Financial Management - PepsiCo vs. Coca-Cola
Sharrone L. Caldwell
Business Enterprise 508
Strayer University – Online Campus
Dr. Victor H.P. Villarreal, Ph.D.
March 7, 2011
This paper will focus on a possible option that Marathon could take to reduce the time involved in the production process. There will be a discussion on the relationship between the retail price of gasoline and the price of crude oil. Another discussion will explain what Marathon could do to keep the price at the pump the same without losing profits if the price of crude increased 10%. Finally, a discussion will take place on prohibiting deep water drilling off the US coast, and how US companies remain competitive lead to the adjustment of tax legislation so that it allows American companies to operate in other countries without being taxed twice – by the hosting country and at home.
Marathon is definitely among the world’s leaders when it comes to integrated energy. The company is well known for its ability to apply innovative technology to discover and develop valuable energy resources. The primary exploration activities are in the United States, Canada, Norway, Indonesia, UK, and Equatorial Guinea. Marathon Oil is keeping up a steady pace when it comes to competition for profits in the oil and gas industry. Marathon reported reserves of 1.7 billion barrels of oil in 2009, including 600 million barrels of synthetic oil from oil sands (Hoovers, 2011). In addition, Marathon Petroleum supplies approximately 4,600 Marathon brand US gas stations and 1,600 Speedway gas stations with fuel (Hoover, 2011). The gas stations are independently owned and operated. In addition to gasoline, Marathon locations offer a wide variety of services, such as convenience stores, car washes, fast food restaurants, and repair services (Marathon, 2008). Ability to Pay Current Liabilities One possible option that Marathon could take to reduce the time involved in the production process is by widening several pipelines to accelerate the amount of oil flowing through the pipes. Since the pipelines are the most feasible way to transport large quantities of oil, building lines both above and under water would allow for easy transporting. Trans Alaska Pipeline System is one of the most popular lines in the United States because significant portions of the system are above ground. The oil that is produced in Alaska, moves south on TAPS and is then carried on tank ships to the west coast. Once the oil reaches its destination, it is again moved by pipeline to refineries along the west coast of the United States (Guarino, 2011). However, in order for Marathon to consider widening the pipelines in Alaska to reduce production processing time, serious consideration for public safety has to be address. The United States Department of Transportation’s pipeline safety division states that 800 miles of the pipeline is corroded and poses a serious public safety and environment issue. Unfortunately, limited use of the Alaskan pipeline has caused increased corrosion (Guarino, 2011). The pipelines are made of steel and plastic tubes with lengths up to 120 centimeters. The pipelines are buried at a depth of approximately 3 to 6 feet, and pump station along the pipeline keep oil moving at a speed of 4 to 8 kilometers per hour. With that in mind, by widening several of the pipelines to 200 centimeters, it will almost double the size of the lines, whereby doubling the amount of oil flowing through. Profits over the Past Three Years
Fuel is strongly influenced by supply and demand, just like any other commodity. The fuel industry is one of the world’s largest and most complex industries around. Crude oil can have a direct affect on retail prices (pump prices). Shell Canada explains...
References: Marathon, (2008), Corporate Profile, Retrieved February 8, 2011
Hoovers, (2011), Marathon Oil Corporate, Retrieved February 8, 2011
Pipeline 101, (2007), Crude Oil Pipelines, Retrieved February 9, 2011
Guarino, M., (February 12, 2011), Alaska Oil Pipeline has Safety and Environmental Risks,
Retrieved February 12, 2011
http://www.csmonitor.com/Environment/2011/0212/Alaska-oil-pipeline-has-safety- and- environmental-risks
The Atlas of Canada, (February 9, 2009), Pipeline Infrastructure, Retrieved February 9, 2011
Shell.com, (2008), Understanding Fuel Pricing, Retrieved February 10, 2011
Hamilton, T., (May 3, 2007), The Changing Relationship Between the Price of Crude Oil and the Price At the Pump Retrieved February 10, 2011
Retrieved February 12, 2011
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