The size of energy or oil industry worldwide is large. A report of DOE (Department of Energy) indicates that fossil fuels (entailing oil, natural gas, and coal) constitute over 85 percent of the consumed energy in the world (Johnston 3). Oil industry alone supplies approximately 40 percent of the world’s energy needs (Puckette, Jim, and Zuhair Al-Shaieb 11).
The global capital expenditures for oil firms are approximated to be US$541.0b (Puckette, Jim, and Zuhair Al-Shaieb 12). The strong expansion within the exploration spending as well as development spending was offset by reductions or declines within property acquisition costs. Both the development and exploration spending rose by 20 percent in the year 2012 and increased by 48 percent from the year 2008 to 2012 (Zaman, Islam, and Mokhatab 7).
Studies reveal that all regions in the world have increases in the spending of oil, although the level or extent of reinvestment within gas and oil operations varies widely based on each region (Puckette, Jim, and Zuhair Al-Shaieb 12). The industries’ global plowback percentage is shown to be 54 percent between 2008-2012 whereas the United States registered 123 percent, the highest level recorded, and Europe recorded the lowest at 31 percent. The plowback percentage shows the total capital expenditures representing the percentage of revenues without production costs (Johnston 5).
Revenues and Profits
Global after-tax profits of oil industry is US$268.4b (Puckette, Jim, and Zuhair Al-Shaieb 12), this represents a 16 percent decline between 2011 and 2012. Both the gas and oil production grew by 2 percent within 2012 and revenues recorded an increase of 1 percent. The cost of production grew by 6 percent in the year 2012 because of higher costs for services, labor, as well as extra lease operating expenses. Depletion, amortization, and depreciation charges increased significantly within the year 2012 because many producers of natural gas within US and Canada registered property impairments because of low prices for natural gas.
The total number of oil industry globally depends on the definition of an energy or oil industry. There exist companies, which sell diesel, lubricating oil, and gasoline although call themselves names, such as, Smith Oil Company (SOC) but they refine nothing and produce nothing (Zaman, Islam, and Mokhatab 5). Therefore, there exist thousands of energy or oil companies within the globe producing and refining oil. Moreover, there are those that distribute oil products. The categories of industries differ from large companies, for example, BP, Shell, ExxonMobil, and Chevron to large Government-owned oil companies like Saudi Aramco, Pemex, Petrobas, Kuwait Petroleum Corp., Sinopec, and CNOOC. In contrast, there are several mid-sized firms producing oil and natural gas although do not refine oil products. Moreover, there are thousands of small-sized firms privately owned producing oil and natural gas.
Oil industry is an ever-growing sector. It is projected that petroleum consumption as well as other liquids is expected to reach its peak at 19.8m barrels in a day by 2019 (Zaman, Islam, and Mokhatab 6). Studies show that petroleum consumption as well as other liquids has been increasing by 0.6m barrels in a day as from 2011. However, this is expected to decline within all end-user sectors from 2040 (Puckette, Jim, and Zuhair Al-Shaieb 10).
Oil industry is a mature industry as it has passed emerging as well as growth phases or stages of industry growth. Sales and earnings grow slower in oil industries. For example, global capital expenditures in oil and gas industries increased by 13 percent in the year 2012. Global oil reserves grew by 3 percent (Johnston 3).
Johnston, Daniel. International Petroleum Fiscal Systems and Production Sharing Contracts. Tulsa, Okla: PennWell Books, 2009. Print.
Puckette, Jim, and Zuhair Al-Shaieb. "Naturally Underpressured Reservoirs: Applying the Compartment Concept to the Safe Disposal of Liquid Waste." 3.1 (2003): 10-12. Print.
Zaman, M. S., M. R. Islam, and S. Mokhatab. "Nanotechnology Prospects in the Petroleum Industry." Petroleum Science and Technology 1.2 (2012): 5-7. Print.