| Inside this issue:
The Galaxy (Cont...) 2
The New Millennium 3
The Lost World
3
In-Flight~ Re-Fueling 4
Celebrity Service
4
Ambassadors
State of the Art
4
Technology
Congratulations
to Lambros
Lambropoulos. His son
won a Motiva retailer
Scholarship. James
Lambropoulos has a
$1,500 Scholarship
for Tufts University.
Good Job James! |
|
Are you prepared for the new millennium?
Are you being led to believe that rent is the
issue of the day? Are we pre-pared for the
new millennium? Do we believe that rent
will save the day? According to Oil Express
and economist Phillip K. Verleger Jr.,
Five years from now, there'll be only
four or five majors and few will be in the
refining or marketing business. Instead,
they will have spun off their downstream
assets to industry outsiders so that they
can concentrate instead on exploration and
production.
Shell, Exxon and BP Amoco will remain
in the oil arena, with one or two others
emerging after fierce competition pares
the group of industry leaders to just a
handful, Verleger believes. The FTC will
force divestitures that will make refining
and marketing mergers impossible, hence
the move to consolidation upstream.
"Refining and marketing is like an
albatross round their necks," Verleger
told a NACS meeting in New Orleans.
The type of FTC scrutiny that may hold
up Exxon's purchase of Mobil and prevent
future consolidation of other companies
that have marketing and refining overlaps,
would be avoided if retail and marketing
operations are divested before new deals
are struck, he said.
The exit of majors will allow hyper-
markets and chain retailers to expand and
they will dictate the direction of marketing.
To gain strength through numbers and cut
costs, marketers must form their own joint
ventures, set up buying cooperatives, |
find more than one petroleum supplier, and
maintain a geographical focus, he says.
Retailers must come up with innovative
ideas to alter the scope and scale of their
businesses in order to stay afloat and
succeed, he said.
According to the Journal of Commerce
in a recent article entitled, Is Bigger Oil Better
Oil? dated 4/9/99:
The oil industry is now focusing on the
megadeal. In recent deals such as BP and
Amoco, Total and Petrofina, Exxon and
Mobil, and currently BP/Amoco and
ARCO, the stated goal has had a familiar
refrain: to increase profits by dramatically
cutting costs, reducing inefficiencies, and
expanding geographically.
But will the mergers result in innovative
new business designs, or simply larger
warehouses of outdated business designs?
While mergers may create huge value for
shareholders initially, is size alone sufficient
for sustained value growth?
To effectively answer these questions,
oil executives and investors have to
understand what conditions are driving this
wave of mergers. Foremost is the chronic
glut of oil that has driven crude prices to
near-historic lows. Some of this oversupply
is derived from flattening demand in mature
markets and economic difficulties in many
emerging markets. More devastating were
recent moves by the major oil companies
and oil-producing countries to over-invest
in capacity when prices were high. |
