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Production and Operations Management - Assignment Example

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Author : gleasonterence

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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…

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Production and Operations Management

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. ...
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