PEST ANALYSIS

PEST Analysis



PEST Analysis

Introduction

Oil is an integral part of a country's economy. Countries that have reserves in oil have a growing economy; look at the Middle East “The U.S. Department of power state that the Middle East has two-thirds of all the world's oil reserves”. As the economy continues to grow, the demand for oil therefore increases. This leaves major oil companies like Shell and BP trying to stay ahead of the demand to earn substantial profit.

As countries reap the benefits from oil, there is also a prominent risk to our environment. The adverse environmental and social consequences of oil have been well documented: climate change caused by the production and the use of oil and gas, local air and water quality impacts around petroleum refineries, the “resource curse” that has afflicted many countries with significant oil and gas resources, allegations of complicity in human rights abuse perpetrated by state or private security, the failure to use the revenues from oil to provide lasting benefits in public health and education.

Furthermore, “oil and gas exploration and production has the potential to cause severe environmental degradation, not only to the physical environment, but also to the health, culture, and economic and social structure of local and indigenous communities”.

This departs the oil industry in UK in a difficult situation having to persuade not only the shareholders, but the government and the general public alike. Causing a three held at bay dispute as illustrated in design drawing 1.1

Diagram 1.1 shows the demand from the oil industry

 This report focuses on the UK oil commerce and its sustainable development. I have use a wide variety of resources by PEST analysis. Moreover I have reviewed the current and prospective drivers in the UK business environment that might encourage the oil industry to improve its ecological, ethical and social performances. 

Political

Because oil is a valued commodity, politics can play a vital part in controlling its ownership, many wars have been fought over its control and ownership, “oil - due to its sheer value as a commodity - aggravates tensions between rival ethnic groups and with central governments over royalties and compensation in many cases this leads to brutal repression by the police and military to keep dissent under control” (the oil industry - do or die). A fine example of how politics can play a cruel role in controlling the world most valued commodity is in Chechnya, where they withdrew from Russia only because the planned pipeline which goes through Grozny, carrying Caspian oil to the Black sea ports. The confrontation came to an end when Yeltsin appreciated that his military operation had cost more than re-routing the pipeline. The greatest area of conflict over oil of course remains in the Middle East, in particular Iraq, the US invasion of Iraq was subsequently because of oil and not weapons of mass destruction, despite what George W Bush and Tony Blair say. This conflict is due to the fact that the Middle East supplies 38% of the world's ...