Major Industry Players
The oil industry is the world’s main energy source for fully 80% of all its energy needs. Recent technologies have allowed oil drilling to be less disruptive of environment and coal-fired plants have new carbon-emission capture capabilities. Even the giant oil firms are now environmentally-conscious and have become good corporate citizens. The only major concern of big oil such as Exxon, Mobil, Shell, etc. is that they will be hit with “windfall” tax on their profits. The upstream portion of the oil industry is controlled by giant oil multinationals but the downstream portion is in the hands of other industry players. This upstream portion includes oil exploration and drilling which are very expensive undertakings because drilling in a place does not guarantee oil is in it or if it is of sizable commercial quantities. It is a “hit-or-miss” thing. Good fields should contain 500 million barrels at the minimum.
Exxon oil corporation
The downstream includes transport (mostly sea transport by giant oil tankers or through land pipelines), refining, distribution and marketing. Transporting oil is controlled mostly by independents such as Greek shipping magnates or tycoons while oil refining is done in other countries which are not oil producers. Singapore is a big refinery center in Asia and refining fee is a significant source of income for the island-state. The current oil “crisis” is not really a shortage of crude oil. OPEC ministers claim that the “perceived” shortage is due to a lack of refining capacity worldwide. Energy demand keeps growing but refiners have not added new capacities in the last 5 years or so.
Distribution channels were brought back under control by the giant oil firms primarily to protect their franchise (brand name loyalty of customers). It allows them to advertise their other products and services. It is more important for oil firms to concentrate on profitable operations than to have fully integrated operations starting from exploration to end-user distribution at the gas stations. Big oil firms try to maintain captive markets of car owners by offering certain gasoline types as appropriate for a brand of car. Of late however, Exxon-Mobil is trying to follow both its competitors Royal Dutch Shell and British Petroleum in moving away from ownership of gasoline stations. This part of oil operations is a low-margin aspect of their business and contributes very little to their overall profits. Exxon is the world’s largest publicly-traded oil company and has 12,000 branded gas stations in the U.S. but owns only about 2,220 of them with the rest being run by franchisees. The gas stations will still be carrying the Exxon-Mobil logo though because of its brand name recognition.