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Economics Essay

1175 words - 5 pages

Differentiating Between Market Structures

Kilpatrick McGollie

ECO/365

April 14, 2014

Vilma Vallilee

British Petroleum is a multinational oil and gas company headquartered in London, England. BP is the sixth largest energy company by market capitalization the fifth largest company in the world in regards to revenues. BP is the sixth largest oil and gasoline companies, measured by production and ...view middle of the document...

The economic concept of positive and negative externality comes full circle with the oil leak BP had to endure in the Gulf of Mexico. The negatives consisted of millions of dollars lost due to production of shrimps, fish and other fish products. Fisherman lost income derived from the billion dollar tourism industry of Louisiana due to the gulf oil spill. There were millions of dollars in cost trying to save wildlife and wildlife breeding grounds lost due to the oil spill. Due to the oil spill; oil priced increased as part of the moratorium on deep water drilling operations. Jobs were lost due to the suspension of deep water drilling operations. Health cost increased due to clean-up efforts to frontline workers with pollution to the air, causing respiratory ailments. The opposite side of the coin presented some positives as a result of the oil spill. There were millions of feet boomers employed to prevent oil from spreading uncontrollably. Boomer production means increased income for the manufacturers of this material. Millions of dollars millions were spent on dispersants that greatly benefit the producers of this chemical. Thousands of kiddie scoopers were sold at $2 each benefiting the manufacturers and there was is an increased demand for respirators, which means increased income to producers of this device. 30,000 cleanup workers were hired and 200 portable toilets were rented at $200,000 a month increasing income of providers more than three times. Small four-bedroom houses near the location of the oil spill were rented at $45,000 per month at the lowest
hotels in the gulf area are fully booked for six months which means increased income.
$360 million dollars was spent for a project to build six sand traps meant to protect Louisiana's wetlands from spreading oil. There was also income derived from production of technologies to cap like robots and capping domes. Vertical mergers are also a major component of British Petroleum. BP Amoco and ARCO confirmed reports that the two oil giants were negotiating a merger agreement. The announcement created vast controversy about the impact the new organization would have nationally. Pursuant to an agreement and plan of merger dated August 11, 1998, BP made plans to acquire all of the outstanding common stock of Amoco in exchange for stock of BP valued at the time of the agreement at approximately $48 billion. The new combined entity was to be renamed BP Amoco. As a result of the merger, BP’s shareholders would hold approximately 60%, and Amoco’s shareholders would hold approximately 40%, of the new combined entity.
The FTC carefully examined all of the areas in which BP and Amoco’s operations might overlap...

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