US petroleum companies lag in e-comm uptake

E-commerce has opened rich veins of opportunity for many industries within the past year. But in the petroleum industry the well is still running dry.

A study of public Web sites by Ernst & Young Consulting in New York revealed the petroleum industry isn't as accomplished in the e-commerce space as most other industries. Most of the major oil industry players still rely heavily on EDI (electronic data interchange) over private, point-to-point networks to handle business transactions, according to Thomas Yacko, an e-commerce partner in Ernst & Young Consulting's petroleum industry practice.

"The petroleum industry has lagged other industries such as travel, financial services, capital markets, consumer products, and retail due to their focus on business-to-consumer commerce," said Yacko. In the petroleum industry, over 90 per cent of transactions are conducted by businesses, suppliers and corporate customer.

A minority of petroleum companies offer some e-commerce capabilities. For example, one in four companies offer price quotes for their products on the Internet. Credit-card applications, electronic invoicing and electronic bill presentment are offered by less than one in seven petroleum companies. In contrast, nearly every consumer electronics company offers extensive e-commerce capabilities, according to the study.

Some industry observers said as oil giants continue to merge and oil prices fluctuate, petroleum companies will examine the potential of the Internet.

"The recent round of oil price reductions has left its legacy," said Martin Tallett, president of Ensys Energy & Systems, a based petroleum industry consulting group, referring to plummeting oil prices earlier this year. "Just because oil prices have gone back up over $US20 a barrel, I don't think people have forgotten about cost reduction and efficiency. I expect for people in the industry to be looking for further opportunities to cut costs," he said.

Chevron, Mobil Corp and BP/Amoco are moving into e-commerce to pare costs and provide expanded opportunities for new supplier markets, the study said.

While petroleum companies are beginning to address these capabilities, speed will be critical, according to Ernst & Young. "Failure to recognise and adapt to the speed of the Internet will provide opportunities for new entrants into their highly controlled economic market," the study said.

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