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Name: Instructor: Task: Date: The oil industry The oil industry is not a modern development. It traces back its history to ancient ages. The only problem that has necessitated changes pertains to refinery and exploitation of oil. The modern oil industry emanated from an invention by Colonel Edwin drake.
The first companies progressed to attain revenues that offset their high costs. In this sense, they became monopolies. The main reason of monopoly pertained to the fact that it was becoming difficult to attain the minimum efficient scale. The established companies were experiencing economies of scale. However, this trend stalled on the formation of unions such as oligopoly. The OPEC was composed of Middle East Asia countries and Venezuela. They emerged to form a substantial influence in the market. In spite of the fact oil was a unique product, it could be refined to several products. These products helped create companies such as shell and BP who later influenced entry of other companies. In this analysis, it is essential to focus on the level of BP and Shell in order that an accurate analysis becomes possible. However, it is vital to note that many companies are conducting oil exploration that could see the industry change to a monopolistic competition scenario. In spite of the domineering presence of unions such as OPEC, prices usually shift in response to notable factors (Clo 46). The industry has also faced notable threats as regards their continuity in the energy market. It is vital to note of the market theory in action. This involves the principles of supply and demand in conception of the same. ...
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