Oil Business - Advantages and Disadvantages Essay

Oil Business - Advantages and Disadvantages - Essay ExampleTypically, the entire oil color business is divided into three main parts which are the upstream, midstream, and downriver sector. The upstream sector is concerned with the location and extraction of oil from various parts of the world while the midstream is concerned with the processing of extracted oil to marketable products as well as the transportation of such products. Both 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 indus get word which is part of the downstream sector is spread throughout the world (Gary & Handwerk, 1994). Therefore, any changes in the world(prenominal) market of oil shag either favorable or adversely affect the distribution industry signifi nominatetly. The unpredictability of the global market can to a fault lead to many changes inside of the distribution industry, and the rising cost of fuel h as only put a strain on the already straining oil distribution industry.One of the industrys strengths is that it is among the first in the line of industries affected by oil prices and therefore it can suffer minimally as compared to some otherwise industries when it comes to changes in oil prices. Because it is the first hit by the changes, it is also the first that can adapt and the first to be able to quick 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 go down on distribution is hit first and therefore can adapt most quickly with the other industries adapting around it.When less oil is mined 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 sm aller distributors, this can cause problems, and may at first look like an outright negative effect of gas prices, and a negative effect of the whole of the industry. But 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 survive at hard times when most other industries would fold upon themselves and crumble.