Energy supply chains and states Essay Example | Topics and Well Written Essays - 2750 words

Energy supply chains and states - Essay Example This paper will discuss the main actors in the oil supply chain and the roles they play, and analyze relations of power among the actors and regulation. It will also discuss the key arguments linking oil to war. Supply chains serve the key purpose of overcoming the gap between customers and suppliers and manufacturers (Bowersox, Closs & Cooper 2007). Operations that can only be done, or are best done, in distant locations are made possible by supply chain networks. Apart from their ability to bridge physical distance, or space gaps, supply chains also overcome, time gaps, quantity gaps, variety gaps and information gaps. Time gaps occur when the time between products being available and the time when consumers need to buy them differ. Quantity gaps occur when the stocks available from the suppliers cannot match the consumers’ demands, while variety gaps occur when consumers demand a wider product variety than can be available from one supplier. When there is an information gap , consumers are not able to know of the source or availability of products and the suppliers are also unable to know of potential consumers. The Main Actors and their Roles in the Oil Supply Chain In the oil industry, the key actors are the oil companies (which are the operators), the main contractors and sub contractors, and then the suppliers and consumers (Rushton, Croucher & Baker 2006). The existence of numerous actors has been necessitated by highly specialised and unique business processes, which encourage fragmentation. In the oil industry, the supply chain can distinctly be viewed through the different fragments concerned with exploration, production, refining, marketing and finally, the consumer. The oil companies, which may be state-owned or private organizations, interface on a worldwide scale with governmental entities, whereby some have direct links with the governments themselves. The main contractors are usually traditional service, construction or engineering firms, most of which have undergone nurturing under protective government policies on development for years. Suppliers and sub contractors are made up of regional agents, service companies and manufactures. The supply chain network is bound together by expertise, and the assumption that safety requirements and interruption-free operations should never come under compromise. Conventional definitions dictate that the large part of petroleum reserves are held by state-owned (or national) oil companies, which also produce most of the world’s crude oil supply. By virtue of their privilege of holding exclusive rights to the development and exploration of petroleum resources in their home countries, national oil companies also have the power to decide to what degree they may require the private companies’ participation in the activities of the industry. Further, the national oil companies are typically not compelled to strictly operate basing on market principles. For countries tha t are members of the