Oil Business - Advantages and Disadvantages Essay

Oil Business - Advantages and Disadvantages - adjudicate ExampleTypically, the entire oil business is divided into three main parts which are the upstream, midstream, and downstream sector. The upstream sector is concerned with the location and extraction of oil from various parts of the world succession the midstream is concerned with the processing of extracted oil to marketable products as well as the transportation of such products. twain the upstream and the midstream sectors are concentrated only in certain parts of the world such as Russia or the Middle East while the distribution industry which is part of the downstream sector is dole out throughout the world (Gary & Handwerk, 1994). Therefore, any alterations in the global market of oil force out either palmy or adversely affect the distribution industry signifi shadowertly. The unpredictability of the global market can too lead to many changes inside of the distribution industry, and the rising cost of fuel has only put a strain on the already straining oil distribution industry.One of the industrys strengths is that it is among the root in the line of industries affected by oil prices and therefore it can suffer minimally as compared to another(prenominal) industries when it comes to changes in oil prices. Because it is the freshman hit by the changes, it is also the first that can adapt and the first to be able to quickly overcome the changes to try to lessen losses based on the change in oil prices. Where other industries are affected conversely through the chain of order and sometimes have little room to do anything about the price of oil, the gas distribution is hit first and therefore can adapt most quickly with the other industries adapting around it.When less oil is mine and processed in the international market, independent distributors would have to compete to obtain what is available. This sort of competition can drive smaller distributors out of business. And for those smaller d istributors, this can cause problems, and may at first ascertain like an outright negative effect of gas prices, and a negative effect of the whole of the industry. exactly this negative opportunity for the smaller firms soon opens up a larger one for the bigger firms, which can then flex their economic muscle a little bit. It is this versatility and adaptability that helps the oil distribution industry to give-up the ghost at hard times when most other industries would fold upon themselves and crumble.