Conduct a PESTEL analysis.

Concern for global oil consumption in future is attributable to VAT rise in UK, rising oil prices, and a decline in global oil consumption. The increase in VAT has influenced the prices of commodities resulting from crude oil refinement. Economic factors inclusive of wage levels and inflation rates interfere with an organization costs. Consequently, the profit margin for BP is affected as sales lower because of a decline in demand of these derivatives that is attributable to the 2.5% rise in VAT. Clients and manufacturers may not order equivalent amounts of the commodities resulting from crude oil refinement because of affordability.

The crude index has revealed considerable rise in oil prices over the past years and is attributable to some certain events including political unrest in Egypt, Iraq and of late Libya, that is the sixth largest producer of oil.

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BP has invested significantly in crude oil refinement. Additionally, the political imbalance in Egypt led to an increase in price to $ 101 per barrel and ultimately to $105 per barrel after Libya unrest. These events tend to affect oil prices considerably because there is a decrease of operations within these countries and instill an element of panic buying. Additionally, oil prices may be rising but statistically, global oil consumption is ever decreasing. The last decline was in the year 1982. This would support a report similar to the latest decline as apparent in global recessions.

Some argued that greener attitudes and immense commitment by political leaders to minimize carbon emissions could also have led to the decline. In 2006, BP profits declined by nearly twenty-five percent compared to the year 2005. Therefore, if the recession continues, it will harm BP’s profits because of a decline in oil consumption (Schroder 2012).

BP mainly focuses on utilization of fossil fuels connected with key environmental challenges. 

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