Question

Reflect on global business and trade, in the context of oil and gas industry. Consider these questions:

1.) How much does oil and gas  industry rely on global markets for its success?

2.) What are the advantages and disadvantages for oil and gas industry to be a part the global business environment?

You have a 600 word limit. Please include your rationale. Also APA citation.

Answer 1

Oil and gas industry relies a great deal on the global markets as global markets serve their customer base. The size of oil which it excavates is much more to meet the domestic demand, which leads to huge gains in the long run for such economies whose oil revenues make up most of their budgets. Just by looking at the case of Saudi Arabia and UAE, the oil which they consume locally is not even half of what they export globally to all the world economies. Without global demand, countries such as Iran and Iraq are expected to plunge and experience severe fiscal deficits as because of increased global supply and the slowdown in global demand the oil prices have plummeted. Thus to sum up, if there is no global demand, then oil prices plunge, the oil and gas industry incurs losses and production cuts, this is how severe its reliance is on the global market.

Advantages are that it has the global market access as everyone needs oil, so even if one producer reduces the production, the oil prices will rise which will lead to increase in the revenue base of several countries all over the globe. With increased organisational talks they are able to influence the supply of oil in the market which makes all countries gain in the global market.

Disadvantages are that there are several global countries participating in the supply chain, wherein even if one country doesn't agree with the guidelines, the prices plunge as global supply increases, this leads to losses in operational efficiencies and as several countries rely on oil revenues whole and sole, this leads to severe losses in global companies balance sheet. The increasing reliance on electronic cars has led to deterioration in the oil and gas industry as increased climate change awareness and renewable energy dependence has led to severe impact on the oil and gas industry.

Source: Bloomberg, Wall street