The Economic Situation of the Oil & Gas Industry
The oil and gas industry, including exploration and production, consists of about 7,000 companies who pull in a combined, estimated revenue of around £450 billion. However, the production and associated revenue are fragmented; around 10% of companies generate approximately 60% of this figure.
Demand for oil and gas is caused by Economic activity, population growth and the need for energy for residential, industrial and transportation uses. The growth of an individual company is determined by the success rate of new finds, as well as the ability to continue to produce from existing sites.
Larger companies have the upper hand, having greater access to capital and the capacity to buy smaller companies or propagate amalgamations. Smaller companies rely on their abilities to focus on and develop expertise in a few geographical areas.
In addition, oil and gas competes with other fuel-types, such as coal, nuclear power and hydro-electricity. In addition, other sources of energy are emerging, such as ethanol and bio-diesel and there are other forms of application arriving on the market, such as the new generation of hybrid-electric car.
Oil and gas are found in huge, underground basins that meet certain geological criteria. As well as creating three-dimensional maps of underground structures and using seismic waves to ascertain a site’s potential, exploratory drilling is still a major factor in finding oil and gas.
Last year, the number of exploratory drillings that took place exceeded 53,500. Once an area has been designated as having promise, the area is cleared and a drilling rig and crew are brought in to begin the process of extracting the resources that have been found.
Oil and gas jobs generally fall in to one of two categories: upstream and downstream. Upstream jobs are found in the process of obtaining oil and gas from natural resources: drilling jobs are upstream jobs. Other jobs are likely to include those in construction and those involved in production facilities. Not all upstream jobs take place on land; for many, part of the attraction of this industry is its variety.
Gas and oil fields are also developed below sea level, such as in the North Sea and the sub-sea sites recently discovered in West Africa. These require specialists to find and extract the resources available.
Downstream jobs involve the transportation of oil and gas in their basic forms, the liquefaction of those substances and their processing. While upstream jobs tend to be comparatively more transitory, being based on exploration and ultimate extraction, it is in the downstream category that gas and oil careers are made;
while oil rig jobs, for example, will only last as long as the resource is there, marketing jobs can become life-long opportunities as the team packages the combined products across the globe.
The oil and gas industries are two of the world’s biggest and most profitable enterprises. They employ huge numbers of staff that work in an incredible range of department, from those on the ‘front-line’ to those who design advertising campaigns to those who put it in our vehicles.
The Economic Situation of the Oil & Gas Industry
The oil and gas industry has experienced a challenging economic situation in recent years, with declining prices, increasing competition from renewable energy sources, and geopolitical instability contributing to the industry’s woes. In this article, we will explore the economic situation of the oil and gas industry in more detail.
One of the biggest challenges facing the oil and gas industry has been declining prices. The price of oil dropped sharply in 2014, from over $100 per barrel to less than $30 per barrel in early 2016. Prices have recovered somewhat since then, but they remain well below the levels seen prior to the 2014 downturn.
The decline in prices has had a significant impact on the industry, leading to reduced investment and job losses. Many oil and gas companies have been forced to cut back on exploration and production activities, leading to a decline in production in some areas.
Another challenge facing the oil and gas industry is increasing competition from renewable energy sources such as wind and solar. Renewable energy is becoming increasingly cost-competitive with fossil fuels, and governments around the world are setting ambitious targets for renewable energy deployment.
This competition is putting pressure on the oil and gas industry to adapt and evolve. Many companies are investing in renewable energy technologies and exploring new business models that incorporate renewable energy.
Geopolitical instability is another factor contributing to the economic situation of the oil and gas industry. Conflicts and tensions in regions such as the Middle East and Venezuela can lead to disruptions in oil supply, which can cause prices to rise and impact global markets.
In addition, the increasing use of sanctions as a geopolitical tool can also impact the oil and gas industry. For example, the United States has imposed sanctions on countries such as Iran and Venezuela, which has led to a reduction in oil supply and increased prices.
The oil and gas industry is facing a challenging economic situation, with declining prices, increasing competition from renewable energy sources, and geopolitical instability all contributing to the industry’s woes. However, the industry is also adapting and evolving, with many companies investing in renewable energy technologies and exploring new business models.
As the world transitions to a cleaner and more sustainable energy system, the oil and gas industry will continue to play an important role, but it will need to adapt and evolve to remain competitive in a changing market.