Chevron: company overview-role of government regulations for oil company and issues and opportunities companies face

Chevron conducts business in over 100 countries and employs 68,000 people around the globe. The organization has a long rich history that led to one of the leading energy organizations with awards from the National Ocean Industry Association and the California Department of Oil, Gas and Geothermal Resources for the organizational efforts to protect the environment. They have also made important improvements in technology and alternative fuel that will push the organization into the future.

History of the CompanyThe Chevron Corporation began in 1879 and was originally known as, Pacific Coast Oil Company. In 130 years of history and growth the company has seen many changes. Alex Mantry an oil field pioneer was the first person to strike oil in the hills of the San Joaquin Valley. Lacking capital and funding to get his company off the ground he sold his oil well and the surrounding fields to Pacific Coast Oil. In the next year, Pacific Coast would build the largest and most modern refinery in the United States, producing 600 barrels of oil a day.

In 1878 Standard Oil Company opened a three man office. With financial backing from its New York parent and strong marketing, the company became an emerging leader. Standard Oil was the major marketer for kerosene in the western United States lighting 96.5% of the western United States. Lacking the savvy of Standard Oil, Pacific Coast oil was struggling financially despite its innovation in the oil market and in 1900 was acquired by Standard Oil but was allowed to retain the name Pacific Coast oil. This now merged the fuel business with both kerosene and oil production under one company.

In 1901 the company purchased 500 acres in Richmond California and started work on the Richmond refinery and the new pipeline to feed the huge refinery. The location of this refinery was a perfect location for not only the pipeline but also to the proximity of the marine terminal in San Francisco. Growth for the company included the purchase of a fleet of vessels converted into barrel tankers; providing transportation of oil throughout the United States.

Over the next several years as the gasoline market began to grow with the ever increasing popularity if the automobile, Standard Oil grew and expanded operations into other areas creating the service station. With a pioneering spirit and motivation the company continued to grow and develop in the early 1900’s creating one of the largest oil companies on the west coast with markets in natural gas, oil and kerosene; Standard oil cornered the market in energy production.

Over the next 70 years the company continued to grow and explore the world entering markets in South America, Nigeria, and the Middle East. The company developed new methods for oil exploration including off shore drilling and refinery structuring that would allow them to produce up to 150,000 barrels of oil a day.

In 1977 the company went through an organizational change and became Chevron USA. With the familiar logo, and a strong financial history, Chevron has remained a leader in the industry and marked the company centennial in 1979. Today, Chevron realizing the days of oil are coming to an end continues to look for new sources of energy. Oil has been the backbone of the company for over a hundred years, knowing this, they do not lose sight of their roots but also need to look toward the future to remain compete in today’s energy conservative market. Chevron is looking for new resources and development that will give them a competitive edge and allow them to continue to be a strong and viable company.

The Market in Which Chevron OperatesChevron operates in the global energy market. It competes in the oil and gas refining and exploration, alternative energy resources, and electric utilities markets (Hoovers, 2009). The organizations major market is oil and gas. Chevron has facilities for its oil, gas, and coal markets in Africa, Asia-Pacific, South America, North America, Nigeria, Western Australia, New Mexico, Wyoming, Alabama, and Europe among others (Chevron, 2009). According to Chevron (2009), “Between now and 2030, global energy consumption is projected to increase between 40 and 45 percent, with oil and gas, along with coal, continuing to meet the largest part of that demand” (para. 2).

Chevron is the world’s sixth “super major” oil company in the world. The organizations most popular operations are oil and gas. Chevron’s top three competitors for market share in these markets are BP, Exxon, and Royal Dutch Shell (Hoovers, 2009). These organizations compete for additional market share through continually advancing technology to locate, extract, market and transport these resources to consumers across the globe. The organization also participates in the coal market, with expectations of growing 65% through 2030. The largest contribution to this increase comes from developing countries such as China and India (Chevron, 2009).

In response to the changes in the energy environment and the growing alternative energy market Chevron is investing in research and development of alternative energy strategies such as biofuels, gas-to-liquid, hydrogen, and fuel cells. With governmental interaction in the energy industry and increased consumer demand, it has become necessary for the survival of the organization to continue to invest in various alternative energy sources (Chevron, 2009).

The Role of Government RegulationsThe U.S. federal government ultimately is responsible for regulations of domestic private enterprise such as Chevron. Although there may be different regulatory agencies, the scope of regulations imposed on private enterprise basically fall into two categories, economic, and social.

Economic regulation strives to control price, either directly, or indirectly. Conventionally, “the government has sought to prevent monopolies from raising prices beyond the level that would ensure them reasonable profits. ” (U.S. Department of State, 2009) The government has also, expanded the range of economic control to other sectors of the industry to balance social goals of protecting the public’s health and safety while addressing the social conflicts of protecting the natural environment.

Social regulation has assumed growing importance however, has been argued that such regulation interferes with free enterprise, increased cost of doing business, and thus contribution to inflation (U.S. Department of State, 2009). Still, many activists continue to voice concerns about the dangers associated with use of crude resources and the production and exporting of these fuels; prompting the government to develop regulators to reduce the current environmental damage through unwarranted wastefulness and conservation.

President Obama is pursuing visions of a new energy economy that includes “reducing the U.S dependence on foreign oil, restructuring the transport sector, developing alternative energies, and addressing climate change.” (Energy Intelligence, 2009) If the policy is successful, it will cause an upheaval in the domestic energy industry, with extenuating repercussions proliferate around the world (Energy Intelligence, 2009).

As one of the worlds leading composite energy companies, Chevron is seeking to increase diversify through development of alternative energy sources. By Chevron voluntarily creating a sound energy strategy, will be in a better position to combat controversial issues of environmental health and safety, while dominating the domestic and global marketplace. This competitive advantage will continue to shape the framework of regulatory policy by teaching others to use energy more efficiently and investing in renewable and next generation of energy sources. With advanced technology Chevron is “devising new and enhanced ways to deliver needed forms of energy, from conventional crude oil and natural gas to the emerging sources of the future.”

(Chevron, 2009)Government can help stimulate the growth, expansion, and consumption of new energy technologies, next-generation ethanol fuels and advanced battery systems (Chevron, 2009). However, the government still needs to play a critical role in regulatory policy, new energy promotion, and environmental security to adjust balances effectively.

Growing global demand for oil, “geopolitical pressures and more remote and challenging resources continue to change the global energy landscape.” (Chevron, 2009)The decisions of government, companies, and individuals made today, will have long-term energy implications. Embracing those challenges and opportunities builds a foundation for a wider span of economic progress while improving the quality of life of the people around the world.

Issues and OpportunitiesChevron competes with other service stations in the United States but has no claim on any one area. The fluctuation of prices in gasoline across various areas makes it near impossible to predict profits. Inflation prices extend to the products Chevron sell in their stores as well causing fewer sales of products and a decrease in profits. These are only a couple of issues Chevron will face on a daily basis. On the other side, there are many opportunities that Chevron can take advantage of. One major opportunity is the new fuel types used in many vehicles such as biodiesel.

Chevron could setup specific pumps designed only to pump out biodiesel fuel to provide customers a cost per gallon just as they do gasoline. Implementing this added choice for consumers will also show the company is encouraging environmentally friendly alternatives thereby increasing their popularity among the public. Being first to implement this opportunity would give Chevron a competitive advantage and consideration for this business venture should be evaluated.

Chevron has built an innovative company by looking into the future and developing a solid organization that looks at market trends and responds accordingly. They have correctly predicted variations in energy consumption and flexed their resources to respond to demand, governmental regulations, and the opportunities that exist in the organization along with opportunities in the market.

ReferenceChevron . (2009). Global Issues. Retrieved October 23, 2009, from Chevron Corporation: http://chevron.comChevron. (2009). Oil Providing Energy for Progress. Retrieved from Intelligence. (2009). Obama energy vision. Retrieved October 23, 2009, from Energy Intelligence: (2009). Business Intelligence: Chevron Competitive Analysis. Retrieved from–ID__103877,target__business_intelligence–/free-co-samples-index.xhtmlU.S. Department of State. (2009). Regulation and Control in the U.S. Economy. Retrieved October 23, 2009, from