Power Relations Effect Different Actors in A Supply Chain of Oil Essay

Power Relations Effect Different Actors in A Supply Chain of Oil Industry - Essay Example In his article, he considers Michael Porter’s concept and argues that this model, while it may seem when considered from a business manager point of view, seems to work but fails in terms of wider economics because, in real economic structures, other factors such as power play and influent has an effect on the value chain (Henderson, 1999). Oil supply has had a history of the power play as seen in the example of the seven sisters who were a consortium of seven companies based in the Middle East and who dominated the oil industry for over thirty years since the 1940s. Countries have vested interest in oil supply chain as a way to make sure that they can be able to sustain their economies (Bridge & Le, 2013). According to oil and energy experts, over ten calories of oil energy are used for the production of just one calorie of food energy. The energy in form of fertilizers, energy for farm equipment, chemicals packaging for farm pesticides etc also adds up to over ten calories o f energy to produce just one calorie of food. The same oil is also needed to power other areas of the economy, such as transportation and communication equipment. In most countries, the defence department depends on oil for over 70% of its operations. This leads to the concept of energy security. Energy security refers to the security related to the availability, or lack thereof, of oil energy. This brings in a lot of power play in the supply chain. The role of political power in the oil supply chain is much that there is even speculation that the reason why the United States has continually attacked the Middle East is for the purse of getting the oil reserves in this region. The same theory has been applied in the attack and killing of the leader of Libya, Muammar Gadaffi. Whether these conspiracy theories are valid or not, the truth remains that political power play is a major factor in oil supply chains.