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Royal Dutch Shell Essay

1927 words - 8 pages

Overview
The oil industry is an integral part of the U.S economy and with new legal revisions in place; Royal Dutch Shell will be better able to develop technologies to continue advancing this industry. Also know as Shell, they are headquartered in the Netherlands and are the second largest energy company in the world. “Shell has operations in over 90 countries, produces around 3.1 million barrels of oil equivalent per day and has 44,000 service stations worldwide (Shell, 2011).” Shell Oil Company, its subsidiary in the United States, is one of Royal Dutch Shell’s largest businesses. It has integrated itself into every area of the oil and gas industry, including exploration and ...view middle of the document...

. With jobs, billions of dollars and a highly reliable source of energy for the U.S on the line, the passing of this project on to another country would add to the instability of the U.S economy. As it stands today, Shell is not a business partner on the Keystone Project. Therefore, if the US passes on the project, it may enable Shell to have a chance to have involvement in the trillion dollar project. The decision to hold on the project will come, ironically, after next year’s election.
Economic Analysis
The oil industry can be very volatile and affected greatly by regulations, or the lack thereof, natural disasters and the continued hostility in the Middle East. Shell along with all other companies will be subject to Obama’s plan for oil and gas companies to begin paying greater drilling permit fees to the Bureau of Land Management. “Crude oil prices have risen 70% since last summer while the U.S dollar fell 10%. Crude up to $102 a barrel in November, Crude oil prices will rise to over $120 a barrel after 2013” (Sands, 2011). This is one way for U.S to make a possible $66 million profit without spending any money. The industry also could be hit with a 9.7 cent-per-barrel excise tax on all crude oil and imports of oil products. This tax would fund the cleanup of hazardous waste sites. While Shell has the financial resources to handle these new restrictions, they will greatly affect their business strategy. Shell will not be as willing to take a chance on drilling where there is not a large amount oil to be extracted. This will help the environment as a whole forcing oil companies to be more aware of what is necessary to complete jobs in an environmentally friendly manner. With natural gas becoming a better a more viable source, Shell has spent a great amount of resources for future energy.
Socio-Cultural Analysis
Oil drilling is a very hot topic with U.S citizens and collectively most are against drilling altogether and wish to find alternative energy sources or ways to extract oil. Popular opinion finds that companies have seemingly snuck by with poor methods and procedures that have created oil disasters. Now, the proposed 1,700 mile Keystone Pipeline is set for construction from Canada to Texas. Not only are citizens angry but environmentalists argue, “the pipeline would deepen U.S. dependence on oil-sands, which produces higher amounts of greenhouse gases than conventional oil” (Yakabuski, 2011). This is a major factor and “this year saw the highest oil and petroleum output in a decade worldwide” (Arvedlum, 2011). Consumers are dealing with rising gas prices and the lowering of the value of the U.S dollar. Obama has recently placed the Keystone Project on hold in order to research more possible affects to the environment. While the U.S may be taking proper steps to address the socio-cultural issue, the choice to wait may cause conflict as Canada may look to other countries to partner on the project and move it...

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