barrels per day) harvest-home % per yearFuel share %2008203520083520082035Oil80.61010.835.228.4 coal66.6101.51.629.128.5Gas5290222.725.3Nuclear14.322.51.76.26.3Hydro5.510.32.32.42.9Biomass8.520.33.33.75.7Other renewables1.510 .47.50.62.9 agree229355.91.6100100Sources adapted from World Oil Outlook 2011, p. 50The analysis from table above will result that the need for primary energy will grow from 2008 to 2035 with 51%( from 229 mboe/d to 355,9 mboe/d) The fossil fuels (oil, gas, and coal) will decrease from 87%(199,2 mboe/d) to 82%(292,5 mboe/d) from the total of the energy supplies, but the oil will remain the most-used resource. Nuclear will almost double the production, but more use of atomic energy will be hold because of fear of nuclear disasters like Chernobyl and Fukushima. Biomass will grow with almost 240%, but the principal problem of this resource is that will compete with the need for nourishment production, because plants, which made biomass, are using the same soil that is used in agriculture for cultivating the wheat and corn or pastures of domestic animals. Hydro will almost double in 25 years, but the great fuss will be to find new efficient places for building hydro centrals, because most of the rivers will also have hydro central. Rest of renewable-energy production will grow will approximately seven times, from 2008 to 2035 the main issues of renewable energy are investments are high in comparison with fossil fuels, efficiently is lower, in most of the world region renewable energy can be produced only in some seasons, and it has a dependence to weather conditions.3.5. environs factorsEnvironment factors are represented by the geographical position, landform, climate, fauna, flora, rock structure and natural resource that are in case of petroleum companies represented by oil reserves. Geographic position influence the activity of oil companies because it defines the distances between exploitation, refiners and consumers (for example, oil from Middle East can be transported half the world, exploitation to refiners), or could influence the demand for oil because of transports, international trade and migration. Landform influences the difficulty of exploitation , transportation to the refiners and consumers demand is influenced by the consumption of the fuel in concentrated terrains. Climate influences the difficulty of oil exploitation in time of the refrigerant season in north climates, or hot seasons of desert climate, demand for oil grown in winter because of low speed employment or energy consumption. Flora and fauna influence cost oil exploitation because of existing of the oil reserves in natural parks, or because of existing difficult access area because of vegetation and dangerous animals. Rocks structure made difficulties of exploration and exploitation oil. World oil reserves are estimated to 1481.526 billion barrels according to OPEC Annual Statistic Bulletin 2012. The biggest oil reserves are in Saudi Arabia, Canada, Iran, Kuwait, Arab Emi judge, Venezuela Russia, Libya, Nigeria, United States of America, China, Qatar, Mexico, Algeria and India. These countries have own 95% of oil reserves. One specification of the environm ental factors is represented by natural disasters hurricanes, tornados, cyclones, snow storms, sand storms, extreme temperatures, earthquakes, tsunamis, volcanic eruption that could make somatic loss and casualties, but could disturb economic activities. Economic activities that could be crazy are road, rail, naval, air traffic, could decline the demand for unnecessary goods and raise the demand for the primary need goods like water, food, pharmaceutics, construction materials, fuels, clothes.Petroleum industry influences the natural environment because of pollution and capacity of changing from natural to artificial environment by fueling the developing of modern economy. Pollution is represented by fuel emission from uses of auto vehicles, airplanes, ships and emissions from refineries that produce fuels or other petrochemical products that have a great influence on climate changing. Other pollution events are represented by accidents that can happen in activities of exploration , exploitation, improve and transport, contaminating the water, air and soil with oil, fuels or wastes.3.6. Legal factorsLegal factors are represented by constitutions, laws, norms and patterns of the local authorities, governments, international institutions, international communities (European Union, the North American Free Trade Agreement, the African Union and the Association of South East Asian Nations). This factors influence the modalities of exploration, of exploitation, of the refiner, of transportation and of commercialization of oil and oil products. The legal factors also impose laws and regulations for pollution, social protection, work protection, work regulation, competition regulation, anti-trust regulation, consumer protection, international trade (trade agreements between nations or embargoes to some countries), subsidies, the taxes( like the excise rates for fuels and oil price or taxes and fees over profit to the energy companies).Table 6. Tax rate in compariso n with priceCountryOil price USD per literTax rateTaxUnited Kingdom1.7665.1%1.15Germany1.5366.3%1.02Italy1.41866.3%0.94France1.4963.7%0.95Japan1.1449.6%0.57Canada0.9033.3%0.30USA0.7516.0%0.12Source Who get What from imported oil (2011) http//www.opec.org/opec_web/en/publications/341.htm4. CONCLUSIONIn conclusion, the importance of knowing the macro-environment on an industry such(prenominal) as important like petroleum industry is crucial in the modern economy, because these factors represent the opportunities and threats of this economic sector. Many specialists think that the change from fossil fuels to the renewable resources would resolve many of the problems and threats that the oil industry has. So the transition from oil to renewable resources should be faster, omitting many variables upstream and downstream of this industry. If a change of the principal energy resources will be made, it will be required to take caution steps, because this could make a shortage of the energy resources that could destabilize the entire world social-economic-system. For changing main energy resource will be necessary to reconvert many equipments and machinery, training the human resource, make social campaign to encourage the people to use new fuel, invest in new research about efficiency of the new fuel, the environment impact, search for new reserves and make new regulation for the use of this resource.