Energy: Introduction


The energy industry is comprised of all activities involved in extracting, processing, and distributing natural resources to create energy. While it includes alternative energy sources, it is dominated by the production of petroleum and natural gas. The petroleum sector has always been unstable as disturbances in the supplier regions may greatly affect the supply, which in turn affects prices. Though bad for the consumer, the rise in the price per barrel of crude oil is good news for oil companies.

The Energy industry is Concentrated. The production in this industry is dominated by a many large firms that are capable of shaping the industry’s direction and price levels.

Primary Demand Drivers

  • Economic activity
  • Population growth

Profitability Drivers

  • Increasing production from existing wells
  • Achieving high success rate of new wells drilled
  • Increasing production from existing wells
  • Creating the best mixture of products
  • Controlling the short term demand cycle
  • Managing risk
  • Increasing efficiency of operations