Global Trends in Oil & Gas Markets

Question: Discuss about development in oil and gas retail industries? Answer: Introduction Oil and Gas retail industry is considered analogous to the circulatory system of the human body. Both of these elements represent a most crucial part of the energy sector as well as the backbone of the countrys economy. The oil and gas industry in the UK is a mature one and the country remains a self-sufficient one in oil and gas. Being a crucial sector in the country, it has greatly succeeded in fulfilling the energy needs of the country (Energy Digital, 2012). Both the economic and social factors prevailing in the country, separately has an influential impact on the Oil and Gas Retail Industries. Talking about the scenario of the developing countries, a small mistake committed by these industries can cost them and the whole country, a very huge amount. This mistake could occur when the industry drives its entire focus solely on reducing the costs and spending. When such a strategy is applied in a wide range of market conditions, they prove to be rarely effective enough to make the current business successful over a long-term. The following sections are precisely written to analyze the factors affecting the present status of this sector and how the rising price of oil in global and local markets affects the progress of this industry. Another important discussion to be made here is of the substantial impact of developments in the technology sector of the UK on the growth rate of the energy retailing industry of the country (Doshi Corrigan, 2015). The factors prevailing in the country, has no notable impact, when considered separately. Rather, all these factors work in coalition to evaluate the true powers of this emerging sector, in situations of economic and other related turmoil. Factors affecting the Energy Retailing Industry The factors affecting the energy retail industry are in a great number. This sector being the strongest, among all the other sectors in the UK, is directly and indirectly affected by a number of external and internal factors. For instance, national and global economic conditions have always been an influential factor that can easily change the growth patterns of the industry. The changing patterns in these economies have a potential to heighten the operational risks in this sector, which could be tackled only by adopting transforming measures that can minimize the adverse outcomes of these risks. The industry has never worked only for its own benefit, but has taken numerous steps to uplift the transport capacity, industrial and chemical production, agriculture sector, etc. The political parties, owning and ruling the continent, have a great influence on all the activities related to these sectors. It is the political parties only which decide that with whom the parent country will es tablish a strong export-import business and with whom there will be no trading activities. National political factors are represented majorly by the grade of authority of the state, political parties and NGOs (Energydigital Team, 2011). This grade of authority of the state represents the power of the government over the society, economy, technology and law. As the majority of the political powers in the UK tend to work in the favor of the energy retailing sector, yet, excessive involvement may lead to development of aversion among the members of the industry against the ones in the rule and even can cease the growth rate of the sector. The financial crisis, the country has faced and is likely to face in future, has a capability to have a negative impact on the companies associated with this sector and the entire population of the country (Ogj Team, 2016). This crisis could force the companies and people to cut on their costs or to become insolvent. The direct impact of this could be seen as the reduction in the economic activities across the world which would eventually make the demand for transport to fall. Talking about the social factors, the population of the UK, like all the other people in the world, has never been against the use of the Oil, the Gas and its related products. The entire population considers developments in the energy retailing sector as the necessity for the growth and development of the society as a whole. But, the UK, being one of the highest ranked developed countries, cannot consider the growing rate of this sector more important than the environment protection and hence imposes a number of rules and norms on these industries in order to depict the eco-friendly relation of its population. These norms may be either in the form of the imposition of a pollution fee or in the form of a pollution reduction law. The population of the developed nations, like the UK, has a tendency to exploit any of the available resources to the fullest, wh ich results in diminishing of the energy or other related resources for the future generation (ECON, 2007). Most of the areas in the country are occupied by the urban inhabitants and hence, Urbanization is yet another factor that has a powerful influence on the energy retailing sector. This is majorly due to an obvious reason that the urban population has a great tendency of consuming more energy resources for transportation or electrical supply than the rural population. Rising Crude Oil Prices and its impact on Energy Retailing Sector Every time the crude oil prices rise, it carries a potential with itself to shake the grounds of the economists and of the financial market analysts. Similarly, a substantial impact is observed in the energy retailing sector as this sector is closely aligned with the economic ups and downs of the crude oil segment of the energy sector. Crude oil has always been a great influencing factor in the gasoline prices. A rise in oil prices has a tendency to increase the countrys currency and hence pave numerous chances to be dragging on exporters. In a broader perspective, the foremost and biggest negative impact of rise in the crude oil prices is on the trade and fiscal deficit scenario, as the maximum of the consumption of crude is met through imports. A negative impact will be observed on the oil and gas based industries. Other potential beneficiaries are automobile industry, transportation sector petrochemicals, etc. As the UK possesses maximum of its population in the form of urban crow ds, hence, a hike in the oil prices will not draw the population away from the energy retailing sector as they heavily rely on the products and services provided by this sector (John Fish, 2012). Future Impacts of Technological Change on the Energy Retailing Sector Technology has always been a crucial factor in the growth and development of any big or small economic sector of a country. Talking about the oil and gas retail sector, then technology here is responsible for having a great influence from inside the industry. This could be possible by creating an urge for the sector to acquire the latest technologies and techniques. Before discussing the potential benefits of technology on the energy retailing sector, there should be a discussion on, why theres a need of technological reformations in the energy retail sector and whether the sector can flourish in the absence of such reforms (LUKOIL team, 2013). By looking over the current status of this sector in the UK and simultaneously comparing it with the energy retail sectors of the developed countries, it is quite clear that the UK needs to adopt the latest trending technological reformations to keep a pace with the other global leaders. The trends, if well understood and implemented, carry a potentiality to transform all the drawbacks of the energy retailing sector into a number of boons for the countrys economy. The technological reformations could have a beneficiary impact on the exploration and exploitation process, in the transportation, storage and refineries department, in introduction of enhanced marketing strategies, in developing new products and services and in reducing the production-time accompanied with the reduction in the loss occurring during the product formation process (Bennett, Coleman Co. Ltd. , 2014). With the development of new softwares and hardwares, the energy retailing sector could enhance the efficiency of its managers and their subordinates by minimizing maximum of the manual work and replacing it with the latest tools and machineries. This could be further helpful in driving the skilled human resources to some other segments of the sector, which could either be marketing or could be sales. The technological reformations could also aid the energy sector in the expansion of its production units and developing a close contact within them for a good coordination. The rate, at which the technology is evolving at present, shows that there will be a time when the reformations made in this sector will lead to the formation of certain kinds of complimentary or substitutable products for the energy retailing sector. The concept of complementary and substitutable products is prevalent in the present era too, but the people have not readily accepted this concept till now. The complementary products have a capability to influence the demands for gas and oil by introducing technologies that will reduce the consumption of these energy resources or replace them with other potential substitutable products. The substitutable products that could accelerate the growth of the energy retailing sector, mainly includes the by-products of the rest of the energy industry like the coal industry, the natural-gas industry, the nuclear and biomas s industry, the hydro and other renewable energy related industry. Any sort of advances, whether big or small, promises a great solution to some of the biggest problems in the oil and gas retailing sector in the UK (The Canadian Press , 2014). A new advancement being made in the technology field is the development and implementation of brand new seismic radar software that could help the producers identify the energy resource rich spots in the earth. The maximum is the production, the maximum would be the availability of these energy resources in the energy retailing sector (Reynolds, 2005). The hydraulic pulsing accompanied with the reduction in the water use with water-free fracturing technologies could also aid in stimulating the oil and gas flow easily and smoothly. According to the leading researchers, the effects of the all these technological advances will eventually get magnifies because at present the producers are adopting advanced analytical tools to gain insights from th e available data and apply it in the most effective form to gain the best possible lucrative outcomes. The next decade promises the incorporation of products made out of nano-engineering techniques in the oil and gas industry. The nano-tech particles have the potential to increase the strength and weight ratio of pipelines, making them more durable. Conclusion The energy retailing sector in the UK is affected by a number of factors and it has become equally important to keep a fine balance among all these factors. The UK, being a developed nation, has constantly made an effort to evaluate these factors and their potential influence on the energy retailing sector of the company (Power Line Services, Inc, 2014). This has been considered crucial as the evaluation of these factors unveils all the possible opportunities and threats to the energy retailing sector. As the competition across the globe is continuously growing, hence, the country also needs to identify all the possible technological reformations that it could adopt in the coming decade to keep it running in the race. The race, that eventually promises to attain the growth and prosperity in all the sectors of the country and simultaneously aids in developing a livable place for all its countrymen. Bibliography Bennett, Coleman Co. Ltd. , 2014. Fall in crude prices and its impact on various sectors. Fall in crude prices, 15 October. Doshi, V. Corrigan, J., 2015. 2015 Oil and Gas Trends. [Online] Available at: https://www.strategyand.pwc.com/perspectives/2015-oil-gas-trends ECON, D., 2007. 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