The reduced prices in Oil and Gas have not just created an impact on the seven sister’s cartel but it has brought the decline in the overall industry. The reduced prices are due to fact of the increased supply in the petroleum products. According to an article publish by Helman (2015) in Forbes, he stated that the prices of the crude oil has reduced more than the anticipation. 70% reduced prices from 2014. The supply has surpassed the demand by a big number. The oil now available for consumption is too much and it can be said that society will find itself swimming if this continues. The shift and movement in the oil prices have an impact on the chemical markets across the globe.
Cutting Jobs and Budgets
The oil companies around the world have cut down jobs and production budgets to remain competitive. Analyst have informed about this effect of price decrease that will have on the industry. Different companies, including the industry leaders announced that they were looking forward to reduce their budgets as well as cut down various jobs to remain effective and face the consequences that low price is having on them. Many of the oil manufacturers have to adjust and revise their budgets.
The organizations are penetrating for less oil, which is good news for climate. If the impacts of climate change are ignored, many fossil fuel will be left under the ground.Reports of various climate change papers suggests that, about 80 percent of the fossil fuel should remain unburned if the world needs to prevent the rise in temperature by even two degrees. This requires a major transformational change in the energy system of the world. However, low carbon industry will get the benefit or not, this is still debatable.
Prices Effect Vary by Segment
The low price atmosphere constitutes a substantial breeze for the energy value delivery, mainly for exploration and production firms. For the downstream sector the time is relatively good and has been a blessing for them. The current environment for them offers growth and profit maximizing opportunities. Downstream companies now need to realize the dynamics of their existing market and design strategies very carefully if they think to sustain the positives from this low priced market. The plunge has effected in their cost materially. Simultaneously, that has also increased the demand for their product, pushed by a spontaneous in economic development caused by the drop in oil prices. The margins for these companies have widened respectively. The actions they will have to take must be quick, the window of opportunities will not remain open forever.