Relationship between gasoline price and crude oil demand Crude oil is a naturally occurring liquid which mainly contains hydrogen and carbon. Crude oil is the major component in the production of fuel for cars, trucks, trains, boats, and airplanes. In addition, crude oil is also used for wide varieties of other purposes. The fractional distillation of gasoline produces an output known as gasoline. Gasoline is mainly used as fuel in internal combustion engines. Gasoline is traded in regional market; whereas, crude oil is the part of global market. Generally, the price of a commodity increases as demand increases (there are some exceptions to this rule) (Oxford). Since crude oil is a non-renewable energy source, its demand will not fall regardless of its price variation. Hence, when the demand for crude oil increases, its price also increases. Crude oil prices have a direct impact on the gasoline prices as crude is the major raw material used in the production of gasoline and other petroleum products. “Crude oil accounts for 55% of the price of gasoline while distribution and taxes influence the remaining 45 %” (Mazeel, 2010, pp.106-107). To illustrate, one barrel of crude oil contains 42 gallons of oil. If the price for one barrel of crude oil is $75, raw material worth $1.78 is required to produce a gallon of gasoline. This figure does not include transportation and other process charges. In total, when the global demand for crude oil increases, there will be a proportional increase in the retail price of gasoline also. How to keep the price at the pump the same? When the global crude oil production is decreased by 10%, the crude oil supply might fall and this situation would probably result in a rise in crude oil price. Under such circumstances, domestic oil retailers may be forced to raise their prices in order to avoid loss. If Marathon adopts effective business strategies, the company may keep the price at the pump the same without losing profits even in times of a decline in global crude oil production. In order to achieve this goal, the Marathon has to acquire materials at reduced rate by researching different markets because a decrease in cost of production is the most effective method to retain the same prices. In the view of Cox and Brittain (2006) it is advisable for the company to make bulk purchases as this system offers the benefits of cash discounts (p.159). This additionally earned money by way of cash discount may assist the company to keep the oil prices at the pump the same. It is obvious that the bulk purchase increases the inventory for supply; this increased stock may benefit the company to retain prices in the situation of a further reduction in global crude oil production. The Marathon may also connect with other oil corporations to purchase comparable products that provide quantity breaks. It is advisable for the Marathon management to analyze the company’s monthly expenses with previous quarters; this practice would largely assist the company to reduce its operating expenses by averting unnecessary costs such as luxury corporate offices. Finally, the top management may insist the departmental leaders to review their budgeted revenues and expenses and reduce their account payables. These strategies may be helpful for the Marathon Petroleum Corporation to maintain their oil prices stable at the pump. Deepwater drilling and gas
Production and Operations Management Marathon Petroleum Corporation: Case Study Production and Operations Management Marathon Petroleum Corporation: Case Study Introduction Marathon Petroleum Corporation (MPC) is the fifth largest US refiner which engages in extensive marketing and transporting operations, and is based in Findlay, Ohio…
Essentials in operations management: 8 3.1 Capacity planning 9 3.2 Quality 10 3.3 Inventory management 12 3.4 Supply chain management (SCM): 13 3.5 Performance management and HRM 14 4. Strategic implications for the business 15 4.1 Implications for competitiveness 16 4.2 Impact on sustainability of each organisation 17 4.3 Impact on Innovation of each organisation 17 5.
Marathon’s upstream activities can be classified into three categories; exploration and production, oil sands mining and integrated natural gas. The company is located in US, Canada, Angola, Equatorial Guinea, Indonesia, Libya and North Sea. It supplies hydrocarbons and natural gas to world’s developing energy markets.
This report will discuss different concepts that are used by project managers to make sure that the project is completed on time within the given resources and cost. Different methods and techniques will be discussed and applied on McDonald’s. Techniques that will be discussed include linear programming, network analysis and critical path analysis.
Those individuals who are involved in these crimes are not the ones who are poor and aim at getting wealth, these people include those who already have a higher status in the society, and they use their power and authority to ensure that their crimes are never publicized, and they are not penalized for committing such crimes.
Within the parking services, the business will provide the customers with parking and storing facilities by imposing the certain amount of fees. ABC Corp will provide customers with three fundamental services that encompass external car washing, internal cleaning, and detailing.
Within operations management there are different domains and aspects which should be managed in effective and efficient manner by the organization, like supply chain management, production management, forecasting, logistics management, and many other. In this paper an attempt has been made to understand the impact of the production management, forecasting activities, and quality management within production and supply management on the successful operations of the organizations.
This assignment gives the reader answers to common questions on production and operations managment of the corporation, such as analyzing Marathon’s product process, relationship between the retail price of gasoline and the world demand for crude oil and how to keep the price at the pump the same without losing profits.
This paper will mainly explore the process of converting crude oil to consumer fuels, such as gasoline for transportation.
Crude oil is a naturally occurring liquid which mainly contains hydrogen and carbon. Crude oil is the major
Additionally, there are some other activities that are related to operations management such as managing purchases, quality control, logistics, storage, inventory control and evaluation processes (Slack, 2012, p.23). In the
Therefore, the main operational concepts that will be discussed relevant to the case study include:
It will also include the above mentioned concepts to be applied on Al-Jouf International School after their concepts overview. The case study will further suggest possible
24 pages (6000 words)Assignment
Get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Apply my DISCOUNT
Got a tricky question? Receive an answer from students like you!Try us!
Didn't find an essay?
Contact us via Live Chat, call us at +16312120006or send an email to email@example.com