A Microeconomic Analysis Of British Petroleum Economics Essay

A Microeconomic Analysis Of British Petroleum Economics Essay BPs (British Petroleum) origins can be traced back to 1901 when William Know tried to explore oil in Persia. The first commercial oil discovery was made in the Middle East by BP in 1908. In 1935, the company prospered and was renamed the Anglo- Iranian Oil Company. The war effort resulted in the British government becoming a shareholder of the company (until 1987). In 1950, Anglo-Iranian expanded into petrochemicals. The Iranian nationalization of the oil industry and subsequent diplomatic solution involving Britain, the US, and Iran led to the emergence of a new consortium involving Anglo-Iranian Oil called The British Petroleum Company (founded in 1954). 1.2 Company Overview BP is one of the largest vertically integrated oil and gas companies in the world. The companys operations primarily include the exploration and production of gas and crude oil, as well as the marketing and trading of natural gas, power, and natural gas liquids. BP is headquartered in London, the UK and employs about 92,000 people. 1.3 Why choosing BP for the essay The company recorded revenues of $361,143 million during the financial year ended December 2008 (FY2008), an increase of 27% over the financial year ended December 2007 (FY2007). The operating profit of the company was $36,347 million during FY2008, an increase of 9.2% over FY2007. The net profit was $21,157 million in FY2008, an increase of 1.5% over FY2007. 1.4 Business Description BP is one of the worlds largest oil and gas companies. It has presence in more than 100 countries across six continents. The company operates through two reportable business segments: exploration and production; and refining and marketing. The company also operates through a third business segment, other businesses and corporate. Upstream activities involve oil and natural gas exploration and field development and production. The midstream operations involve the ownership and management of crude oil and natural gas pipelines, processing and export terminals, and LNG processing facilities and transportation. For the FY2008, BPs worldwide network consisted of some 22,600 locations branded BP, Amoco, ARCO, and Aral. BPs retail network in the US for the FY2008 comprised approximately 11,700 sites, of which approximately 9,200 were owned by jobbers (who purchase their products directly from the refining companies and either sell them to retailers or directly to the end users) and 900 operated under a franchise agreement. At the end of FY2008, BPs European retail network consisted of approximately 8,600 sites and had approximately 2,300 sites in the rest of world. Other businesses and corporate segment of the company comprises treasury (which includes interest income on the companys cash and cash equivalents) the companys aluminum asset, the alternative energy business, and shipping and corporate activities worldwide. 1.5 What we will discuss Not a clue yet. 2. ANALYSIS 2.1 Microeconomic analysis 2.1.1 Consumer demand, price elasticity and BP revenues for FY 2008 We will take one example here to analyse the law of demand and how it applies to BP. For this specific example we will use petrol as product. In general, the law of demand states that the quantity demanded of a good falls when the price of the good rises (assuming other things equal). To represent this change, the demand curve is used. It is a graph that represents the relationship between the price of a product (petrol in this case) and the quantity demanded. demand.JPG Figure The Demand Curve (image taken from www.freeworldacademy.com) As you can see in figure1, when the price increased from P1 to P2 the quantity demanded dropped from Q1 to Q2. Changes in the demand curve can be caused by many factors such as the consumer income, the price of substitutes and others. There are 2 categories of goods though. The ones that the demand doesnt change a lot when price is changed and those that even a small price change will result in a huge change in the demand. This is called the elasticity of demand. The price elasticity of demand for petrol is inelastic (price elasticity inelastic.JPG Figure Inelastic demand You can see here that an increase in price (p1 to p2) leads to a decrease in quantity (q1 to q2) that is proportionately smaller. This results in an increase of the total revenue of the company. Lets see how BP performed. revenue.JPG Figure BP revenue in 2008 (BP annual review) BP recorded revenues of $ 361.143 million in the year 2008 compared to $ 284.365 million in 2007. This large revenue increase is partially due to the very high oil price. Peter Sutherland (BP chairman) said in his speech in February 2009: There are few precedents in history for such a rapid and dramatic change in the business environment. In the space of a few months we went from a record oil price of more than $140 per barrel, and BP reporting two consecutive quarters of record profits for the group. This profitability in 2008, in theory can be based to the price effect which states that after a price increase, product (petrol) sells at a higher price, which tends to higher revenue. The sales effect doesnt apply here because we are talking about inelastic demand. 2.1.2 Oil Market Structure (supply curve, market equilibrium, total surplus) Its difficult and most times inaccurate to try and analyse the supply curve for inelastic products. A supply curve illustrates firms willingness to supply at particular prices. But in the oil industry there are exogenous factors that affect the prices. When a factor changes we say we have shifts in supply. That can be anything, for example a change in the number of firm selling petrol, a change in the price of a factor input (oil exploration expenses) or a change in technology. In our case, the supply is not affected by customers willingness to buy. Someone will buy petrol at any price in order to cover their needs (e.g drive to work). But in theory, the more quantity requested, the higher the price set by the firm. In the case which the price has reached the level where quantity supplied equals quantity demanded, we use the term equilibrium. On a graph, it is the price at which the supply and demand curves intersect. The total surplus refers to the total net gain to consumers and pr oducers from trading in the market. IT is the sum of the producer and consumer surplus. But in practice the things are a little bit different. There is always need for more petrol (or oil products generally). This means that BP and other firms can produce as much petrol as they want. The boundaries here are if the petroleum firms can produce more petrol. Its clear that the firm that can sell more barrels of oil, they will generate more revenue and gain more market share. BPs performance in the last 10 years has been exceptional well. They improve and increase the production every single year and thats due to increased refining availability. In the next page (figure4) you can see some of the performance factors. performance.JPG Figure BPs performance (picture taken from BPs annual report 2008) As you can see in the photo, the production was high but a bit lower that the year 2006. This is due to the unstable economy and prices in the last 2 years. BP still managed to increase their profits by improving their processes. The highlights of the year are: replacement cost profit of $ 25.594 million (up 39%), capital expenditure and acquisitions of $ 30.700 million and share price increase. The complete table with data will be attached in the appendix. 2.1.3 Government legislation (competition policy and carbon trading) The competition policies are different from country to country. We will talk about the policies in England as the BP is a british firm. In the UK there is the role of Director of fair trading and their job is to supervise the behaviour of companies. If they think that a firm is doing something is not supposed to do then they can refer those firms to the Competition Commission for investigation. The maximum market share that a company can hold is less than 25% of the total market. If it exceeds this limit the Director of fair trading can refer the company to the Competition Commission. Also, firms are not allowed to collude because this way they restrict the competition by setting prices. Also, because many companies operate in Europe or worldwide, there are other organisations that keep an eye on firms strategy. In the oil industry the top 3 competitors are : Exxon Mobil, Royal Dutch Shell and BP. BP is the second largest refining and fuel retailing firm in the UK and third in the world. In their effort to become the largest petroleum and offer high variety of products, BP merged or acquired other firms over the past few years. The companys key products and services now include the following: Aromatics and acetyls, petrochemical products, oil and gas exploration and production, lubricants downstream derivative products, aluminum coil and other. To produce their products, firms utilise big amounts of energy. This energy usually comes from burning fossil fuels. For example, oil and coal are used to generate electricity. By burning these fuels, greenhouse gas is emitted in the atmosphere. Carbon dioxide is a pollutant and the European governments have set rules to try to reduce the emissions. The reason the firms dont care much about pollution is because they maximise profit by reducing their costs. Nowadays though, they have to pay big amounts of money depending how much they pollute the environment (surplus permits). BP is helping to meet the worlds growing demand for sustainable and affordable energy, building alternative energy businesses with the potential to grow and compete far into the future. gas.JPG It is also impressive how much money BP invests in alternative energy, $ 1.4 billion just in 1 year. The total cost they are willing to invest is $ 8 billion. Alternative sources of energy BP is experimenting with are: Wind (432MW), Solar(162MW) and Biofuels. Moreover, they are running a project called CCS that stands for Carbon Capture and Storage. What CCS does is capturing the CO2 emitted during the burning and processing of fossil fuel. Then, it is transported and stored in deep geological formations such as gas or oil fields. CCS technology is supported by the government and the target is a worldwide implementation that will help reduce the problem of global warning. 2.2 Macroeconomic Analysis 2.2.1 2.2.2 3. CONCLUSION Based on your analysis, state your recommendations describing the possible strategies that the firm can consider.

Two Types of Computer Software

COMPUTER SOFTWARE INTRODUCTION OF COMPUTER SOFTWARE Computer software or just call as software is about any set of machine –readable instruction that directs a computer precessorto perform spesific operations. One common way of dicribing hardware and software is to say that software can be thought of as the varible part of a computer and hardware as the invariable part. Hardware and software require each other neither has any value without the other. Software is a genaral term. It can refer to all computer instuction in general or to any specific set of computer instuctions.It is conclusive of both machine instruction that call the binary code that more human understand and source code that more human undestandable instructions that must be rendered into machine code by compiless or interoreters before being executed. On most computer plattforms software can be grouped into two broad categories. It is system software is the basic software needed for a computer to operate. The application software is all the software that uses the computer system to perform useful work beyond the operation of the computer itself.Software refer to one or more computer and data held in storage of the computer. In the other words, software is a set of programs, procedures, algorithm and its documentation concerned with the operation of the fuction of program it implemens either by directly providing instruction to the digitals electronics or by serving as input to the another piece of software. The term was coined to contrast to the term hadware. In the contrast hardware , software ‘ cannot be touched. Software is also sometimes used in a more narrow sense meaning application software only.Sometimes the terms includes data that has not traditionally being associated with computers, such as film, types and record . These are system software or operating system referred simply as the OS, application software and programming languages. Usually most of us interact with a c omputer using application software. * TYPES OF SOFTWARE APPLICATION SOFTWARE Application system includes a variety of programs that can be subidivided into ganeral-purpose and function-specific application categories. A normal user rarely gets to see the operating system or to work with it.But all of us are familiar with application software which we must use to interact with a computer. Application softwares are used to improve our work ability. Different application softwares and system softwares are used in daily life. Some are productivity software, content software, assessment software, online software, drill and practice software, problem solving software, tutorials, multimedia softwares, stimulation, games, group ware, share ware, spy ware, free ware etc . Some softwares are used to produce and create documents and different presentations. In the application software have four type. It is general purpose, custom software, commercial off-the –shelf(COST) and open source -software. Genaral-purpose application programs are programs that perform common information processing jobs for end user. For example word processing, spreadsheet, database management, and graphics prgrams are popular with microcomputer user for home,education,business, scientific and many other purpose. Because they significantly increase the productivity of end user , they are sometimes known a productivity packages.Other examples include web browsers, e-mail, and group ware, which help support communication among workgroups and teams. Costum software is an additional common way of classifying software is based on how the software was the developed. It is the term used to identity software application that are developed within an organization for used to identify software applicationthat are developed within an organization for use by that organization. In other words, the organization that writes the program code is also the organization that use the final software organization. Software that is developed for a specific user or organization is custom software. Since it is built for a specific user, its specifications and features are in accordance with the user's needs. Commercial off-the –shelf(COST). It is developed with the intention of selling the softwarein multiple copies and usually for a profit. In this case, the organization that writes the software is not the intended target audience for its use. Several characteristics are important when describing COST software.As opposed to custom software, off-the-shelf software is standard software bought off the shelf. It has predefined specifications that may or may not cater to any specific user's requirements. When you buy it, you agree to its license agreement. First as stated in our definition, COST software products are sold in many copies with minimal changes beyond scheduled upgrade release. Purchaser of COST software generally not control over the specification,schedule, evolution, or access to either the source code or internal documentation.A COST product is sold, leased, or licennsed to the genaral public, but in virtually all cases, the vendor of the product retains the intellectual prperty rights of the software. Costum software, in contrast,is gerally owned by the organization that developed it, and the specifications, functionality, and awnershipof the final product are controlled or retained by the developing organization. Open- source software is the newest innovation in software development. In this approach, developers collaborate on the development of an application usingprogramming standards that allow for everyone to contribute to the software.Futhermore , as each developer completes his or her project, the code for the application becomes the available and free to anyone else who wishes to use it. Open source software is available in its source code form and the rights to change, improve and sometimes distribute its code are given under a software license . Software developed by an individual or an organization, where the source code is closed from public (not available openly) is referred to as closed source software. SYSTEM SOFTWARE System software consist of program that manage and support a computer system and its information processing activities.For example. Operating systemand network management programs serve as a vital software interface between computer networks and hardware and the application programs of the ends users. System software is the backbone of any computer. It consists of all the files and programs that work to make your computer operate as a computer. System software is automatically provided when you purchase a computer on the high street, and is installed along with the operating system. Providers of system software include Windows and Apple Mac.These offer regular updates which can be installed for free as they become available. Examples of system software include assemblers, system utilities, tools and deb uggers. We can group system software into two major categories. System management programs. Program that manage the hardware, software network,and data resources of computer system during the execution of the various information processing jobs of users, example of important system management programs are operating systems,network managemant programs, database management systems and system utilities.System development programs. It is program that help user develop information system program and procedur and prepare user programs for computer processing. Major software development programs are programming langguage translators and aditors ,and variety of CASE and other programming tools. PICTURE OF TYPE OF SOFWARE REFFERENCE O’Brien, J. A. ,Marakas, G. A(2011). Management information system. American : new york: McGraw Hill. Wikipedia, the free encyclopedia

Power Shifts In Intergovernmental Relations A Result Of...

Power Shifts in Intergovernmental Relations: A Result of Fiscal Federalism nbsp;nbsp;nbsp;nbsp;nbsp;Fiscal federalism is the result of the states dependence on the national government for funds. Until 1913, the national government had minimal monetary resources, thus possessing little control over the affairs of the states. Once effected, the Sixteenth Amendment resulted in the amassing of government funds on the national level. This reserve of money enabled the national government to initiate a multitude of national programs--such as the interstate highway--as well as provide grants to the states. It is primarily through these grants that the national government can exert influence over state affairs; for, by designating†¦show more content†¦In addition to Social Security, the government also established the Federal Emergency Relief Administration in 1933 which provided states with money for the needy. The Aid to Families with Dependent Children (AFDC) program was state-administered and federally funded, another example of state dependence on the national government. The Works Progress Administration is one of the multitude of programs implemented to provide employment to aid in recovery. Formerly a state responsibility, the national government became the primary source for relief. The national government broadened its powers in response to this crisis and began to supersede the state governments in decision-making. As a result, the states began to relinquish their power and defer to as well as depend on the national government. This increase in federal power did not exist solely under Roosevelts Depression-era administration but extended over to later administrations as well. nbsp;nbsp;nbsp;nbsp;nbsp;The remainder of the century until the present was marked by legislation limiting the states even further. During the Great Society of the 1960s, Congress passed Johnsons proposals for increased federal aid to education-- augmenting federal control and involvement over education, a power reserved for the states. Moreover, Congress passed Medicare and Medicaid, health insurance plans for the elderly and the poor or disabled, respectively, expanding the federal role in social welfare

Alcoholism in the 21st Century - 1743 Words

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