Energy Industry Overview

The energy industry is a diverse environment, comprised of various supply- and demand-side participants. Here are the primary sectors of the global energy complex:

• Drilling and exploration: Finding and tapping into oil resources is the backbone of the energy industry. According to the International Association of Drilling Contractors (IADC), there are more than 540 drilling-oriented companies in the US alone. Among the largest are Nabors Industries Ltd., Helmerich & Payne, Inc., and Patterson-UTI Energy, Inc.
• Service: Providing support services to drilling and oil field operations is a key element of the energy complex. Sealing wells, active fracking, and disaster aid are three specialties of service companies. Two of the world’s largest are Halliburton and Schlumberger.
• Logistics: Transportation and storage are integral parts of the oil industry. Whether it’s by tanker, rail, pipeline, or truck, delivering raw crude oil to refiners and consumers is an essential facet of the industry. Energy Transfer Equity (US), Enterprise Products Partners (US), Australian Pipeline Trust (AUS), and Enbridge (Canada) are leading energy logistics companies.
• Refinement: Oil refiners are responsible for delivering viable fuel sources to the public for large-scale consumption. Gasoline, diesel, and heating oil are three of the most common products. ExxonMobil, Marathon Petroleum Corporation, and Saudi Aramco are several globally prominent refining companies.
• Consumption: Many different types of industries consume refined fuels to sustain operations. Companies ranging from American Airlines to Archer Daniels Midland have an interest in the pricing of crude oil and refined fuels.

The energy complex plays a major role in the global economy. As an illustration of scale, the American Petroleum Institute (API) estimates that the oil and gas industry accounts for nearly 8 percent of US gross domestic product. This is a significant figure, and one that is typically higher in many other leading and developing nations. Subsequently, a variety of institutional participants frequently turn to futures to manage risk via oil hedging strategies.