An oil refining scorecard, in essence, is just like any scorecard in any industry. All industry structures need a scientific and data driven approach to measure how the performance impacts the business as an entity and economy as a whole. Failure to meet some specifications may not only bring downfall to the company itself but to the other industries that depend on its output, especially oil.
In most cases, an oil refining scorecard is designed with corresponding indicators that play significant roles, not only in terms of profitability, but also environmental elements. Several methodologies were developed before in 1997 by the Environmental Defense to rank oil companies in terms of pollution and waste disposal. When pollution is measured, the common indicator is the amount of toxic materials or elements released into the air, land, and water. This is not limited to just sulfur dioxide, but also other chemical components that are not commonly known to man.
As a result, an oil refining scorecard must meet the acceptable waste so the company would find itself ranked among the highest of all oil refining businesses. The goal here is to decrease pollution, lessen the use of natural resources, increase refining capacity by the barrel everyday, and improve product life-cycle management. The Environmental Defense updates its database on rankings regularly to see how oil refining companies are doing in terms of meeting standards and specifications.
Another part of the scorecard is marketing. This indicates how oil eventually reaches its consumers. The business of refining oil is ultimately measured by its salability. If the oil has been refined and yet it is not fit for use, it will be of no significant value to anyone. One of the most important factors in refining oil before it is sold is the company’s flexibility in terms of upgrading its facilities. Year in and year out there will be major changes in government standards to protect the people and the environment. These new laws for governance will impact the business as the company has to comply.
There has to be efficiency in operating the oil refining plants to maximize the utilization of the crude or materials and convert them into salable output. Expenses should be balanced and the company should expect profit instead of loss. Poor management of internal resources, such as man, money, and machines will never result to the ideal outcome. Somewhere down the line, there has to be a clear process that will result to optimized output through minimal input.
Lastly, part of the scorecard is the risk for geological factors and the lag time that it takes between the day of investment and the day of profit. Of course, it need not be said that all companies must ensure that no biological hazard is taking place. Companies should also look into projected sales, as this is one of the key indicators that investors look into prior to shelling out funds. If all these are balanced in the company’s oil refining scorecard, then the only thing that is left is sustainability.