The Petrol Stations Industry In The UK

Diesel/petroleum oil Top firms worldwide #1 China Petroleum & Chemical Corp. (SNP) #2 PetroChina Co. Ltd. (PTR) #3 Saudi Arabian Oil Co. (Saudi Aramco) (Tadawul: 2222) #4 Royal Dutch Shell PLC (RDS. A) #5 BP PLC (BP) The Petrol Stations industry in the UK: The companies holding the largest market share in the Petrol Stations in the UK industry include →CD&R Firefly Holdco Ltd → Shell UK Ltd → Euro Garages Ltd →BP Oil UK Ltd → Applegreen → Rontec Roadside Retail Ltd. Esso, BP, and Shell had the highest market share of petrol station outlets in the United Kingdom in 2021, at 14.6, 14.5 and 13.4 percent, respectively. Market structure of petrol companies: Oligopoly Why? There are a few dominant firms relative to market size, and they each command a large proportion of the market share, thus having strong monopoly power. Due to the small number of competitors in the market, every action taken by any petrol company will affect all the other firms in the market significantly. Rivals' actions cannot be ignored, as they are likely to result in adverse effects. Thus, there is a large degree of mutual interdependence. Each firm will have to assess or predict rivals' actions to its pricing strategies. How oil was affected by COVID-19 Statistics → From January 2020 demand for oil in China decreased by 3 million barrels per day, which represents approximately 20 percent of the country's overall oil consumption. → As the COVID-19 pandemic continued to spread across the world, Saudi Arabia, the world's second-largest oil producer behind the United States, urged fellow Organisation of the Petroleum Exporting Countries (OPEC) members and Russia to cut production. → Having formed a 2016 alliance with OPEC to control the price of oil through production cuts, Russia, the world's third-largest oil producer, now resisted the call for further reductions in response to the pandemic. → By the beginning of April, OPEC had raised output by 1.7 million barrels per day, up to a level of 30.4 million barrels per day, the largest production jump since September 1990. →According to Bloomberg, Saudi Arabia alone reached a record production of 12.3 million barrels per day on April 1, an output exceeding the pre-pandemic consumption levels of Japan, Germany, France, the United Kingdom, Italy, and Spain combined. → The production boom coincided with an International Energy Agency (IEA) estimate that global demand for oil was down by almost 30 million barrels per day because of the shutdowns in response to the COVID-19 pandemic. → With demand down, the addition of petroleum to an already saturated market led to a near-record level of 535.2 million barrels of crude petroleum stockpiles in the United States on May 1. Implications → Intemational Oil Companies (IOCs), indigenous oil & gas and chemicals companies responded by cutting capital and operational expenditures, which would filter down to suppliers and oil servicing companies → New businesses related to the energy transition and renewables will continue to emerge. → The petrochemical industry will continue to lead demand growth, with ethane, LPG and naphtha together accounting for 70% of the forecast increase in oil product demand to 2026. Disciplined investment in advantaged assets (such as at-scale integrated refining/petrochemical installations) that feature distinctive technologies and privileged markets should enable value creation. Positive Externalities: → Economic Benefits-increased employment, business activity → Increased Productivity - use of oil accelerated efficient production in many industries →Means of Globalisation-increased trade between countries Negative externalities: → Environmental Damage - environmental damages from oil production, distribution and consumption as well as: wildlife habitat disruption, release of air, noise and water pollution, both chronic and through spill →Health Risks - injuries and illnesses from fuel production and distribution → Economic Costs-economic impact of importing fuel → Security Risks - political and military costs of maintaining access to oil resources → Limitation of Resources - depriving future generations from non-renewable resources → Financial Subsidies - different financial subsidies to oil producers Main products provided by the oil industry The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilisers, pesticides, synthetic fragrances, and plastics. Top challenges they face → Reducing costs to remain competitive Producing crude oil and refined products at a lower cost to stay competitive on the market is one of the industry's major challenges. Optimising production systems and environmental utilities on currently operating sites is therefore a priority for the oil industry. This maximises production efficiency, reduces the costs of extraction and refining and thereby offsets the exploration costs. → Improving performance to ensure the valorization of assets To sustain their supply of crude oil or gas, oil companies are looking to extend the life of mature sites but are also compelled to seek new sources of oil or gas for which extraction, transport and refining are much more complex and costly. For that, they aim to achieve 100% reliability of their plants: no unplanned shutdowns, increased throughput, secure industrial assets. → Improving the Environmental footprint to meet increasingly stringent standard The oil and gas industry is a major consumer of water and energy resources and is therefore subject to increasingly stringent environmental standards. This constrains them to rethink extraction, production and distribution methods in order to obtain or maintain their licence to operate. ☐ They also have to provide guarantees and ensure transparency in the environmental management of their activities. In the Beijing area in China for example, where water shortages are becoming more frequent and where tackling air pollution is a major central government commitment, environmental standards are particularly strict. The standards governing wastewater discharges in particular are currently the most demanding in the world.