A barrel of oil is no longer a leaky cask. Rather, it is an economic concept.
As a result, creating value along the supply chain has evolved from streamlining operations to exploiting operational and commercial synergies. The emphasis has shifted from vertical integration and expertise in specialized energy sectors to a tightly coordinated system in which every opportunity to increase profit margins is pursued. The agile system has the potential to quickly address supply-and-demand imbalances through access to energy storage and a focus on spot sales rather than long-term contracts. A certain quantity of oil can only be produced once, but it can be traded multiple times to maximize profit throughout the supply chain.
Video Spotlight: Difficult Cooperation in the Oil Industry
This post is based on the Forbes article, Is a Complex Value Chain Squeezing Every Cent from a Barrel of Oil?, by M. Ashraf, June 23, 2021, and the YouTube video, The Terrifying Oil & Gas Shock of 2021|$10 Gas Spike, by MHFIN, July 5, 2021. Image source: Grassetto/iStock/Getty Images.
1. Why are vertical integration and specialization along energy product lines outdated? Are those systems essentially “leaky” barrels?
Guidance: Rockefeller, the Continue reading