Implications Of Recent Trends And Changes Within The Supply Chain Of The UK Petroleum Retail Market

Analysis of the Factors Affecting the Current Gas and Oil Industry in the UK

Critically discuss the implications of recent trends and changes within the supply chain of the UK petroleum retail market.  

A brief research showed that the UK market for petroleum as well as liquid fuel experienced an effective change regarding the supply and demand of oil and gas. The oil industry in UK contains the general procedure of refining, exploration, transportation, extraction and marketing the products of petroleum. Gasoline or petrol and fuel oil are the biggest volume products of the oil industry. Petroleum oil is a raw material which contains numerous chemical products. The chemical products include solvents, pharmaceuticals, fertilizers, plastic and pesticides. The UK industry is divided into three fundamental components such as downstream, midstream and upstream. The operation of midstream is commonly included in the category of downstream. The demand for petroleum and its products has been increasing in such countries which are developed. The countries are China, India as well as Middle East countries. Countries such as the United Kingdom have shown a high potential for the development gas and oil industries. These developments have led to the improvement in gas and oil sectors based on its efficiency. It has also impacted the rise of prices. As a result, the United Kingdom and US reassessed strong inclinations in the UK market of liquid and fuels. The government of United Kingdom provides a massive public support to the companies of petroleum with significant breaks in taxes at every virtual stage of oil extraction and exploration. The cost of drilling equipment and oilfield leases are also included. In the United Kingdom, the National Petroleum Council evaluates the demand for gas and oil supply.

The primary factors that impact the current structure and size of the new gas and oil retail sectors are the demand and supply of world’s energy, unconventional resources, the requirement of technology, and the constraints that meet the need of energy and access to resources (Hilyard, 2012). The description of each of these factors are listed below:

The demand and supply of world’s energy

The energy of the world are the primary resources for these industries. The resources are oil and natural gas. According to the National Petroleum Council, the international demand in UK for oil in the year 2000 was seventy-six million barrels per day (Inkpen and Moffett, 2011). The production of oil is currently eight six million barrels per day which are equivalent to 31.4 billion barrels per year. Since petroleum contains hydrocarbons, so NPC or National Petroleum Council predicted that the hydrocarbon fuels can still make up eighty percent of the sources of energy by 2030. Based on the natural gas, the situation is more optimistic than oil industries. Internationally, the production of natural gas in 2000 was two hundred and forty-three billion cubic feet per day. NPC projected that the demand for natural gas would increase to 356-581 billion cubic feet per day by 2030 (Energy policies of IEA countries, 2012). Most of the natural gas are used to generate electricity and heat in Europe, Russia and North America and hence satisfying the customers (Economic review, 2009).

The Impact of the Increase in Price of Oil in the UK

Unconventional resources

Unconventional resources are reservoirs producing gas and oil at very low flow rates due to geologic complexity, high fluid viscosity and low permeability (Markowski, 2012). It includes resources triangle which is a concept used by Masters to find a large gas field.

Figure 1

Figure 1 represents a resource triangle. When someone goes deeper, the reservoirs are low grade. It means that the permeability of reservoir is decreasing (Linn, 2014). However, low permeability reservoirs are much larger than high-quality reservoirs. High-quality reservoirs need to be improved technology, and therefore, prices get increased.

Requirement of technology

Technologies are required for the improvement of unconventional gas and oil and the reservoirs. The techniques include reservoir engineering, drilling, well stimulation, completion methods and formation evaluation. The technology must deal with the getting more gas and oil out of the reservoir and thereby reduce the cost of drilling. Better technologies based on the electronics and materials can withstand high temperature and high pressure. As a result, drilling methods can be improved thereby increasing the gas and oil supply (Van, 2010). Technology for unconventional gas includes hydraulic fracture fluids which are among the most important technology of all. It requires challenging operators in unconventional gas tanks. Formulation of polymer gel are utilized for creating the crack as well as carry the propping agents.

The constraints that meet the demand of energy

The limitations are environmental, technological, manpower and capital constraints. Based on environmental constraints, NPC stated that the use of hydrocarbon fuels need development in technology as well as the regulatory and legal framework. The issues based on the emission of carbon dioxide must be resolved. It is very crucial to develop the technology, so the National Petroleum Council suggest UK governments and UK industry to put money on technical development (Hilyard, 2012). The NPC also recommends the UK government should recruit young engineers who are willing to work in these fields. The changes should be made to tax laws for allowing the retired people. Based on technological constraints, research says that the governments and the industry in oil-producing countries should put more money into the development as well as research.

Access to resources

In many areas such as North America, the gas and oil deposit are restricted due to environmental concerns. The National Petroleum Council recommends the UK governments to conduct regional and national resources and market assessments for identifying opportunities. As a result, the supply of gas, coal and oil will increase in United Kingdom. The continuation method to create technologies by the industry must be progressed for the development of friendly environment of high potential areas. It is developed both offshore and onshore. It is recommended that public must learn about energy, its application and its benefits.

Evaluation of the Potential of Technical Change in the Next Decade

The increase in the price of oil impact globally. The increase in the price of petroleum oil will lead to the decrease of discretionary spending of lifestyle in UK (Powers, 2013). The increase in the price of the gas will lead shoppers to drive less. Researchers concluded that the volume of gas and oil production was directly tied to the price of it. As stated by Marin Software, the searches based on online shopping increased dramatically along with the growth in gas price. However, the automobile industries in UK have reported increasing the price of gas and the necessities for the reduction of dependence on oil by manufacturing more fuel-efficient and smaller cars. The customers have supported this revolution in automobile industries in UK. Also, small vehicles presently account for around a quarter of all United Kingdom auto sales (Herkenhoff, 2013). The increase in the price of gas leads to the increase in public transportation ridership. For example, a public train like the Rider on Rail Runner of New Mexico provides facility between Albuquerque and Santa Fe grew by fourteen percent for the same month.

The increase in prices from gas and oil and the development of technology cannot stay constant. It means that the technology needs to change so as to reduce the cost of oil production. It may lead to the reduction of the cost of gas and oil. Thus, it will remove the problems faced by normal people during the purchase of oil (Delloitte, 2012). The technical change needs some evaluation and calculations to determine that whether the modification can result in some benefits or not. First of all, the cost needs to be evaluated. After that, evaluation of low-carbon and energy supply technologies needs to be done. In numerous respects, 2020 could prove to be a crisis in the evolution of energy system (Sheng and Chen, 2014). By 2050, the overall population of the world will rise by more than two billion people. The OECD countries will be a progressively minor energy players in the world in production, demand and trade, but nevertheless remain significant as a supplier of technology (Smead, 2015).

	Consumption of primary-energy fuel for electricity and heat production in 2030 (EJ/YR)	Increase in demand of new power from 2002 to 2030 (TWh)	The demand of final electricity in 2030 (TWh/YR)	Consumption of primary-energy fuel for electricity in 2030 (EJ/YR)	Total emission from electricity in 2030 (GtCO2-Eq/YR)
OECD	118.6	4,488	14,244	115.4	5.98
EIT	29.3	983	2,468	22.1	1.17
Non-OECD	128.5	10,111	14,944	125.3	8.62
World	276.4	15,582	31,656	262.8	15.77

The above table represents a baseline data from the World Energy Outlook 2004. This chart describes the mitigation potentials and the cost for the primary supply of energy based on technology (Kondratov, 2015). The generation of final electricity was based on the electrical proficiencies calculated from the data of 2002. It includes a correction for the share of final heat in the total consumption of final energy. These technologies are quantified and compared with the assumptions of 2030. This analysis determines the mitigation potentials at a high end of the range of every technology by 2030 (Smead, 2015). It expects every innovation or technology will be executed as much as financially and, in fact, possible and yet it is restricted by the down to earth requirements of stock turnover, preparing of authority skill, the rate of expansion of producing limit and so on. The presumptions utilized are contrasted, and different examinations reported in the writing. Each and every innovation will be obliged by what will be going on somewhere else in the energy supply area. They could never achieve this total greatest potential all in all. Therefore, these definite possibilities can’t be explicitly included to get an anticipated genuine potential (Duncan, 2015).

Innovative technologies in UK are set to develop and innovative technologies. It will be built for sustaining production and facilitate trade mainly in gas and oil industries. Public energy industries are likely to be transferred to many countries. As a result, there will be more completion in the international energy market. The changeover of the world’s energy segment based on gas and oil industry could well increase in speed over the period 2020 to 2050 (Andrews and Playfoot, 2014). The type of energy structure will develop and it will be shaped by a multitude of constraints and opportunities. For example, numerous end-use devices like industrial processes, cars, heating systems, infrastructure and parts of the building stock will get started to be replaced by innovative technologies. By 2050, all vitality innovations or technologies like gadgets will have been supplanted at any rate once (FOCUS: Libya starts to rebuild its oil and gas industries, 2011). It will offer an abundance of possible outcomes for setting the advancement of both the UK society and economy on an a great deal more energy efficient way. Be that as it may, advancements like new and old require significant investment to deliver and diffuse, and there is presently worry that uses on vitality research and development are on the decay. Besides, increments in the convergence of nursery gasses in the weather over the more lengthy term will make it vital to put resources into arrangements and advances, and it will permit consistency with stricter ecological targets. What’s more, oil generation will presumably have begun to diminish, took after nearly by gas; regardless of the fact that non-traditional oil and gas assets fill the crevice for quite a while, substitute powers will, in the end, should be found.

Conclusion

The above report is based on the development of oil and gas retail industries in UK. In the first portion, the analysis is done on the factors that affect the new structure and size of the current UK gas and oil retail sectors. The second part described the impact of high price oil in the life of normal people of UK and on the international industries like automobiles. The next portion evaluated the potential of technical change in next decade based on energy retailing industries in UK. Evaluation is done by taking help from the baseline data table. The oil and gas industry employs people in different types of jobs roles both onshore and offshore.

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