Moratorium on Deep-Water Drilling For Retail Gas Prices Coursework

Moratorium on Deep-Water Drilling For Retail Gas Prices - Coursework Example Marathon’s Product Process The production process in MPC takes place in three phases, i.e. refining, transporting, and marketing. The refining phase is executed with the assistance of sis-plant refinery network system. Crude oils gathered from the supply markets of Midwest and various parts of Southeast are refined in these plants with the capacity of around 1,142,000 barrels per day (bpd) accumulatively. Notably, two different types of crude oils are refined in these plants, i.e. sweet crude oils (46% approx) and sour crude oils (54% approx) which are collected from national as well as international suppliers. These refineries are located in six different parts of the continent, i.e. Louisiana, Kentucky, Illinois, Michigan, Ohio and Texas. The refineries are not only different in terms of their location but are also diverse in terms of sizes and their strengths (as cited in Marathon Petroleum Corporation, 2011). ... In this context, the biggest limitation of the company shall be recognized as the integrated management system implemented in its refining phase of production. This indicates the refining phase of production process to be open for greatest number of efficiency improvements. It is due to the fact that all the six plants tend to be different from each other to a large extent in terms of operations, size and strengths. Thus, it is likely to become quite challenging to manage the vivid operations through the implementation of an integrated plan. 2.0. Relationship between the Retail Price of Gasoline and World Demand for Crude Oil Experts have stated that the retail price of gasoline and the price for crude oil are asymmetrically related to each other. To be illustrated, the retail price of gasoline is examined to rise substantially with the rise in the price of crude oil. However, the retail price of gasoline tends to fall leisurely when the price for crude oil substantially minimizes. This presents an asymmetric relationship between the two fac tors (Balke, Brown, & Yucel, 1998). On the similar context, the price elasticity of demand for crude oil is termed to be least, i.e. with a significant rise in the crude oil prices; it is likely that the demand for the product will diminish but not extensively (Cooper, 2003). Therefore, it can be stated that the global demand for the crude oil and retail prices of gasoline are asymmetrically related. This indicates that fall in demand due to the price increase of crude oil will have an inverse impact on the retail price of gasoline resulting in substantial price hike of the commodity.