The Risk and Uncertainty in Oil and Coal Market

Question: Describe about the risk and uncertainty in oil and coal market. Answer: Introduction The primary research topic for this research paper is the risk and uncertainty in oil and coal market. Chiang et al., (2015) depicted that the worlds business procedure is growing rapidly and hence there is an increasing demand of energy resources in these industries. The primary sources of these energy resources are the coal and oil. Hernandez, (2014) illustrate that the users daily consume approximately a total of 90 barrels of oil across the world for different work like feedstock of more fuel and in chemical factories. However, there are several risk and uncertainty associated with the usage and consumption of these natural resources that will be discussed in this research study. The risk that is associated with the concerned industry is the political risk, geological risk, price risk, operational risk, and supply and demand risk. Kashcheeva andTsui, (2015) portray that the political risk factor resembles the regulation formulated by the governing body where the organization persists. These governing bodies mention generates regulation for the procedures by which the extraction of the oil and coal should be extraction by the company (Mix Waldo, 2015). As a result, these organizations are always looking for politically stable countries where the governing authorities provide longer leases for conducting business some circumstances. In context of the geographical risk, Burgherr et al. (2012), mention that it is crucial for an organization to consider the fact that extraction of coal and oil should not be done in the area where drilling of land is less environment friendly like the area besides oceans or mountain ranges. Moreover, Talus, (2014) depict that the p rice risk is a factor that enlightens the circumstances that higher the political and geographical barrier, higher will be the prize risk in oil and coal industries. Caldecott et al., (2016) show that if there are more geographical barrier then the organization possess unconventional extraction of the oil and coal that cost much higher than the conventional vertical drilling to the deposit. In addition to that, it is hard to predict the subsequent price of the coal and oil according to the demand of the community for the energy resources. Bauer et al. (2015) depicted that particularly in this industry, the demand of the associated product is fluctuated according to the market requirement and hence predicting an amount for this proceeds to the way of gambling. Cost risk also resembles to the adversity to retain their loyal and skilled employees for the betterment of their organization and appropriate raise is salary should also be provided to them during the booming season. Gorbacheva and Sovacool, (2015) mentions that another risk with this industry the supply and demand risk that resembles the circumstances when the coal and oil has to be supply in the extreme north direction while the organization who supply the resources is present in the south. The risk that is faced especially by the coal industry is addition is the structural decline for the persuasion of the expo rting the coal. In recent times, people and almost every industry adopts a way that is more environmental-friendly and put less harmful affect by their outcome (Caldecott Robins, 2014). As a result, if every organization takes initiatives for a greener approach for conducting their business, the coal industry faces structural decline. Moreover, both the industry faces the risk of the environment that results in the adverse effect of the land, wastewater and the air pollution caused. Fajersztajn et al., (2013) illustrate that the workers those who are working in these industry also faces health problem caused by the burning of the oil and coal. Harmful chemical substance like Benzene and sulfur dioxide results in deadly disease like cancer and othercardiopulmonarymortality. Problem statement Most of the organizations are developing rapidly in terms of their maximum productivity and profitability. The enhancement in the productivity is supported by the modern technology and high production helps them to attain more financial growth. However, the scenario for the oil and coal industry is not the same and hence it is a highly risky industry to accomplish the business. Other manufacturing organizations formulates new products with the help of the evolved technology but the concerned industry in this research study have to rely the natural resources as the oil and coal cannot not be formulated manually or artificially. Throughout so many years, these sources are considered as a source of energy and it is diminishing days by day by a great extent. In this modern era, it is evident that the organization adopts an ecological approach to accomplish the business procedure so that the environment should be less impacted by the mining and extraction of coal and oil. Thus, the study enlightens on the evolved risk and uncertainty in the business of coal and oil. Van der Hoeven, (2013) researched and mentioned that United States is the leading country for the coal reservoirs and reserves 121,961.7 million tones oil equivalent coals while Russia and China follows the US by reserves 68,699.3 million tons and 58,900 million tones oils respectively. Harriss, (2016) moreover affirms that Saudi Arabia is the major producer and consumer of oil and stores produces 9817thousand of barrels per day. Russia and Iran follows UAE by producing 8,543 and 3,852 thousand of barrels per day (Van der Hoeven, 2013). The increased concern of the modern people towards the environment makes them using these materials less, which results in the structural decl ine of the coal and oil industry. Moreover, James, (2012) states that people also takes initiatives to protect these natural resources for the next generation and hence there is a fluctuation of the demand of these resources, which results in the cost risk. In addition to this, exporting coal and oil to distant consumers results in the supply risk. Thus, this research is to cover the study of these risks of the coal and oil industry. Research questions The major aim of this research is to investigate the evolved risk in the coal and oil industry for their mining and extraction from the ground. RQ1: What is the effect of the political risk in the coal and oil industry? RQ2: What is the effect of the geological risk in the coal and oil industry? RQ3: What is the price risk affect the in the coal and oil industry? RQ4: What is the effect of the operational risk in the coal and oil industry? RQ5: How supply and demand risk affects the coal and oil industry? These questions will help to study the different risk factors in the coal and oil industry so that the concerned organization can follow these factors for better performance and that makes them able to enhance their productivity and profitability. Justification of the project The research proposal would be helping in: Outlining of the research proposal related to the risks and uncertainty in oil and gas project Enlightening on the involved risk and uncertainty in the business of coal and oil Incorporating the observation of the key indicators of the data analysis and risks analysis methods Helping the organization to better understand about the significance of evaluating the various risks involved with the oil and business process Helping the organization to apply with the risk management strategies such that to prevent the risks to occur within the business environment Expected research outcome The expected outcome of the research process would be to analyse the various risk and uncertainties related to the oil and gas industry. The study includes the details of the methodology incorporating the literature review. It also incorporates the data collection methods including the surveys and data series by observing the key indicators of the data analysis and risks analysis methods. The purpose of the research project would be to generate the initiatives in the companies to protect these natural resources for the next generation. It would help in illustrating the case study of the business procedures of the organizations, which are growing rapidly and hence, there is an increasing demand of energy resources in these industries. The research outputs would be helping the readers to understand the problem that has been identified for the research proposal. In addition to this, exporting coal and oil to distant consumers results in the supply risk. Thus, this research is to cover t he study of these risks of the coal and oil industry. Conceptual framework The demand of the energy resources is increasing according to the market requirement wherein both the oil and coal industry faces the risk of the environment that results in the adverse effect of the land, wastewater and the air pollution caused. In recent times, people and almost every industry adopts a way that is more environmental-friendly and put less harmful affect by their outcome. As a result, every organization is taking the initiative for a greener approach for conducting their business. The enhancement in the productivity is supported by the modern technology and high production helps them to attain more financial growth. However, the scenario for the oil and coal industry is not the same and hence it would be very high risk industry to accomplish the business. Throughout so many years, these sources are considered as a source of energy and it is diminishing days by day by a great extent. Other manufacturing organizations formulates new products with the help of the evolved technology but the concerned industry in this research study have to rely the natural resources as the oil and coal cannot not be formulated manually or artificially. Cost risks Choma et al., (2016) illustrate that cost risk resembles to the adversity to retain their loyal and skilled employees for the betterment of their organization and appropriate raise is salary should also be provided to them during the booming season. The risk that is faced especially by the coal industry is addition is the structural decline for the persuasion of the exporting the coal (Arnold, 2016). In recent times, people and almost every industry adopts a way that is more environmental-friendly and put less harmful affect by their outcome. Price risk It is hard to predict the subsequent price of the coal and oil according to the demand of the community for the energy resources. The demand of the associated product is fluctuated according to the market requirement and hence predicting an amount for this proceeds to the way of gambling. The risk also resembles to the adversity to retain their loyal and skilled employees for the betterment of their organization and appropriate raise is salary should also be provided to them during the booming season. Supply and demand risks Murray and King, (2012) depicts that another risk with this industry the supply and demand risk that resembles the circumstances when the coal and oil has to be supply in the extreme north direction while the organization who supply the resources. Political risks The political risk factor resembles the regulation formulated by the governing body where the organization persists (Gillingham, 2014). These governing bodies mainly generates regulation for the procedures by which the extraction of the oil and coal is governed by the bodies. Methodology The following methodologies would be undertaken by the researcher in order to analyse the objectives of the research proposal in an effective way: Literature Review: This chapter would be incorporating the reviewing of the literature of the various researchers who have illustrated on the business procedures which are growing rapidly and hence there is an increasing demand of energy resources in these industries (Boix, et al., (2015). The study would be helping in enlightening on the evolved risk and uncertainty in the business of coal and oil. Data Collection process: The chapter incorporates the various information related to the research study which are required to be scrutinized in order to collect idea about the risks and uncertainties related to the oil and coal industry. The chapter would be dealing in the collection of the information related to the effects of the political risk, effects of the geological risk, the price risk and the effect of the operational risk in the coal and oil industry. The chapter would also be dealing with the collection of useful information related to the supply and demand risk that also affects the coal and oil industry. Data analysis methods: The chapter deals in findings and analysis of the research process related to the risks and uncertainty in oil and gas project. Harris, (2014) demonstrate that the conduction of the data analysis, two important methods can be utilized including the quantitative and the qualitative methods. The quantitative analysis would be incorporating the use of the pie charts, figures, excel; sheets, statistical modeling and mathematical modeling tools. On the other hand, the quantitative analysis will be making the use of the surveys and forums. The techniques to be used for analysing the quantitative information would be descriptive statistics, which would be utilizing the descriptive statistics for the mean, median, and standard distribution and deviation of the primary variables that would help in evaluating the individual values to be clustering around the mean (Lewis, 2015). For analysing the qualitative information, Taylor et al., (2015) depicts that the utilization of the literature from the concepts would be used as a source for helping in the establishment of the findings and relationship will be examined on the basis of the information being acquired through the surveys and forums as collected from the employees of the relevant industry. References Arnold, J. (2016). " The Death of Sympathy." Coal Mining, Workplace Hazards, and the Politics of Risk in Britain, ca. 1970-1990. Historical Social Research, 41(1). Bauer, N., Bosetti, V., Hamdi-Cherif, M., Kitous, A., McCollum, D., Mjean, A., ... Calvin, K. (2015). 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