Royal Dutch Shell Transportation Sector Analysis: PESTEL & Economy

This report analyzes the role of the transportation sector within Royal Dutch Shell, a major energy and petrochemicals company. It details how the sector ensures the movement of oil and gas, facilitates trade and commerce, aids in business operations, and enables international reach. The report then examines the impact of PESTEL factors (Political, Economic, Social, Technological, Environmental, and Legal) on the transportation sector, particularly focusing on the UK and European markets. It highlights the effects of Brexit, economic fluctuations, social trends, technological advancements, environmental regulations, and legal aspects. Finally, the report assesses the impact of oil and gas transportation on the local economy, considering both positive aspects like employment and revenue generation, as well as negative impacts such as emissions and potential environmental hazards. The report concludes by emphasizing the need for Royal Dutch Shell to mitigate negative impacts and ensure environmental sustainability.

OIL AND GAS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Role of Transportation Sector within Royal Dutch Shell...........................................................1
TASK 2............................................................................................................................................2
Impact of PESTEL factors on transportation sector within Royal Dutch Shell..........................2
TASK 3............................................................................................................................................5
Impact of oil and gas transportation on local economy..............................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Oil and Gas Transportation is one of the most prominent aspects associated within the
transportation industry and includes movement of oil and gas across different geographical
locations (Narain and Bhushan, 2015). The report below is based on Royal Dutch Shell, which is
one of the largest energy and petrochemicals organisations operating at a global level.
Assignment covers a brief discussion on the role of transportation sector within the company.
Furthermore, it also covers a detailed review as of how technological and environmental
PESTEL factors have an impact on transportation sector within the firm. The report also includes
assessment of how oil and gas transportation impacts the local economy, lives of indigenous
people and local communities in which Royal Dutch Shell Operates.
TASK 1
Role of Transportation Sector within Royal Dutch Shell
Transportation refers to movement of goods or services from one particular geographical
location to another. The whole transportation industry is quite widespread within the country and
for almost all companies operating under different sectors, transportation sector play a vital role
in facilitation of movement of their offerings to the public or other business organisations.
Transportation sector plays a crucial role in operations of Royal Dutch Shell as well. This
role is discussed in brief below:
 Ensures Movement:
One of the most prominent role which this sector plays within the company is that
facilitates the movement of oil and gas across the whole nation. Royal Dutch Shell provides the
UK market with almost 10% of overall oil and gas which is used by the businesses as well as
households of the country (WHAT WE DO: ROYAL DUTCH SHELL, 2019). Thus, transportation
sector plays an effective role in allowing the firm to distribute its offerings within the whole
nation.
 Facilitates Trade and Commerce:
Another prominent role which the sector plays within the company is that the
organisation deals in refining and transportation of petrochemicals and gas. Furthermore, there is
a high demand of oil and gas within the transportation sector itself. Therefore, it is quite evident
that the whole sector helps to expand the trade and commerce within the organisation (Klass, and
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Meinhardt, 2014). This is also apparent from the fact that almost 600 aircraft are fuelled by
Royal Dutch Shell at 8 airports within the whole country. Thus, this sector contributes in
enhancing the profit margin of the organisation as well as expansion of its business operations
within the country and beyond (Khan, Yasmin and Shakoor, 2015).
 Aids in Business Operations:
Not only the transportation sector aids distribution of the refined oil by the organisation,
it is also responsible for storing and transporting crude oils an other petrochemicals from oil
fields, which is a necessary task for the company in order to refine the discovered oil. In addition
to this, through pipelines and tankers, the transportation industry also aids Royal Dutch Shell in
storing its oil and gas appropriately to be used for long term effectively.
 International Reach:
Expanding business operations in home country is one thing. However, transportation
sector plays an effective and necessary role within Royal Dutch Shell in relation to facilitation of
an effective global oil trade. This is one of the largest and most prominent category of trade
within the outside market and is very necessary for a company so big in size. Thus,
transportation industry allows the firm to perform these operations quite easily and effectively on
a global level and thus, expands the reach of organisation on international grounds as well. This
in turn also helps the firm in transporting their oil and gas to countries which have shortage in
terms of both these elements. Thus, an international welfare by the company could also be
achieved through transportation sector of the UK.
Thus, it could be effectively claimed that transportation sector have a very important role
to play within Royal Dutch Shell and is perhaps one of the most important sectors with with the
firm must be associated in order to a smooth running of business operations and a better
sustainability within the marketplace (Kahyarian, Singer and Nesic, 2016).
TASK 2
Impact of PESTEL factors on transportation sector within Royal Dutch Shell
Within each sector, there are several factors which have quite a necessary impact on the
organisation as well as each sector within the business environment prevailing within that
country.
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Within UK, there are certain external environmental factors that has a wide impact on
both the transportation sector as well as Royal Dutch Shell. Impact of these factors are explained
below in detail:
 Political Factors:
These factors are associated with the aspects associated with the elements in relation to
the political aspects of the country. All the regulations, taxation policies and laws prevailing
within the country are covered within these factors. In context with Royal Dutch Shell, currently,
the company has a very strong market within Europe and surrounding areas like the UK.
However, due to the exit of United Kingdom from the European Union, the political and trade
tensions have taken a rise in both these countries and more or less have an equal impact on the
same as well as on the transportation sector. Reason for the same is that the firm has a firm
heritage in the UK as well as on the continent. Moreover, the firm was fetching shareholder
approval for the firm's bid to acquire BG Ltd., which is one of the most prominent groups within
the UK (Shell CEO says oil giant would be hit by Brexit, 2019). However, this acquisition has
been seriously affected by Brexit in effect. Thus, this factor has a negative impact on the
organisation and transportation sector within the firm.
 Economical Factors:
These factors are associated with the economic performance of a nation and how it
possibly impacts the industry as well as the company (Zhang and et. al., 2016). As for the
transportation sector within the Royal Dutch Shell, economic impacts could be experienced on
the are in relation to supply as well as demand.
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Illustration 1: Oil demand is expected to remain flat to slightly down by 2050
(Source: An uneasy alliance: can the world be less reliant on oil?, 2019)
The demand of oil is rising substantially within the urban markets, where markets of both
Europe and UK stand. However, there are several alternatives being developed to substitute the
use of natural fuels and gases within these countries, the demand of oil is yet rising. Thus, the
economic impact on the transportation industry within the Royal Dutch Shell in Europe is quite
positive, the reason being with high demand, the industry has the opportunity to expand more
within the country and produce more effective transportation system for petrochemical
companies. As for UK, however, with decline of the currency and shooting up of inflation rate,
this sector is negatively effected as there is a very limited supply of finance to conduct their
operations. Furthermore, with cutting up of ties with EU, the transportation sectors is
experiencing a rather negative impact due to trade restrictions in the two countries. This has also
affected Royal Dutch Shell negatively (Pepe, 2018).
 Social Factors:
The social factors are related to all the social trends prevailing within a market and how
these have an impact on a sector as well as on the companies operating within the market. In
context with the transportation sector within the Royal Dutch Shell, there has been a substantial
changes in the social facet of markets which surely impacts this sector. For example, there has
been an effective cultural integration due to rise of social media and thus, different markets are
associating themselves with Europe as well as the UK. This has a positive impact on the
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transportation sector within Royal Dutch Shell. It is because with expansion of more markets,
there is a vital need for such effective transportation system to facilitate the trade even outside
the international borders (Zemenkov, Shalay and Zemenkova, 2015).
 Technological Factors:
As for technological factors are concerned, there are various effective technological
advancements recently witnessed in transportation. From Vehicle to Vehicle technology to
Artificial intelligence, there are several enhanced technological outbreaks which are shaping up
this sector within Royal Dutch Shell. Within the same, the transportation sector is impacted in a
positive manner as it now has opportunity to use these technologies to ensure safety and
consistency in their delivery of oil and gas.
 Environmental Factors:
In terms of environmental factors, the current concern is towards the protection and
preservation of environment and its resources. This requires the transportation sector within the
company to adopt technologies and manufacture vehicles with low or no carbon emissions. Thus,
this factor has a negative impact on the sector as these vehicles are still using standard
technologies. Thus, in order to enhance effectiveness and comply with the environmental
standards, it is very important for transportation sector within Royal Dutch Shell to adopt
methods which are environmental friendly and are effective enough to ensure environmental
safety and sustainability (Seba, 2014).
 Legal Factors:
There are several legal aspects associated with the transport sector within Royal Dutch
Shell which are important for the businesses within the sector to follow. For instance, there are
several regulations associated with the transportation of oil and gas by pipeline. In order to
effectively ensure safety, it is essential for the sector to evaluate the material, design,
construction as well as installation of pipelines. It has a positive impact on the sector as it ensures
a long tern sustainability and better performance of businesses like Royal Dutch Shell.
TASK 3
Impact of oil and gas transportation on local economy
Oil and gas are two necessary constituents which helps to give major share of revenue to
the people. These two are mostly part of natural resources which is reality comes out of the
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underground location. Company who deals in all these resources has lots of the burden to store it
and also protect it from being frozen and destruction of its values. They actually deals with other
nation or their business to earn revenue or profits. So, they are required to shift crude oil and
natural gases to other nation using mode of transportation such as railway, waterways and by
mode of road to gives out the facilitation of the transportation. Royal Dutch shell is the British-
Dutch firm headquartered in the Netherlands and deals in the valuable sources of an energy.
Generally, it was realised that oil companies uses Royal Dutch shell uses roadways and railway
to transports oil or gases to other cities or nation of the Europe. Thus, its impact is severe and
positive (Omotholar, 2016). During the filling process of gases, some harmful toxics comes and
mix into the air which is threat for local people lives their and also threats for the indigenous
people lives into the Netherlands. But due to transportation, employment to the regional people
has been arises and this is composite for other's to get involves to earn revenues. It would not be
good to avoid the disadvantage of oil and gases transportation such as emission of the gases and
oil, while doing its transportation. If leakage of oil happen, it can be dissolves, but gases which
would mix into the air cannot be protects. Thus, it would show negative effect and would
become threats for the local economies. Along with this, impact of oil or gases could be severe
and also would be led to hazard to the people lives there as well as local economies.
Thus, Royal Dutch shell plc is required to takes out decision making and action plan for
how to decrease its impact and ensure protection to the local economies. Business can utilises
sources such as pipelines fitting, air proof shield with help of emission of the gases or oil can be
protected in order to protects. Thus, an affective decision making is required to control negative
impact of the oil and gases transportation (Alkhuzai, 2014). This was realised that, mainly
indigenous people are being affected by this and local communities are affected by this. Thus,
effective decision as well as action planning can be taken to find measures or step on how
impact of all these can be resolved in maximum time period. Using of the routes to do
transportation of the oil and gases is one of the favourable with help of which prominent
decisions can be taken to protect side effect of such transportation of oil and gases. Royal Dutch
shell must be takes necessary actions such as remedial actions and protection measures so as to
protect communities, local people and also indigenous people from negative impacts or
consequences.
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CONCLUSION
Thus, it is concluded that oil and gas transportation is quite a necessary factor associated
with businesses of petrochemicals and oil. It is essential to evaluate the role of transportation
sector within oil and gas companies and to analyse the impact of PESTLE factors on the
transportation sector within these organisations. Lastly, it is also crucial to assess impact of oil
and gas transportation on the local economy, lives of the indigenous people and local
communities in which organisations operates.
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REFERENCES
Books and Journals
Alkhuzai, K. A., 2014. Use of life cycle assessment (LCA) to develop a waste management
system for Makkah, Saudi Arabia. University of Leeds.
Kahyarian, A., Singer, M. and Nesic, S., 2016. Modeling of uniform CO2 corrosion of mild steel
in gas transportation systems: a review. Journal of Natural Gas Science and
Engineering. 29. pp.530-549.
Khan, M. I., Yasmin, T. and Shakoor, A., 2015. Technical overview of compressed natural gas
(CNG) as a transportation fuel. Renewable and Sustainable Energy Reviews. 51.
pp.785-797.
Klass, A. B. and Meinhardt, D., 2014. Transporting oil and gas: US infrastructure
challenges. Iowa L. Rev.. 100. p.947.
Narain, S. and Bhushan, C., 2015. Capitan America: US Climate Goals: a Reckoning. Centre for
Science and Environment.
Omotholar, A. A., 2016. Investment in Tourism, Transportation and National Development
(Case Study of Ibadan Metropolis). Global Journal of Management And Business
Research.
Pepe, J. M., 2018. Eurasian Transport Integration Beyond Energy: Geoeconomic Transformation
and Geostrategic Response. In Beyond Energy (pp. 247-430). Springer VS, Wiesbaden.
Seba, T., 2014. Clean Disruption of Energy and Transportation: How Silicon Valley Will Make
Oil, Nuclear, Natural Gas, Coal, Electric Utilities and Conventional Cars Obsolete by
2030. Tony Seba.
Zemenkov, Y. D., Shalay, V. V. and Zemenkova, M. Y., 2015. Expert systems of multivariable
predictive control of oil and gas facilities reliability. Procedia Engineering. 113.
pp.312-315.
Zhang, Q. and et. al., 2016. Study on the impacts of natural gas supply cost on gas flow and
infrastructure deployment in China. Applied energy.162. pp.1385-1398.
Online
Shell CEO says oil giant would be hit by Brexit. 2019. [Online] Available Through:
<https://de.reuters.com/article/us-britain-eu-business/shell-ceo-says-oil-giant-would-be-
hit-by-brexit-idUKKCN0UV0H3>
WHAT WE DO: ROYAL DUTCH SHELL. 2019. [Online] Available Through:
<https://www.shell.co.uk/about-us/what-we-do.html>
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