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MGMT 1035 > Final MGMT 1035: Week 11 > Flashcards

Final MGMT 1035: Week 11 Flashcards

Oil Indusry

1
Q

What is gasoline?

A

Gasoline is a byproduct of the refining of oil into kerosene

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1
Q

In 1953 The C.I.A. and British Intelligence organized the overthrowing of what countries government?

A

Iran.

due to Iran nationalizing their oil industry

Overthrow of Premier Mohammad Mossadeq with CIA and British support because of his support for the SOVIETS

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2
Q

In Canada the original oil industry was created in what region?

A

Southwestern Ontario

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3
Q

The U.S. Energy Information Administration (EIA) defines spare capacity as…

A

The volume of oil production that can be brought online within 30 days and sustained for at least 90 days.

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4
Q

The oil embargo of the mid 1970s was sparked by what international event?

A

The Yom Kippur War.

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5
Q

In 2022 which country had the highest total oil reserves?

A

Venezuala.

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6
Q

Willian Knox Darcy developed British Petroleum to exploit the oil resources of what country?

A

Persia (Iran)

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7
Q

What does a spot transaction in crude oil refer to?

A

On the spot purchase of a single shipment

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8
Q

“Upstream” Oil and Gas companies…

A

identify, extract, or produce raw materials.

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9
Q

Who brought commercial production to Germany

A

1880s Carl Benz

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10
Q

Carl and Bertha Benz, 1880s

A

built wagon, coaches, and developed the first internal combustion engine vehicle

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11
Q

William Knox Darcy,

A

o Wanted a monopoly for the extraction on sale of oil in Middle East
o Founded what became British Petroleum
o Got a monopoly by the British

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12
Q

Whose the founder of Standard Oil?

A

John D. Rockefeller

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13
Q

Which government breaks up Standard Oil, due to its success?

A

American Gov.
under the Sherman Antitrust Act of 1890

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14
Q

Henry Ford’s Model T, 1900s

A

o Becomes best-selling car in the world
o Borrowing ideas from the scientific management theory
o Dedicated assembly line  building cars quickly and prices drop

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15
Q

Why did Iran resent Western oil companies after World War II?

A

paying low royalties to the Iranian government. Mossadeq sought to increase royalties

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16
Q

OPEC

1960: Baghada, Iraq

A

The Organization of Petroleum Exporting Countries
want more control over oil and want to control the world price and access of this product

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17
Q

Cartel

A

limits access to a product

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18
Q

A branch of Rockefeller’s Standard Oil?

A

Imperial Oil

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19
Q

When was the oil embargo launched by OPEC?

A

1973

refusal of the Organization of the Petroleum Exporting Countries (OPEC) to sell crude to the U.S. in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations.

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20
Q

Which gov. made Petro Canada a government entity?

A

Pierre Trudeau

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21
Q

Which government sold Petro Canada?

A

50% sold off by the Mulroney conservative party and the rest by the Paul Martine Liberal party

Petro Canada was not cheaper than the American owned ones

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22
Q

Petro Canada Facts

A

o started as a Crown Corporation during the economic crisis in 1960s
o was to be a “window on the industry”
o eventually privatized

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23
Q

What accounts for about one-third of total world energy consumption?

A

Petroleum

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24
Q

Factors Influencing Oil Prices

A
  1. OPEC Compliance
  2. Consumer Responsiveness
  3. Competitiveness of Non-OPEC Producers
  4. OPEC vs. Non-OPEC Efficiency
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25
Q

How does Spare capacity acts as a buffer against supply disruptions?

A

helping stabilize prices

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26
Q

Price Volatility

A

Requires significant price adjustments to rebalance supply and demand due to this inelasticity

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27
Q

What is Brent oil, and why is it a benchmark?

A

Light, sweet oil from North Sea Europe; easy transport; low tanker costs.

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28
Q

What impacts Alberta’s oil royalties?

A

Oil price, production/transport costs; low quality, long transport; better pipelines reduce discounts.

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29
Q

Why does Alberta’s oil sell fro less than Brent and WTI?

A
  • lower quality of Alberta’s oil
  • Far from key refining markets, which increases transportation costs
  • Improving market access
30
Q

Upstream: Supply Chain Divisions

A

Involves identification, extraction, and production of raw petroleum materials

31
Q

Midstream: Supply Chain Divisions

A

o Focuses on transportation and storage of crude oil and refined products.
o Connects upstream and downstream operations

32
Q

Downstream: Supply Chain Divisions

A

o Post-production processes, such as refining crude oil and natural gas.
o Includes the creation of consumer products like gasoline, diesel, and plastics

33
Q

Leading countries in Oil Reserve (2022 data):

A
  • Venezuela: 303.8 billion barrels.
  • Saudi Arabia: 297.5 billion barrels. (HOLDEST LARGEST SHARE IN OPEC)
  • Canada: 168.1 billion barrels.
34
Q

Extraction Methods

A

o Developmental drilling: Tapping known reserves.
o Exploratory drilling: Searching for new reserves.
o Directional drilling: non- Vertical drilling to target oil sources.

35
Q

Petroleum Formation

A

o Fossil fuel created from dead organisms (e.g., algae, plants, bacteria).
o Subjected to high heat and pressure inside rock formations over millions of years.

non-renewable

36
Q

Classifications of Petroleum

A

Unrefined Classes:
o Asphalt, bitumen, crude oil, and natural gas.
Refined Uses:
o Gasoline, kerosene, plastics, and other byproducts

37
Q

OPEC Creation

A

Established at a conference in Baghdad, Iraq, from September 10–14, 1960

38
Q

Founded Members of OPEC

A

Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela

39
Q

OPEC’s Purpose

A

o Stabilize the global oil market.
o Coordinate energy policies among members.
o Ensure fair oil prices and a steady supply to the market

40
Q

What happened in the 1950s oil market?

A

Soviet oil production increased, leading to price cuts by “The Seven Sisters” (Esso, Mobil, Standard, Gulf, Texaco, BP, CFP). Arab nations sought price stabilization

o Arab nations sought ways to stabilize and profit from oil prices.

41
Q

What was the significance of the Declaratory Statement of Petroleum (1968)?

A

Asserted sovereignty over natural resources; supported decolonization and national enrichment.

42
Q

What challenges did early oil-producing nations face in cooperation?

A

Struggles with export limits (1962) and political tensions like the Six-Day War (1967).
as members prioritized maximizing individual exports.

43
Q

What triggered the 1973 oil embargo?

A

U.S. support for Israel during the Yom Kippur War. Arab OPEC members embargoed oil to the U.S., Canada, UK, Japan, and the Netherlands.

44
Q

What were the results of the 1973 oil embargo?

A

Supply disruptions, sharp price increases, and economic shifts in global power.

45
Q

What challenges did OPEC face in the 1970s?

A

No monopoly (56% market share) and reliance on Western companies for refining and downstream activities.

46
Q

Iran-Iraq War (1980–1988

A

Restricted Iranian oil production; other OPEC members compensated.
oil prices rose significantly

47
Q

What was the impact of Iraq’s invasion of Kuwait in 1990?

A

Disrupted oil supply; Saudi Arabia increased production to compensate

48
Q

What is OPEC’s role in the global oil market?

A

Pivotal in shaping the oil market; influence fluctuates with geopolitical and technological changes.

49
Q

What global conflicts affected OPEC’s oil supply?

A

Wars in Libya, Nigeria, Iraq, and Syria caused intermittent supply disruptions

50
Q

How much barrels did OPEC attempt to restrict?

A

17.5 million barrels/day to stabilize prices

51
Q

West Texas Intermediate (WTI)

A
  • Represents oil produced in the U.S., centered around Cushing, Oklahoma.
  • Although also a light oil, WTI is typically priced lower than Brent due to:
  • U.S. export restrictions on crude oil.
52
Q

What was the primary use of oil before the invention of kerosene?

A

Lubrication

53
Q

Why did the British government grant monopoly rights for oil extraction in the Middle East to British Petroleum?

A

As part of a colonial strategy to extract resources

54
Q

What company basically bough out the Canadian Oil industry and controlled it in the 1800s?

A

Imperial Oil, a branch of Standard Oil ->

55
Q

Which Middle Eastern country became pivotal in the oil industry after World War II?

A

Saudi Arabia

56
Q

What global economic event was triggered by the OPEC oil embargo in 1973?

A

A global economic recession

57
Q

Why does Western Canada Select (WCS) trade at a discount to WTI?

A

Heavier oil and longer transportation distance

58
Q

What is one key use of petroleum besides fuel?

A

Conversion into plastics

59
Q

What is a major environmental concern associated with petroleum use?

A

Global warming due to carbon emissions

60
Q

What is the significance of the Alberta royalty framework?

A

It determines the value Albertans receive from resource production.

61
Q

Where did BP first discover oil and when?

A

Iran, after World War 1

62
Q

Why was the search for oil in Persia costly and difficult?

A

devoid of infastructure and politically unstable

63
Q

Which company joined Darcy in his search for oil in Persia?

A

Burmah Oil Company joined D’Arcy in a Concessionary Oil Syndicate in 1905

64
Q

What was the first oil discovery in the middle East?

A

southwest of Persia at Masjid-i-Suleiman

65
Q

What was BP originally founded as in 1909?

A

Anglo-Persian Oil Company

66
Q

What resource did BP rely heavily on from countries like Iran, Libya, and Iraq?

A

crude oil

67
Q

What treaty solidified the integration of US and Canadian energy markets in the 1980s?

A

Canada–US Free Trade Agreement (CUSFTA)

68
Q

What technological advances drove the shale revolution?

A

Hydraulic fracturing and horizontal drilling

enabled the United States to significantly increase its production of oil and natural gas

69
Q

What legislation lifted the US ban on crude oil exports in 2015?

A

A Congressional motion supported by President Obama

70
Q

What was the ultimate impact of the shale revolution on North American energy markets?

A

Reduced US dependence on Canadian oil

71
Q

Which US policy focused on increasing domestic energy exploration?

A

Energy Policy Act (2005)

72
Q

What did Canada’s National Energy Program (NEP) aim to achieve?

A

Redistribution of oil revenues and energy independence

MGMT 1035 (7 decks)

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