Development in oil and gas retail

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1.0 Introduction

            In principle, increasingly markets and analysts suggest that the United Kingdom while not running out of oil, the country should ensure that prices maintain above historical levels so that to attract the essential financial investment into refinery activities. In the United Kingdom government regulation is a significant factor influencing downstream industries concerning low returns and margins. Nonetheless, the United Kingdom’s refinery production as per the 2030 economic forecasts disclose a trend that the exercise will utilize historical levels of exploitation. For that reason, according to Elder and Serletis (2010), this move will lead to an increase in the level of competition among countries that will result in attracting substantial investment from international companies.

            Even so, the future prices would remain between $60 and $80 per barrel to 2030 according to the data compiled and analyzed by International Energy Agency under the present policies due to the sluggish supply of crude oil. Besides, Myers (2005) asserts that courtesy of the International Energy Agency, medium-term forecasts reveal that the current rate of investment into refinery activities could be as little as 20 percent below what would be deemed as satisfactory in meeting the global demand. One of the most notable factors behind the firming of these expectations in the United Kingdom has been highlighted by the weaker than expected projections for expanding oil supply.

            Notably, this paper-based report examines the various drivers and barriers regarding financial investments in refinery activities based on company data and projections complemented by prospects for capacity expansion. The oil companies in the United Kingdom seek investment into refinery activities due to various reasons, for example, to expand the existing business. For that reason, it is crucial that the oil companies and organizations identify and analyze the key drivers of an investment opportunity. On the other hand, financial investment barriers can be subdivided into two, for instance, 'below ground' and 'above ground' barriers (Mitchell, 2007). Below-ground barriers are related to technology and geology; these factors pose the challenge of project delays due to cost overruns resulting from the scarce availability of skilled labor. Similarly, 'above ground' barriers hinder financial investment into refinery activities concerning macroeconomic factors.

2.0 Drivers to financial investments                            

2.1 Oil Financial Investment and the Macro-economy