ExxonMobil Corp.: A Case Study
ECO 201 – Microeconomics
Dr Greg Randolph
June 13, 2014
The purpose of this paper is to outline the company profile for Exxon Mobil; its business stance, policies, sustainability, economic responsibility and profitability. It will examine such factors as supply, demand, competitive advantages, market structure, and entry barriers. The oil and gas industry as a whole will referenced with the purpose of giving a better context to the environment in which Exxon Mobil operates. Recommendations for a more socially and economically responsible future will be made, as well as predictions based on company research for future business.
ExxonMobil is an American-based multinational oil and gas corporation headquartered in Irving, Texas. ExxonMobil, formerly known as Standard Oil of New Jersey (Exxon) and Standard Oil of New York (Mobil), respectively, was once separate companies until the two merged on November 30, 1999. Both Standard Oils were descended from John D. Rockefeller’s Standard Oil Company. The company is also affiliated with Imperial Oil, which operates out of Canada (ExxonMobil, 2014). The world's sixth largest company by revenue, ExxonMobil is also the second largest publicly traded company by market share. The company was ranked number 6 in the world in Forbes Global 2000 list in 2014 (Forbes, 2014). ExxonMobil's reserves were 72 billion BOE (barrels of oil equivalent) at the end of 2007 with expectations of that reserve to last approximately 14 years. ExxonMobil currently operates 37 oil refineries in 21 different countries worldwide, producing a combined 6.3 million barrels of refined oil daily. ExxonMobil is the largest refiner of oil in the world, an honor once given to Standard Oil in 1870 (ExxonMobil, 2014). In 2008, ExxonMobil remained the largest of the world's corporate super powers, producing 3.921 million barrels of oil daily in 2008, dropping from 6.3 million barrels in 2007, or approximately 3% of total global production. However, their numbers are lower than several other large, state-owned petroleum companies. When ranked by oil and gas reserves, it is currently ranked 14th in the world today (ExxonMobil, 2014).
Supply and Demand
The oil, gas, and petrochemical businesses are essentially goods in trade businesses, as they produce products available for sale to consumers. ExxonMobil’s operations and earnings are vulnerable to possible changes in oil, gas and petrochemical prices and by changes in margins on refined products. In turn, oil, gas, and petrochemical product prices and margins depend on local, regional and global events or conditions that affect supply and demand for the relevant product. Since government regulations on gasoline prices were eliminated, gasoline and diesel prices have continually risen to a rate where consumers are looking for alternatives or have turned to decreasing their gasoline usage. Economic conditions
The demand for energy and petrochemicals is closely related to overall economic rates, positive or negative. The occurrence of recessions or other periods of low or negative economic growth will have a direct detrimental effect on the demand of petroleum products. Other factors that may affect world economic conditions are changes in growth rates of a country’s population or times of conflict. This can be demonstrated by the price at service stations whenever there is a problem within a county that is a high producer of oil. The government will often explain the instances of rising prices as a result of national emergencies, even if those emergencies are in countries that we do not import oil from, such as Iran. Economic conditions that weaken financial markets and institutions also pose risks to the financial well-being of ExxonMobil. These risks may include, but are not limited to, risks to the safety of their assets and to...
References: Corporate Watch. (2014). Exxon Mobil and Esso UK. Retrieved from http://www.corporatewatch.org/content/exxon-mobil-overview.
ExxonMobil. (2014). Our history. Retrieved from http://corporate.exxonmobil.com/en/company/about-us/history/overview.
Forbes.com. (2014). The world’s biggest public companies. Retrieved from http://www.forbes.com/global2000/.
Gaebler Ventures. (2013). How elastic is your business? Retrieved from http://www.gaebler.com/How-Elastic-Is-Your-Business.htm.
In WriteWork.com. (2004). What is the structure of the world oil market? Retrieved from http://www.writework.com/essay/structure-world-oil-market.
Personal Liberty. (2014). No viable substitute for oil, gas. Retrieved from http://personalliberty.com/no-viable-substitute-for-oil-gas/.
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