A couple of decades ago the demand for gas and oil far exceeded the supply resulting in high prices for these forms of energy for consumers and high profits for oil and gas cartels. However, in recent years circumstances in the oil and gas industry has changed and according to the latest oil and gas report, the oil and gas companiesare finding it imperative to increase their operating efficiency in order to make profits in today’s new energy climate. There are several reasons for these massive changes in the oil industry. Let’s take a look at some of these changes.
Diversification of the Industry
While some of the big oil cartels are still functioning, there has been a huge diversification in the industry with more and more companies entering oil and gas exploration and production. This diversification combined with newly found sources of oil and gas has lead to an increase in supply of gas and especially oil. By and of itself, while this increase in supply of gas and oil resources would lower prices, making these forms of energy more affordable for consumers while lowering the profit margins slightly for the gas and oil company. However, increasing supplies is only the tip of the iceberg that has the oil and gas companies showing concern.
Changes in Demand and Alternative Forms of Energy
With new and alternative form of energy becoming more and popular combined with continuing economic problems in many countries around the world, there is less demand for oil than there once was and although the gas demand is continuing to increase, it is increasing at a slower rate than the gas companies would hope for. This means that in order to make a profit during this period of imbalance between supply and demand for gas and oil, gas and oil companies are being forced to increase the efficiency of their operations.
What the Oil and Gas Industry is Doing and Needs to Do to Increase Profits
The Gas and Oil industry has already begun to take steps to increase their operation efficiency. They have embraced new technological advances and are using Robotics and digitization to produce oil at a lower cost to the company. They are also reviewing their projects and focusing those that are producing well while cutting back on further exploring. However, there is still more that these companies need to do in order to make a profit during this time of increasing supply and decreasing demand. Some steps these companies need to take include:
- Hiring Experienced Project managers
- Standardizing more of their processes
- Learning from their mistakes and improving on them
While currently the future of some of the oil and gas companies may look bleak, commitment from many of these companies to improve the efficiency of their operations will let them earn profits even during this time of increasing production and decreasing consumption. In the end both the Oil and Gas companies and consumers will benefit.