PESTLE Analysis of BP

BP (British Petroleum) is an oil and gas extracting and manufacturing British multinational company. Charles Greenway and William Knox D’Arcy founded the oil and gas company in 1909. Today, we’ll discuss the PESTLE analysis of BP; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.

Political Factors Impacting BP

Some of the main political factors in the BP PESTLE analysis are as follows;

I-Carbon Emission Policies

The US government, EU, and other countries are imposing strict policies for oil and gas companies like BP (British Petroleum). For instance, the US government plans to decrease the carbon emission rate and burning of fossil fuel rate by 50% in 2030. Such types of limited carbon emission targets aren’t good for the oil and gas company’s growth and productivity in the long term.

II-Instability in Oil Countries

The Middle Eastern region and countries are the top source of extracting oil and gas. Unfortunately, the Middle East has been under a lot of political conflicts, wars, and violence for the past 3 decades. The regional and political instability has greatly disturbed and disrupted the supply chain and distribution of oil and gas.

III-Political Lobbying

According to an estimate, BP (British Petroleum) invested approximately 4.5 billion USD in political lobbying and endorsing various political parties. In fact, political lobbying has become a standard business practice. It is because if you don’t invest in the political campaigns of your favorite party and politicians; they will launch anti-oil and gas policies after winning the election.

IV-International Sanctions

BP (British Petroleum) has limited and stopped its supply of oil and gas to the Russian allies’ countries due to the international sanctions. The US and EU have imposed sanctions on Russia due to the invasion of Ukraine, and it has negatively impacted the business operations of oil and gas brands.

Economical Factors Affecting BP

Some of the main economic factors in the BP PESTLE analysis are as follows;

I-High Taxes

The UK’s government has imposed 25% taxes on BP (British Petroleum) and other oil and gas companies that are potentially earning annual revenue of approximately 5 billion British Pounds. The increase in taxes has greatly impacted the annual revenue, net income, and profitability of the brand.

II-Fluctuating Oil Prices

The oil prices are highly sensitive to various economic and political factors and they keep on fluctuating regularly. For instance, the oil prices per barrel were 100 USD in 2022; it reduced to 80 and 90 USD in 2023. The unstable oil price negatively impacts the sale, revenue, and profitability of the brand BP (British Petroleum).

III-Exchange Rate

Along with oil prices, the currency exchange rates of various countries and currencies keep fluctuating due to various external factors. For instance, the value of the British pound and Euro is higher than the USD; when the foreign income becomes converted into the EU and British Pounds, then it drops significantly.

IV-Renewable Energy

BP (British Petroleum) plans to invest approximately 26 billion USD in the production and development of renewable sources of energy. The objective of the company is to decrease the carbon emission rate and its reliance on fossil fuels by 2030.

Social Factors Impacting BP

Some of the main social factors in the BP PESTEL analysis are as follows;

I-Negative Perception of Carbon Emission

The social media campaigns and environmental sustainability awareness projects have spread significant awareness among the public. Nowadays, many people consider and perceive the oil and gas companies negatively because of their impact on the environment. According to a survey study, approximately 77% of customers are highly careful and cautious about the consumption of fossil fuel and their impact on the environment. These trends aren’t good for the growth and productivity of the brand BP (British Petroleum).

II-Sustainable Energy

The demand for renewable and clean energy has been increasing significantly for the past few years. According to an estimate, the market value of renewable energy businesses would reach 600 billion USD by 2025. BP (British Petroleum) is also investing a significant amount of resources in clean energy to keep up with the growing customer market trends.

III-Social Responsibility

Along with environmental sustainability, BP (British Petroleum) is a highly socially responsible brand. According to an estimate, the oil and gas brand invests approximately over 200 million USD annually on social welfare projects. Currently, the company is funding more than 300 social welfare and community projects.

Technological Factors Affecting BP

Some of the main technological factors in the BP PESTEL analysis are as follows;

I-Smart Drilling Technology

BP (British Petroleum) is investing a significant amount of capital resources in smart drilling technology and ultra-deepwater technology to improve efficiency. It has decreased the cost by approximately 5 billion USD by employing advanced technological tools and equipment.

II-Renewable Energy

According to an estimate, the market value of renewable energy businesses would reach 600 billion USD by 2025. BP (British Petroleum) is also investing a significant amount of resources in clean energy to keep up with the growing customer market trends.

III-Research and Development

BP (British Petroleum) invests approximately over 500 million USD in research and development. It allows the oil and gas brand to develop efficient production and extraction tools and equipment, renewable sources of energy and decreases the company’s reliance on fossil fuels.

Legal Factors Impacting BP

Some of the main legal factors in the BP PESTEL analysis are as follows;

I-Anti-bribery and Corruption Charges

BP (British Petroleum) has been found guilty under the charges of anti-bribery and corruption through the company’s involvement in political affairs and lobbying. The company paid 200 million USD in 2021 and 7.8 billion USD in 2012. The regulatory non-compliance has caused the company significant losses along with jeopardizing the company’s reputation and brand image.

Environmental Factors Affecting BP

Some of the main environmental factors in the BP PESTEL analysis are as follows;

I-Carbon Footprint

BP (British Petroleum) has taken various environmental sustainability initiatives to reduce the carbon footprint on the environment. They are making a positive impact and helping the oil and gas brand to rebuild and strengthen its brand image as a sustainable and efficient brand.

Conclusion: BP PESTLE Analysis |PESTEL Analysis of BP |External Environmental Analysis of BP | Strategic Analysis of BP

After an in-depth study of the PESTLE analysis of BP (British Petroleum); we have realized that BP (British Petroleum) is the world’s leading oil and gas brand. If you are learning about the BP PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.