UK Oil Industry Essay Sample free essay sample

This assignment is prepared with the regard to the Module of â€Å"Business Environment. † I am assigned to fix a paper by our honest teachers Ellie Semsar to analyze the factors that influence and find the oil monetary value in UK oil industry. The study besides aims to supply how much and to what extent. Government policies influence oil monetary values in UK. Objective of the Assignment: This assignment has been prepared sing a figure of aims. The aims are: * Identify and measure the factors that influence and find the oil monetary value in UK oil industry. * Understand how and to what extent UK authorities policies make an impact on the oil monetary values. * To demo the analysis of the current oil monetary values and describe how the tendency goes. * To execute necessary analysis and present it with charts and tabular arraies from dependable beginnings. * To explicate the factors that influence supply and demand of oil monetary values in UK * To demo an apprehension of relevant economic rules. constructs and theories * Understand and use the chief techniques of economic analysis. Beginnings: Primary beginnings couldn’t be managed to fix this assignment. Secondary Beginnings have been used to do this study. Secondary information was collected from on-line diary. articles and the official web sites of Nestle. Some other beginnings that have been used to happen out the information are given on the Bibliography subdivision. Background of Oil industry in UKOil is one the most of import resources in the universe that controls every domains of human lives. Particularly in Developed states. oil seems to be most needed. Crude market oil are really much needed in different operations of developed states. with 84. 249. 000 barrels consumed globally each twenty-four hours as of 2009. ( Ross Lane. 2012 ) . Because of the oil supplies in UK. oil monetary values vary greatly from clip to clip. This assignment analyzes the current market state of affairs for oil monetary values in UK. This study identifies the factors that affect supply and demand of oil monetary values. how authorities statute law impact oil monetary value in UK. Detailed analysis of oil monetary values in UK over the old ages has been shown with proper graphs and tabular arraies. Graph of last three years’ place warming oil has been shown and the monetary value tendency has been analyzed. Besides how authorities policy influences oil monet ary values in UK has been analyzed. The standard economic theory of supply and demand has been related to the necessary scenario. Analysis of the Current Prices of Oil in UK:Oil monetary values in UK are in rise in January. 2013 after last 3 month of monetary value autumn. The monetary value of oil is lifting twenty-four hours by twenty-four hours. Price spread between Petrol and Diesel has widened from 5 lb to 8 lb in last four months. Diesel Price has fallen by 0. 06ppl from 140. 04ppl to 139. 08ppl. Northern Ireland has recorded the highest leadless oil monetary value at 133. 2ppl. Northern Ireland besides recorded highest rate for Diesel at 140. 6ppl in January. 2013. Yorkshire and Humberside and the northwest side have recorder their cheapest oil monetary value 139. 04ppl. The Automobile Association Limited. ( 2013 ) . Home warming Oil monetary values trends has shown fluctuations over recent old ages. Below. oil monetary values in last 3 old ages and I oil monetary values tendency from 2012 to 2013 is given: Figure 1. 1: United Kingdom Average Oil Price from 2012 to 2013. ( Boiler Juice Ltd. 2013 ) . The graph shows monetary values have been fluctuated up and down several times. In June. monetary values tend to be the lowest. 52ppl. In December monetary value was at its extremum 65ppl. Although in start of January 2013. monetary value tend to travel lower but now in February. place warming oil monetary values are once more traveling up to the extremum of 65ppl. To cognize more about the tendency of the oil monetary value fluctuation. oil monetary value tendency of last 3 old ages is given below: Figure1. 2: United Kingdom Average Oil Price from 2010 to 2013. ( Boiler Juice Ltd. 2013 ) . Figure 1. 2 shows place warming oil monetary values in UK for the last three old ages. The graph shows that after 2010. monetary values has increased up to 60-65ppl where before it was merely 40-50ppl. On start of 2011. monetary value has gone 70ppl which is the peak monetary value of this chart. Although monetary values have lowered. it is once more on rise up to the extremum in January. 2013. Retail monetary values of Petroleum oil: Retail monetary values of crude oil oil are increasing every twelvemonth. although there was a little interruption of monetary value lessening but in recent old ages its dorsum on rise. Harmonizing to UK Government functionary website’s publication Statistical Date set of Oil Petroleum merchandises: Annual monetary values of Petroleum merchandises from 2000 to 2013 are given below: Table 1. 1 Typical retail monetary values of crude oil merchandises ( 1 ) ( 5 ) 2000 to 2013United Kingdom| | Pence per liter|| Motor spirit| Diesel ( 2 ) | Standard grade| Gas| | | 2 star| 4 star/ LRP ( 4 ) | Super unleaded| Premium unleaded ( 6 ) | | combustion oil ( 3 ) | oil ( 3 ) | | 2000| January| | . . | 80. 84| 84. 15 | 75. 38 | 77. 75 | 17. 84 | 18. 15 | | 2001| January| | . . | 82. 19| 85. 06 | 76. 85 | 81. 63 | 19. 86 | 20. 46 | | 2002| January| | . . | 75. 94| 78. 48 | 69. 90 | 74. 65 | 14. 61 | 14. 71 | | 2003| January| | . . | 78. 15| 80. 47 | 74. 95 | 76. 38 | 17. 83 | 18. 63 | | 2004| January| | . . | 80. 04| 81. 49 | 76. 20 | 77. 92 | 18. 33 | 18. 95 | | 2005| January| | . . | 87. 16| 87. 43 | 78. 99 | 84. 15 | 22. 16 | 23. 99 | | 2006| January| | . . | . . | 94. 73 | 88. 84 | 93. 07 | 31. 58 | 33. 60 | | 2007| January| | . . | . . | 94. 80 | 86. 91 | 91. 44 | 30. 88 | 34. 03 | | 2008| January| | . . | . . | 110. 59 | 103. 71 | 108. 70 | 43. 90 | 51. 01 | | 2009| Jan uary| | . . | . . | 93. 30 | 86. 33 | 98. 74 | 36. 01 | 43. 83 | | 2010| January| | . . | . . | 118. 53 | 111. 49 | 113. 31 | 42. 49 | 50. 64 | | 2011| January| | . . | . . | 134. 83 | 127. 53 | 132. 08 | 55. 14 | 61. 90 | | 2012| January| | . . | . . | 140. 40 | 132. 89 | 141. 34 | 61. 04 | 70. 74 | | 2013| January p| . . | . . | . . | 132. 00 | 139. 68 | . . | . . | | **Source: Statistical informations set Oil and crude oil merchandises: one-year statistics. Open Government Licence. UK. ( 2013 ) . ( 1 ) The estimations are by and large representative of monetary values paid ( inclusive of revenue enhancements ) at the pump on or about the 15th of the month. Estimates are based on information provided by oil companies from 1977 until 1994. From January 1995 information from super/hypermarket ironss have been included. ( 2 ) From July 1999 Diesel monetary values represent mean monetary values for Ultra Low Sulphur Diesel which now accounts for virtually all Diesel sold. Pump monetary values for both Diesels are loosely the same. ( 3 ) Typical monetary values for bringings of up to 1. 000 liters of standard class combustion oil and between 2. 000 and 5. 000 liters of gas oil. Prior to 1977. monetary values were for bringings of 900 liters of standard class combustion oil and 2. 275 liters of gas oil. Since April 1994 monetary values include VAT at a rate of 8 % until September 1997 when the applicable rate was reduced to 5 % . ( 4 ) From October 1999 Four Star monetary values represent ‘Lead Replacement Petrol’ ( LRP ) which had replaced Four Star at 95 per cent of mercantile establishments at that clip. Leaded gasoline has now been phased out. Pump monetary values for both gasolines are loosely the same. The LRP series has been discontinued from September 2005 due to the low volume of gross revenues. ( 5 ) For rates of responsibility and VAT see Annex C.( 6 ) From April 2001. Premium unleaded monetary values represent Ultra Low Sulphur Petrol ( ULSP ) . which now accounts for virtually all Premium unleaded sold. The pump monetary values for both fuels were loosely the same. The Determinants of Oil Monetary values in United kingdom:Oil militias are limited and demand for this limited resource is being increased twenty-four hours by twenty-four hours. Besides high demand of planetary trade goods has led to the monetary value fluctuations of oil monetary values. Two major determiners of oil monetary values in UK are: * Supply A ; Demand * Market SentimentSupply A ; Demand:Supply and Demand of oil in UK is about same to the constructs of economic supply and demand of resource. As demand increases or supply lessenings. monetary values go up. As supply additions every bit good as Demand is relatively less. monetary value goes down. But in recent times. monetary values tend to be upper graduated table as supply is acquiring lower every twenty-four hours. But that is non all. The monetary value we see by and large set in the oil hereafter market. And oil hereafter contract is an understanding that provides the chance to one party to purchase oil at a antecedently fixed rate on a hereafter day of the month. Under a hereafter contract. both the purchaser and marketer are obliged to carry through their portion of their understanding. Future understandings are done by two types of future bargainers: * Hedgers * SpeculatorsHedger hereafter bargainers are the 1s who buys oil to guard possible oil monetary value rise. For illustration: An Airline Company. Speculators are the 1 who are supervising the monetary value tendency and have an purpose to purchase oil. But study says that merely 3 % of minutess are resulted from speculators. ( Paul Kosakowski. 2011 ) . Market Sentiment: The other of import factor that influence finding oil monetary value in UK is Market Sentiment. When people simply belief that oil monetary value is traveling to lift quickly sooner in the hereafter that will do a great demand for oil. Beside bargainers like Hedgers and Speculator are tend to move more dominantly in these state of affairss to minimise their hereafter losingss and maximise their net income. therefore doing an impact on the oil monetary value. Besides the mere belief that oil monetary value is traveling to be quickly reduced shortly can ensue in dramatic lessening of oil monetary value in the present since oil hereafter contracts are sold. ( Paul Kosakowski. 2011 ) . Other than the major facts. there are some other factors that affect oil monetary values in UK: Worsening Production: As domestic oil production is cut downing since 2007. the state needs to import oil to go on its economic system. As the sum of oil import additions. it generates higher force per unit area on the supply and increase the oil monetary value. Restrictive Legislature: If a Nation decides that it is restricting or censoring oil geographic expedition in an country where big sum of oil is stored. trade good market monetary value will confront the loss of new possible petroleum oil production into current oil production. Legislation restricting oil production will impact on oil monetary values to lift. ( Rich Finzer. 2012 ) . Political Agitation: Majority of the oil production comes from Middle East and Africa. Political instability of those states where most of the oil beginnings are situated and from there oil is acquired affects the oil monetary value in UK. NaturalCatastrophe: Natural and Manmade catastrophe causes terrible monetary value fluctuations for oil monetary value. Harmonizing to Kimberly Amadeo. ( 2012 ) . â€Å"Hurricane Katrina caused oil monetary values to raise $ 3 a barrel. and gas monetary values to make $ 5 a gallon in 2005. Katrina affected 19 % of the nation’s oil production. It came on the heels of Hurricane Rita. Between the two. 113 seaward oil and gas platforms were destroyed. and 457 oil and gas grapevines were damaged. † Factors Affecting Supply and Demand of Oil monetary values in United kingdom: Several factors affect the demand and supply of oil monetary values in UK. Among them some are major of import: * Increased ingestion of Oil:Consumption of oil has increased badly late. Oil demands are highest in the developed states. With more generated demand. and since supply is limited. monetary values tend to be on the rise all the clip. * Oil Militias: Monetary values of oil largely depend on oil militias of UK. With low oil militias. monetary values tend to be higher and with greater oil militias in the state. monetary value will be moderate or lower. Besides limitation on import influences the monetary values of oil in UK. * Exchange Rate: World exchange rate affect oil monetary value large clip. With diminishing value of GBP. oil monetary values will be higher. When oil monetary values addition. people have to number for more pence than earlier due to loss of value of currency. * Guess: Other than physical supply of oil militias. fiscal market besides has the influence to impact oil monetary values through guess. Future bargainers influence oil monetary value more instead than them who are presently administering. ( Ross Lane. 2012 ) . Government Policies to act upon Oil Price in UK:Government policies greatly influence oil monetary values in UK. Transport Secretary Justine Greening has asked oil retail merchants in UK to level up their codification of behavior ; otherwise necessary measure will be taken. The authorities will take statute law if necessary. Harmonizing to Justine Greening: â€Å"Petrol monetary values travel up immediately when sweeping monetary values rise. but when sweeping monetary values autumn. it can take hebdomads for them to come down once more. I want companies to come up with their ain program every bit shortly as possible – and I’m speaking yearss and hebdomads. non months. That manner we can acquire monetary values down faster. instead than holding to go through time-consuming statute law. But we will surely make that if we have to. † ( The Telegraph. 2012 ) When policy is strong or doing the oil companies go for monetary value decrease. the companies have to stay by the authorities statute law. The AA president Edmund King Said: The AA supports a move towards transparence on fuel monetary values. However. with record monetary values cutting gross revenues by 5 % last twelvemonth and 76 % of AA members cutting back on auto usage. other household disbursement or both. ordinance has to stay an option. † ( The Telegraph. 2012 ) Decision:The study is prepared to analyse the consequence of Oil monetary value in UK market. to find what are the factors that affect supply and demand of oil monetary values. how authorities statute law consequence oil monetary value in UK. Detailed analysis of oil monetary values in UK over the old ages has been shown with proper graphs and tabular arraies. Graph of last three years’ place warming oil has been shown and the monetary value tendency has been analyzed. Retail monetary values of crude oil oil are increasing every twelvemonth. although there was a little interruption of monetary value lessening but in recent old ages its dorsum on rise. Harmonizing to UK Government functionary website’s publication Statistical Date set of Oil Petroleum merchandises: Annual monetary values of Petroleum merchandises from 2000 to 2013 have been shown in this study. Two determiners of oil monetary value have been identified in this study. One is supply and demand and other is market sentiment. Supply and Demand of oil in UK is about same to the constructs of economic supply and demand of resource. As demand increases or supply lessenings. monetary values go up. As supply additions every bit good as Demand is relatively less. monetary value goes down. But in recent times. monetary values tend to be upper graduated table as supply is acquiring lower every twenty-four hours. But that is non all. The monetary value we see by and large set in the oil hereafter market. And oil hereafter contract is an understanding that provides the chance to one party to purchase oil at a antecedently fixed rate on a hereafter day of the month. The other of import factor that influence finding oil monetary value in UK is Market Sentiment. When people simply belief that oil monetary value is traveling to lift quickly sooner in the hereafter that will do a great demand for oil. Exchange rates. increased ingestion of oil. and limited oil modesty has strong function in act uponing monetary value of oil. Consumption of oil has increased badly late. Oil demands are highest in the developed states. With more generated demand. and since supply is limited. monetary value s tend to be on the rise all the clip. Monetary values of oil largely depend on oil militias of UK. With low oil militias. monetary values tend to be higher and with greater oil militias in the state. monetary value will be moderate or lower. Besides limitation on import influences the monetary values of oil in UK. Role of authorities policies besides has been included in this study. Bibliography: The Automobile Association Limited. ( 2013 ) . Fuel monetary value study. UK A ; abroad monetary values – January 2013. Available: hypertext transfer protocol: //www. theaa. com/motoring_advice/fuel/ . Last accessed 6th February. 2013. Boiler Juice Ltd. ( 2013 ) . Home Heating Oil Prices. Available: hypertext transfer protocol: //www. boilerjuice. com/heatingOilPrices. php. Last accessed 6th February. 2013. Paul Kosakowski. ( 2011 ) . What Determines Oil Monetary values? . Available: hypertext transfer protocol: //www. investopedia. com/articles/economics/08/determining-oil-prices. asp # axzz2K74EfmGA. Last accessed 9th February. 2013. Open Government Licence. UK. ( 2013 ) . Statistical information set Oil and crude oil merchandises: one-year statistics. Available: hypertext transfer protocol: //www. gov. uk/government/statistical-data-sets/oil-and-petroleum-products-annual-statistics. Last accessed 9th February. 2013. Rich Finzer. ( 2012 ) . Factors That Affect Oil Price. Av ailable: hypertext transfer protocol: //www. ehow. com/list_6696635_factors-affect-oil-price. hypertext markup language. Last accessed 9th February. 2013. Ross Lane. ( 2012 ) . Factors Affecting Demand amp ; Supply of Oil Prices. Available: hypertext transfer protocol: //www. ehow. com/info_8621442_factors-demand-supply-oil-prices. hypertext markup language. Last accessed tenth February. 2013. Kimberly Amadeo. ( 2012 ) . How Are Oil Monetary values Determined? . Available: hypertext transfer protocol: //useconomy. about. com/od/commoditiesmarketfaq/f/oil_prices. htm. Last accessed tenth February. 2013. The Telegraph. ( 2012 ) . Government warns