The BIGGEST Petrol and Oil refining company in Singapore?
Shell – It’s History• Set up Singapore’s first oil refinery in 1961• Bukom Refinery is the largest Shell refinery in the world• Shell produces up to 500,000 barrels-per- day of petrol ( enough to fill Olympic pool 31 times )
AnalysisThe Petrol industry is an OligopolyPossesses these characteristics:• Few large dominant firms• Homogenous product• Difficult barriers to entry
Homogenous Product• Petrol is a homogenous commodity• It is easy for competitors to monitor individual firms’ prices.
Difficult Barriers to EntryDue to shortage of land, there is less landavailable for the allocation of petrol stationsites. Hence, the government charges highland premiums for retail petrol sites.
Difficult Barriers to Entry No. of Petrol Stations per Company Player Number of Petrol Stations ExxonMobil (Esso) 65 Shell 63 SPC 38 Chevron (Caltex) 33 Total 199
Interpretation• The occasions of Price Changes- July 5, 2008 ( Price increase )- July 9, 2008 ( Price decrease )• Shell initiated the reduction in petrol prices, other companies followed• Strong mutual interdependence between these large firms• Practice the game “ follow the leader” Oligopoly model : Price Leadership
Evaluation of Price Elasticity Change In Income
Various Market Structures Perfect Monopolistic Oligopoly Monopoly Competition CompetitionNumber Large Many Few Oneof SellersType of Homogenous Differentiated Homogeneo Uniqueproduct us or Differentiate d productEntry Very easy Easy Difficult Impossiblecondition
Factors affecting Demand andSupply• Agreement among Producers• Changes in Income• Number of Suppliers• Changes in the Complements in Production
Agreement among ProducersAll of Singapore’s Crude Oil is suppliedfrom The Middle East