skip to main content
OSTI.GOV title logo U.S. Department of Energy
Office of Scientific and Technical Information

Title: European oil companies struggle to meet the challenge of an uncertain future

Abstract

Oil companies have traditionally favored vertical integration, controlling the flow of oil from the drilling rig through refineries to the gasoline pump. The development of the downstream infrastructure has largely been driven by the retail market, with other fuels often treated as {open_quotes}marginal{close_quotes} businesses that leverage the retail distribution infrastructure. High-margin niche business such as lubricants and bitumen exist, but their volumes are typically small compared to the retail market. Other high-volume businesses such as aviation and heating fuels are closely tied to traded markets and generally have small market margins. Price levels at the retail site are crucial to the profitability of the downstream business. Price levels at European retail stations have historically been high when compared with North American prices, owing to government taxation. Despite the efforts of the oil companies to educate the consumer on what is the real cause of high prices, the oil majors are blamed when fuel prices fall, the consumer often feels as though lower prices had to be forced on the oil companies. Therefore, European consumers are more price sensitive than consumers elsewhere, and in markets which are deregulated on price, oil companies are losing market share to hypermarkets and supermarkets. Inmore » the U.S., increases in fuel tax levels are likely to result in a heightened price awareness for the average American, increasing the probability that hypermarkets will also enter the U.S fuels market.« less

Authors:
Publication Date:
OSTI Identifier:
482547
Resource Type:
Journal Article
Journal Name:
Fuel Technology amp Management
Additional Journal Information:
Journal Volume: 6; Journal Issue: 4; Other Information: PBD: Jul-Aug 1996
Country of Publication:
United States
Language:
English
Subject:
02 PETROLEUM; PETROLEUM INDUSTRY; ORGANIZING; EUROPE; PETROLEUM; MARKETING; SUPPLY AND DEMAND

Citation Formats

Reed, P. European oil companies struggle to meet the challenge of an uncertain future. United States: N. p., 1996. Web.
Reed, P. European oil companies struggle to meet the challenge of an uncertain future. United States.
Reed, P. 1996. "European oil companies struggle to meet the challenge of an uncertain future". United States.
@article{osti_482547,
title = {European oil companies struggle to meet the challenge of an uncertain future},
author = {Reed, P},
abstractNote = {Oil companies have traditionally favored vertical integration, controlling the flow of oil from the drilling rig through refineries to the gasoline pump. The development of the downstream infrastructure has largely been driven by the retail market, with other fuels often treated as {open_quotes}marginal{close_quotes} businesses that leverage the retail distribution infrastructure. High-margin niche business such as lubricants and bitumen exist, but their volumes are typically small compared to the retail market. Other high-volume businesses such as aviation and heating fuels are closely tied to traded markets and generally have small market margins. Price levels at the retail site are crucial to the profitability of the downstream business. Price levels at European retail stations have historically been high when compared with North American prices, owing to government taxation. Despite the efforts of the oil companies to educate the consumer on what is the real cause of high prices, the oil majors are blamed when fuel prices fall, the consumer often feels as though lower prices had to be forced on the oil companies. Therefore, European consumers are more price sensitive than consumers elsewhere, and in markets which are deregulated on price, oil companies are losing market share to hypermarkets and supermarkets. In the U.S., increases in fuel tax levels are likely to result in a heightened price awareness for the average American, increasing the probability that hypermarkets will also enter the U.S fuels market.},
doi = {},
url = {https://www.osti.gov/biblio/482547}, journal = {Fuel Technology amp Management},
number = 4,
volume = 6,
place = {United States},
year = {Mon Jul 01 00:00:00 EDT 1996},
month = {Mon Jul 01 00:00:00 EDT 1996}
}