Economics Assignment

Oil and gas Industry

Oil and gas exploration has changed the way the world works. Oil and gas are the most significant sources of energy in the world. Activities in this industry consist of oil and gas exploration. There are several processes involved in the process of prospecting, equipping, and then the mining process. The method of processing crude oil is crucial. The crude oil is made into different products that are used in power production, fueling cars, and cooking. The investment in this industry is rather expensive (Pam Sadowski, SSSD, 2017). This is why it requires the input of many parties. The oil wells are also costly to set up and maintain.

The oil and gas industry is a big player in the energy sector. It is a source of energy used in most locomotives in the world. The products from the oil and gas industry include kerosene, gasoline, and diesel. All these fuels are useful for providing energy in the various sub-sectors. Almost the whole transport industry uses fuels from this sector. This is because they are readily available and can be transported from one region to another without needing a lot of effort. This is what makes the oil and gas industry is crucial for all sectors that require energy.

The oil industry is an ever-changing market. The prices of its products are affected by supply and demand. Being a commodity that is needed worldwide, a shift in price in one region affects the cost of the entire specialty. The fuel prices change from time to time, depending on supply and demand. The lower the quantity, the higher the rates. The higher the prices, the higher the amount of money invested in the industry. The quick change in prices means that care has to be taken to keep the cost of production low. The prices shift from time to time has to be kept under check at all times.

The market trends in this industry indicate an increase in investment in North America. The expenditure has been increasing in the past ten years. This shows that there will be an increase in the next five years. According to Price Waterhouse Coopers, North America has been at the center of the most substantial expenditures in oil exploration (PricewaterhouseCoopers, 2018). This indicates that the outlook of the market points to improving trends all over the world. The increased investment shows that it is projected that the output will grow in the next few years.

Retrieved from: https://www.strategyand.pwc.com/gx/en/insights/industry-trends/2018-oil-gas.html

The Government has a significant role to play in this industry. The Government is advocating for an increase in the use of renewable energy sources. This means that there is a possibility that this industry will see a drop in sales due to competition from other sources of energy that are considered more environmentally friendly. Such legislations imply that it will result in less investment in the industry. Due to the price fluctuation seen from time to time, it will not be a surprise that people will opt for renewable energy sources for them to cushion themselves from the impact of price changes.

References

Pam Sadowski, SSSD. (2017). NAICS Search. Retrieved from https://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2017

PricewaterhouseCoopers. (2018). Oil and Gas Trends 2018-19. Retrieved from https://www.strategyand.pwc.com/gx/en/insights/industry-trends/2018-oil-gas.html