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Down to business
| Q: | What does natural gas have to do with your local hospital? | A: | Well it runs the central heating of course. But there's a more subtle and surprising answer. The oil and gas industry is closely connected with the economy of the UK, which is a major producer of natural gas. The tax on profits made by the gas companies goes back to the government, and this money can then be spent on infrastructure such as hospitals, roads and schools. |
The economics of oil and gas
The state of the oil and gas industry can have an even wider impact on the global economy. In other words, those who work in the industry not only work in a fascinating business arena, but have a small part to play in a broader political drama.
Products from oil and gas are used as fuel for cars, trucks, ships and planes; plastics are made from petrochemicals and gas is used for domestic fuel and electric power. Therefore, the price of these raw materials can affect not only the supply of energy, but also the transport and manufacture of the products of all other industries.
So keeping oil prices stable is in the best interests of domestic and industrial users as well as the oil and gas companies themselves. Groups of oil-producing countries work together to co-ordinate prices and supply policies and avoid major fluctuations in prices. Negative effects occur if prices are too high - consumers will have to pay more for the fuel, so demand drops. Oil and gas companies lose profits and have to find even more cost-effective ways of finding and using fuels. In contrast, if oil prices are too low, then it may not be worthwhile for oil and gas companies to explore new fuel reserves. As a result, governments and producing countries could lose tax revenue.
As economic concerns affect all those who produce, sell and use oil and gas, people who understand business issues are involved in all these stages. From the overall strategy for company investment to the advertising of products in your local petrol station, business people and accountants help to ensure that the industry remains profitable and responsible.
Commercial analysts work closely with engineering teams to ensure that their work stays within budget and find the best customers for the product. Marketing experts are involved in logistics and distribution, as well as advertising, to target the best market for the products. There is financial support for all of the operations, whether they are the production team who need to organise the trading of oil, or the research and technology department who need to focus on commercial application for new methods and products.
| Matthew Clarke (23) is with Trafigura. He works in trade support and did a degree in mathematics.
I spend a lot of time just trying to work out how price changes affect a business deal. Sometimes, you can get very bogged down in looking at numbers without really thinking of the vessel which is stuck in bad weather halfway towards the Panama Canal. The big picture for me is the whole trade - one deal, from loading the crude on board to unloading it on the other side of the world. I have to consider all the problems in can encounter and all the implications of these for making money. When I graduated I wasn't entirely sure what I was letting myself in for, but the gamble seems to have paid off. Although it's an office job, the atmosphere here is incredible. In a small company like this one the personal contact really makes you feel that if you do it right, you'll go places! |
I
don't need to have a detailed knowledge of the whole oil and gas process.
In fact, I knew nothing about the industry when I joined. In this small
company you learn as you go along. I now work in hedging - a way of protecting
yourself from risk. We buy and sell things on paper to balance the risks
of physical trading. I'm part of a team which look after the people trading
the physical crude oil. We check up on and support them to see that what
they are doing is making money.