The regulation of government for the cut down of oil imports have severely affected the firms who are operating in oil and natural gas industry. It has become difficult for the firms to expand in such scenario. Oil and natural gas industry is a huge income generating industry and the firms that working in this industry. Also the new investments in this industry would take five or six years, so that would be a long time and during which the business might lose the opportunity to earn more rather, they would incur lose. Bio-fuels and bio-diesels are good for the farmers but it would not be financial for the firms that are operating in oil and natural gas industry because bio-fuels and bio-diesels are alternative form of energy, promotion of alternative forms might affect the business. It should be rather used as an alternative and not be brought as being used in the mainstream. Oil and and natural gas firms will be at a huge loss. The industry that is a source to huge income and also provides employment to many skilled labor force (Twidell & Weir, 2015).
Another issue that affects the firm is that the land acquisition process of the lands that has been given by the government is very difficult, the lands are being owned b cooperatives of many farmers, so there are too much restraints from the farmers making the process difficult for the firms to start up their bio-fuel projects. Even if the project stats there are chances that in the future the farmers hinder the projects. So, business will incur too much loss, there would be factory strikes, which would eventually lower the production of the firms.
Most of the firms operating in this industry are dependent on the oil imports, oil imports, in the next ten years the Government is planning to lower the imports to another thrity percent, whih would make it more difficult for the oil companies to survive and it might happen that most of the firms will be closed down. It would definitely affect the market, and the existing companies will also be suffering.
Local production is a very long process because in order to start the local production the the firms will have to set up facilities and oil rigs, that would require a lot of capital, the firms would be forced to take up loans from the various banks just for setting up the infrastructure and facilities. Cost will also be involved in installation of machineries and the system that is used to monitor the process. If the systems are installed then huge cost will be involved in the repair and maintenance of the machineries and the whichever technologies used. Setting up oil rigs is a huge risk because if any accident occurs the entire facility will be damaged, and also the corporation will have to face legal obligations. They will have to pay huge fund as compensation in case of accidents, they might even have to pay huge sum to the media for prevention of negative publicity. The entire process of local production is very risky and perhaps this has been the reason why the firms were importing oil and natural products instead of looking local production. Further, the organization will be forced to start operating in an area that would be less profitable as the oil and natural gas industry (Huntington, 2015).
Perhaps the only advantage that the firms will have is that whichever firms chooses the production of bio-fuels and bio-diesels will gain a good will in the marketing. In in terms of Corporate social responsibility it would be a wise idea for the firm to change their area of operation (Solarin & Lean, 2016).
The Age of Reason
Bio-fuels and bio-diesels are environmental friendly sources of energy, and it is also a renewable form or energy. Since there is not much cost is involved in the production of bio-fuels, therefore the prices of this fuels are also lower. The step taken by the government is commendable from the perspective of environment. Drilling and oil reserves pose a big threat to the aquatic and marine lives. The oil rigs are really dangerous and hazardous places, if an accident occur the lives of the workers and the marine animals will be lost. Taking up the greener approach is a very pro environment action. Several international organizations keeping in mind the sustainability aspect have been emphasizing on the use of bio-fuels and bio-diesels, because of its benefits. Oil and natural gases are mostly based on fossils, which is a renewable resource but takes a lot of time to be renewed. Firms generally import oil and gases, the production cost is very high and too much work force is required for the installation of oil rigs. So most of the firms are forced to import from other countries, they pay taxes and import duties making, all these cases the price of oil industry to increase, the high prices which further fluctuates depending on the political and economical scenarios of the countries from where the carbon based fuels are imported. It is very clear that there is too much uncertainty involved with this industry, and it has been seen that, the oil prices keeps fluctuating (Tai & Chuang, 2014). So, it is very important to be dependent on such energy resources that has low cost of production and is not much affected by political and economical environments, most importantly the countries should not be dependent on other countries. Importing causes a large amount of money being transferred to other country, this amount could have been utilized for other purposes if there is an alternative to the fossil fuels. There is definitely a need for development of an alternative to this problem (Huntington, 2015).
Another aspect of oil and natural gas industry is that, people working as drillers in this industry put their lives at risk on the oil rigs. A single mistake or delay in taking a step might be risky, the oil spill of Chernobyl and the Methane gas leak tragedy of Bhopal, India are one of the examples that are sufficient to condemn this industries in humanitarian grounds (Epstein & Buhovac, 2014).
The step taken by government have certain disadvantages as well because if the oil and natural gas industries incur too much loss they will definitely opt for bio-fuel and bio-diesel facilities, which would require farming lands. Government has offered the firms a large concession, land tracts. Some of the firms are already acquiring lands for a long lease. Land acquisitions would is a very severe issue and a matter of concern for the concern for the for the farmers who would be losing their lands in acquisition. The farmers will be forced to look for alternatives for earnings, since their only source of income will be taken away. Another serious issue is that if fewer lands will be available for food production then the government will be forced to import food which will hike the food price and since it is the basic necessity of individuals they will be forced to buy high prices it might also lead tom starvation. In that context, this particular step is not good enough because the sufferer would be people who are not financially strong. Another disadvantage is that the people working in oil and natural gas industries will be unemployed. So it would be a mass unemployment of skilled labor force (Kirat, 2015).
Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.
Huntington, H. G. (2015). Crude oil trade and current accounting deficits. Energy Economics, 50, 70-79.
Kirat, M. (2015). Corporate social responsibility in the oil and gas industry in Qatar perceptions and practices. Public Relations Review, 41(4), 438-446.
Solarin, S. A., & Lean, H. H. (2016). Are fluctuations in oil consumption permanent or transitory? Evidence from linear and nonlinear unit root tests. Energy Policy, 88, 262-270.
Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. business, 6(03), 117.
Twidell, J., & Weir, T. (2015). Renewable energy resources. Routledge.