Evaluating Internal and External Business Environment

This report discusses the economic determinants of crude oil prices, the impact of government actions on prices, and the immediate and future effects of COVID-19 on crude oil prices in the UK. It explores factors such as income level, inflation, and employment rates, as well as government actions like the ban on petrol, diesel, and hybrid cars in 2040 and the promotion of electric cars. The report also highlights the impact of ring fence corporation tax and the immediate impact of COVID-19 on crude oil prices in the UK.

Evaluating Internal
And External
Business
Environment

Table of Contents
1.Introduction.....................................................................................................................................
MAIN BODY......................................................................................................................................
2.Discussion.........................................................................................................................................
2.1 Economic determinants of Price of Crude Oil...........................................................................
2.1.1 .Income Level.....................................................................................................................
2.1.2. Inflation.............................................................................................................................
2.1.3. Employment rates.............................................................................................................
2.2. Effects of Government on the Price of Crude Oil in the UK. Explain about three
action of the government and the impact it has on prices..............................................................
2.2.1. Government to ban petrol, diesel and hybrid cars in 2040...............................................
2.2.2 Government promotion of electric cars (the establishment of Office for Low
Emission Vehicles (OLEV).........................................................................................................
2.2.3. Impact of ring fence corporation tax.................................................................................
2.3 Immediate Impact of COVID 19 on Crude Oil in the UK......................................................
2.4. Future impact of COVID 19 on Crude Oil Prices in the UK.................................................
3. Conclusion.......................................................................................................................................
4. Recommendation to the government............................................................................................
REFERENCES.................................................................................................................................
Books and Journals......................................................................................................................10

1.Introduction
Crude oil define as a naturally occurring and unrefined petroleum product which is
made up of hydrocarbon deposits along with some other organic materials. It has been
identified that a kind of crude oil or fossil fuel refers to the refine products which are usually
used in various manner such as diesel, gasoline and various types of petrochemical products.
It has been said that this is a non-renewable resource, and is mainly used by large number of
people all over the world and is very limited resource at the current situation. If talking about
UK, it has been identified that oil and gas industry within the marketplace of UK is wider and
the broader area which is producing around 1.45 billion BOE ( Barrel of Oil Equivalent) on a
daily basis. This is the most influential sector which have their own impact on various
segments which are both positive as well as negative. Just like the prices of various other
types of commodities swings, price of crude oil also have ups and downs at the time of
shortage as well as in oversupply. In addition to this, throughout the twentieth century, it has
been identified that the price of U.K. petroleum has been heavily regulated with the aid of
production as well as price controls. Furthermore, if talking about inflation, from the year
1947 to the year 2010 oil prices used to exceeded $20.53 per barrel 50 percent of the time.
Oil and Gas industry within UK has been changed periodically. It has been analysed that with
its extensive as well as complex supply chain, company will be able to provide their services
in an effective manner within different locations of the country in an effective and
appropriate manner. This is the industry which is dynamic in nature and is continuously
changing by changing in the market environment and situations. In relevance with the
contemporary business situation, modifications and alterations in market has been increased
which as a result raises the issues for business entity or industry. Apart from this, external and
internal factors need to be analysed by the oil sector on a regular basis which have their
influence over the business functioning. By focusing on internal & external environment, it is
easy to make decisions within the business in proper manner. This present report consist of
detail description of different elements of both internal as well as external environment. In
addition to this discussion related to economic determinants of cruel oil which affect the
prices in both positive and negative way. In addition to this, it also includes discussion about
the impact of COVID 19 on UK Crude oil prices. In current scenario, COVID 19 is the most
negative factor which have their impact on the overall performance of economy. Apart from

today, this factor affect the whole functionality of crude oil in a long run which reduces the
benefits gained by the nation. All these elements are discussed in this report which help in
developing understanding related to the topic.
MAIN BODY
2.Discussion
2.1 Economic determinants of Price of Crude Oil
It has been analysed that each element have some determinants which have their both
positive and negative influence. In reference to oil and gas sector it has been said that
increase and decrease of price have their direct influence on the economic growth as well as
development of the whole industry. Therefore, it is very essential for each and every industry
that examination of external elements and determinants are very essential for the
enhancement and decrease of price of crude oil. In reference to the United Kingdom, it has
been identified that the economic system of the country plays very essential role in order to
maintain their position at the competitive marketplace. For every industry it is very necessary
to develop and implement effective strategies and policies in order to stabilise the economic
system of the country. There must be sufficient and effective knowledge about these
determinants so that the overall decision making will be able to take in an effective manner.
In reference to oil and gas industry, some of the most essential factors as well as determinants
are going to be discussed as follows:
2.1.1 .Income Level
This one is the most essential as well as effective factor which have the capability to
highly affect the overall prices of crude oil in both positive and negative way. Income level of
individuals have the capability to influence the overall economic system of the country as a
country is economically stable only when the income level of individuals are strong. In
reference to the United Kingdom, it has been said that the income level of people are quite
strong which plays very essential role in order to influence the overall price of oil and gas
industry. This factor have the capability to affect the prices of crude oil in both positive and
negative way. The biggest reason is that people who have strong income level consumes
more as compared to people who have limited income level. This as a result directly
influence the growth and economic system of the country. In addition to this, it has also been
said that the disposable level of income shows the growth of industrial sector apart from the

growth of country. Therefore, it has been concluded that income level is one of the most
effective and influential factor which affect the price of crude oil in both positive and
negative aspects.
2.1.2. Inflation
Another factor which plays very essential role in the influence of overall price of
crude oil. It has been said that for every country inflation plays very essential role in the
growth and development of the economic system along with the enhancement of living
standard of people. It has been analysed that the prices of oil increases are usually rise the
rate of inflation and negatively affect the economic system of the country. In relation to
inflation rates, it has been identified that the oil prices directly have the power to affect the
prices of products and commodities which are made of petroleum products. Therefore, rise in
oil prices depress the overall supply of other product’s as they raise the manufacturing cost of
these products. Crude oil comes under basic essential for every individual and inflation rate
affect the overall income level and living standard of people. The reason behind this is the
both oil as well as inflation are interrelated with each other which affect the pricing of crude
oil in positive and negative manner. is firs most essential factors which affects the price of oil
& gas industry in UK. This is because both the factors highly affects the economic system as
if prices of the crude oil gets decreased then the consumption of such products increases and
vice versa. Inflation rates of the country have its own impact on the performance as well as
on the economic system of the country in both positive and negative way.
2.1.3. Employment rates
Apart from the above mentioned factors, it has been identified that unemployment is the
other factor which is faced by each and every country. It has been identified that both social
as well as economic implications are there for which government need to develop some
policies and strategies which help in increasing the employment rates among the country. It
has been said that at the time of recession, the most influential factor is oil and gas industry
which affect the overall employment rate in an adverse manner. Due to the current situation
of COVID19 where every country faces decline in the economy, it has also been said that
unemployment rate increases. People across the world loose their jobs due to the lockdown
arise across the world which directly affects the price of crude oil in negative manner.
Therefore, it has been concluded that employment rate have their own impact on the pricing
policies of crude oil.

2.2. Effects of Government on the Price of Crude Oil in the UK. Explain about three
action of the government and the impact it has on prices
2.2.1. Government to ban petrol, diesel and hybrid cars in 2040
Government of a country takes decision related to the supply of crude oil and this have huge
impact on the overall living standard of people across the whole wide world. It has been identified
that due to the rise in price of crude oil within the marketplace of UK, government or higher legal
authorities of the country take some decisions which are beneficial for long run but have negative
impact on short term basis. As per the latest information, it has been decided by the government of
United Kingdom that from 2040 they completely ban on sale of solely fossil-fuelled vehicles along
with hybrid as well as plug-in hybrid models, basically powered by the effective combination of both
petrol as well as diesel engine & the electricity which have the capacity to travel up to 78 miles on the
basis of electric power alone. It has been identified that pulling the date of ban on petrol, diesel and
hybrid cars to 10 years will going to set big challenge to the car makers within the country. This is
because they need to provide sufficient electric cars to the people in order to meet their requirements
and demands in an effective manner.
2.2.2 Government promotion of electric cars (the establishment of Office for Low Emission
Vehicles (OLEV)
The establishment of an office for the Low Emission Vehicles (OLEV) refers to a team who are
working in order to support the government for an early market for effective ultra-low emission
vehicles (ULEV). OLEV is one of the most essential part of the Department for Transport along with
the Department for Business, Energy as well as Industrial Strategy. It has been analysed that Low as
well as ultra-low emission vehicles plays very essential role as it is the modern plan of the
government in order to reduce the use of petrol and diesel cars and promote electric cars. It
has been analysed that around 12% shares are of automotive sector within UK’s
manufacturing. These are the sector’s which provide employment opportunities and job
security to the people which enhance the economic system of the country. In addition to this,
transition to ultra-low emission vehicles are not the factor which can be implemented within a
night. It is said that for automobile industry it is very essential to provide electric cars which
can easily be affordable by the people and satisfy their needs and requirements. This as a
result says that it is very essential that this type of infrastructure needs to operate in a cost
effective manner so that it will help in maximising the benefits of plug-in vehicles in an
appropriate manner.

2.2.3. Impact of ring fence corporation tax
Ring Fence Corporation (RFCT) tax as well as the supplementary charges application to
those business entities which are usually involved in the exploration and production of oil and
gas within the marketplace of UK along with this on the UK Continental Shelf (UKCS).
Ring-fencing define as a new regulation which needs biggest banks within United Kingdom
in order to separate their retail banking services from those investment banking as well as
international banking activities. This as a result affect the overall process of such business
entities in a positive manner of implemented in an effective manner.
2.3 Immediate Impact of COVID 19 on Crude Oil in the UK
As in the current situation, COVID 19 pandemic hit the world and spread across the
globe which affect the whole world in an adverse manner. This affect different sectors along
with oil and gas industry and have immediate reaction over the prices of crude oil within UK.
It has been observed that the price index of customers has been slowed down and reduced by
1.5 percent from February to 1.7 percent as per the reports and data of national statistics. In
the year 2020, country facing complete lock down since march as the cases increases on a
continuous basis due to the COVID19 virus spreading. This as a result reduces the prices of
crude oil as the trade activities which has been taken place from one boundary to another has
been stopped. This situation is not less then the phase of recession where everything getting
down and down in terms of money and supply. In addition to this, it has also been faced that
there is no sufficient capacity in order to deal with prevailing environment of recession and it
is currently affecting all the future possibilities by lowering down the trading system. If
talking about April it has been identified that people across UK was highly suffering from the
diseases as well as all the non essential business getting shutdown for a limited time period.
In this stage, it has also been identified that the price of fuel as well as lubricants face huge
downfall which was around 16.7 percent.
In addition to this, it has also been identified that there is huge and drastic fall within the
demand as well as price of crude oil which is one of the biggest issue faced by UK at present.
It has been concluded that United Kingdom is one of the biggest as well as largest producers
of Oil across the whole wide world. Till the year 2019 it has been considered as the biggest
sector within UK which affect the economic system in a positive manner. But in this year
huge downfall has been faced by oil and gas industry due to the restrictions arise between
international trade.

2.4. Future impact of COVID 19 on Crude Oil Prices in the UK
Apart from the current negative situation arise due to COVID19 within crude oil in
UK there are some impacts of this pandemic situation have their long term impacts. It has
been identified that the international demand as well as need of crude oil will surely shrivel as
there was approx. 15-20 million huge indefinite amount on a daily basis as this pandemic
directly affect the economies in an adverse manner. In addition to this, it is said that the
consumption made by people of crude oil within the market area of United Kingdom reduced
down to around mbpd. Apart from this, it has also been said that there is a reduction has been
identified which is approximately 8% in the consumption of oil across the whole wide world.
Hence, it is very essential to meet the requirements of various countries like Mexico,
Indonesia, France, UK and so on. Therefore, it has been identified that around 22%
economies mainly consumes almost 78 % of the crude oil under the situation of COVID-19.
It has been identified that the supply in near future will boom which increases the price of
crude oil but the issues faced by people will be the price. This is because lockdown arise due
to COVID19 which affect the income level of people and employment rates. This is the
biggest issue arise due to COVID19 within UK and all over the world.
3. Conclusion
With the help of above stated information, it has been concluded that within a country
oil and crude industry plays very essential role in the overall development of economic
system. It has also been analysed that within United Kingdom, oil and crude sector is
dynamic in nature which changes on a regular basis. In this context, it is said that oil and gas
industry within the marketplace of UK emphasises in order to provide energy to various sort
of power sections and hear homes. In addition to this, this industry also focus on providing
fuels and gas to the people all over the world for their transportation and other functions. If
talking about employment or job opportunities, this is one of the best factor which have their
influence overall the functioning. It will aid in order to enhance their contribution as well as
efforts in reference to the economic system of UK which includes exports, enhancement of
technological use, advancements in methods and many more. Furthermore, it has also been
identified that from last 10 yeas huge modifications and changes are taken place within oil
and gas industry which as a result provide benefits in near future. There is one major factor
available which have their negative impact on the overall functioning which is COVID-19.

For reducing negative effects of this, it is necessary to adopt major steps by the government
so they will be able to improve their performance and economic system.
4. Recommendation to the government
After evaluating different aspects of the marketplace of UK related to oil and gas
industry, it has been concluded that this is the industry which plays very essential role in the
growth and development of the country. There are various recommendations given to the
government of the country which needs to be implemented by them due to the negative
influence of COVID-19. Some of the most effective suggestions are going to be discussed as
follows:
 One of the main recommendation which needs to be considered by the government is
that there must be a market analysis conducted before implementation of any new
technology and strategy. This will aid in understanding the requirements of current
market place and help in attaining best outcome within effective manner.
 In addition to this, another recommendation is that at the current situation of
COVID19 where the whole world is facing negative scenario, it is needed by the
government of UK that the provide services to their people within affordable and
minimum cost so that every individual get maximum use of oil and gas.

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