ExxonMobil is the largest publicly traded oil and gas producing company. ExxonMobil does business in 200 countries world-wide (1). Some countries are designated for exploring gas and petroleum, and some are designated for manufacturing chemicals, lubricants, and market fuels (1). ExxonMobil's world-class petroleum portfolio gives access to proven reserves of 21.9 billion oil-equivalent barrels of oil and gas, which is the highest in the industry (1). The company's discovered resources consist of 72 billion oil equivalent barrels of oil and gas. On average, each day, they produce 2.5 million barrels of oil and 10.5 billion cubic feet of gas (4). Their asset base, includes more than 60,000 production wells in 1,800 fields in 25 countries. With activities in some 40 countries, ExxonMobil's oil and gas fields extend from West Texas to West Africa and from Australia to Alaska (1). The company operates in deep seas, arctic ice and deserts in some of the world's most remote regions (1). ExxonMobil is the world's largest nongovernmental marketer of equity natural gas. The company has access to 56 trillion cubic feet of proven reserves and discovered resources of more than 185 trillion cubic feet. It has gas sales in 25 countries and across five continents (4).
Oil is Exxon’s primary means of revenue. In the Oil industry there are competitive forces that function in the industry, but none stronger than the barriers of entry. One of the major barriers to entry is finding a supply of petroleum or gas. The cost of research, discovery, and output of gas and petroleum can easily reach the 100’s of millions of dollars. Another problem a new company would face, is receiving permission to develop oil in a foreign country. Because of the amount of money involved in oil, countries tend to produce oil on their own, rather than share the profits. The large investment in capital and the political connections needs to enter the industry, make it almost impossible to start a new oil company.
The second force that affects the oil industry is the bargaining power of suppliers. In the industry, suppliers have all the power. There is no international trade commission, so oil can be dispersed at any pace and be sold at what ever price suppliers want. The inelasticity of oil and the constant fear that oil is on the verge of running out, gives suppliers absolute power in the industry. The lack of a viable substitute, lack of buyer power, and the competition in the industry resembling a cartel, both keeps oil prices high and keeps consumers at bay.
Competition in the oil industry is separated by about 10 cents here in the US. The difference between ARCCO, Shell, Mobil, and Chevron, is between 1 and 10 cents. Oil companies don’t compete with each other. With gas prices constantly fluctuating towards the $3 mark, there is little room to raise prices. Consumers will not pay 25 cents more for a gallon of gas. Although Chevron Texaco and ExxonMobil make have a...