Chevron: Neccesity And Demand For Oil(interim Report) – Case Study Example

Chevron’s Strategic Problem Chevron’s Interim report for Q4 showed that the company is not able to take advantage of high demand for oil due to its poor refining margins, which have resulted in reduction of refining volumes. This is a serious problem Chevron is facing because the low refining volumes lead to low petroleum output. As a result, the price of petroleum produced by Chevron has risen in contrast with the market price which has stabilized at reasonable prices. The price estimate for Chevron is $109, which is about 10% above the current market price for oil. This is particularly damaging for business considering that rivals such as ConocoPhillips and Exxon have lower oil prices. As a result, Chevron is losing its market share to its competitors as consumers prefer purchasing oil from them because of their lower prices.
The issue of Chevron’s poor refining margins is a real problem and not merely a symptom. This is because a poor refining margin is the only thing preventing Chevron from being a competitive player in the oil industry. The company has the oil but is not able to get it to its customers fast enough due to poor refining margins. Poor refining margin cannot be considered a symptom of poor management because Chevron is performing well in all sectors of its operations apart from refining. If the issue had arisen due to poor management or other reasons, then performance in other areas of business would also suffer. Therefore, the management at Chevron should investigate ways of improving the company’s refining margin so as to boost production capacity, initiate a fall in the company’s oil prices and, consequently, become as competitive as its rivals.
Works Cited
Chevron. Chevron Business Portfolio. 2012. Retrieved 6 Jan 2013 from http://www.chevron.com/countries/usa/businessportfolio/