Impact of higher gas prices on the automobile industry

¶ … High Gas Prices on the Automobile Industry

The heart and soul of this study, the primary research question, purports: What impact(s) do higher gas prices exert on the automobile industry (GM; Ford; Toyota; BMW; other manufacturers)? Subsequent questions include: How has the price of gas progressed through history? What do higher gas prices impact?

The study presents pertinent information/data which will prove useful to other researchers, as well as, to individuals impacted by higher gas prices, particularly those connected to the automobile industry. These individuals will especially benefit as this study aims to complement one's current understanding regarding this critical, contemporary concern.

This qualitative study utilizes the literature search methodology and obtains information from a variety of scholarly, news, general and governmental publications. Information from five interviews and a number of questionnaires is also included in this descriptive exploration to arrive at a relevant conclusion regarding Impact of High Gas Prices on the Automobile Industry.

AKNOWLEDGEMENT

Chapter I: Introduction

Chapter II: Review of the Literature

Chapter III: Historical Progression

Chapter IV: Impact of High Gas Prices

Chapter V: The Impact of High Gas Prices on the Automobile Industry

Chapter VI: Strategic Interview

GAS PRICES IMPACT AUTOMOBILE INDUSTRY

CHAPTER I:

INTRODUCTION

"The combination of rising world oil consumption and low surplus production capacity is putting upward pressure on oil prices." (Energy Information Agency, 2008)

THE PROBLEM

Higher Petroleum Product Prices

Higher gas prices leave consumers with "less money to spend at retail, entertainment and dining out, according to a new study by the Nielsen Company." ("Nielsen: High Gas Prices," 2008)

Nielsen's research for 2007 presents findings that cause many consumers to cringe as they realize their weekly spending for higher gas prices ranged from 12 to 16%, with the expectation that as gas prices rise higher, consumers' budget for their weekly allocation gas will reach19%. "With gas prices expected to hit $4 per gallon this year, consumers will be spending nearly a fifth of their household budget on gas,' said Todd Hale, senior vice president, Consumer & Shopper Insights, Nielsen Consumer Panel Services." ("Nielsen: High Gas Prices," 2008)

STATEMENT of the PROBLEM

As noted in the introduction for this study, the contemporary continued rise in global oil, combined with the petroleum industry's reported low surplus production capacity continues to exert upward pressure on oil prices, in turn, contributing to increasingly, higher gas prices. (Energy Information Agency, 2008) the increase in gas prices contributing to a 20% household budget allocation for higher gas prices, this researcher contends, as noted by Hale ("Nielsen: High Gas Prices," 2008), constitutes a direct impact on what consumers can afford to spend, while it simultaneously signals a critical concern that needs to be addressed. According to the Energy Information Agency (2008), "The projected higher costs for crude oil will contribute to higher petroleum product prices. Consequently, record crude oil prices reportedly push current and expected gasoline prices to record levels.

Motor gasoline prices are projected to average $3.36 per gallon in 2008, up 55 cents from last year. Diesel prices are projected to show even larger increases in 2008, averaging $3.62 per gallon, or 74 cents above the 2007 average price. The monthly average gasoline price is projected to peak t about $3.60 per gallon this spring, while monthly diesel prices are expected to average about $3.90 per gallon in March and April. (Energy Information Agency, 2008)

PRIMARY RESEARCH QUESTION and SUB-QUESTION

The research question constitutes the heart and soul of any investigation, Dereshiwsky, (19-99) stresses. Consequently, the heart and soul of this study, the primary research question, purports: What impact(s) do higher gas prices exert on the automobile industry (GM; Ford; Toyota; BMW; other manufacturers)?

Subsequent questions include:

How has the price of gas progressed through history?

What do higher gas prices impact?

SIGNIFICANCE of THIS STUDY

The researcher purports this particular study to be important as it presents pertinent information/data which will prove useful to other researchers, as well as, to individuals impacted by higher gas prices, particularly those connected to the automobile industry. These individuals will especially benefit as this study aims to complement one's current understanding regarding this critical, contemporary concern.

RESEARCH DESIGN and METHODOLOGY

Study Components

This qualitative study utilizes the literature search methodology and obtains information from a variety of scholarly, news, general and governmental publications. Components contributing to the research process utilized in this study include, but are not limited to:

Literature Search of Relevant Information

Descriptive Research

Qualitative Analyses of Retrieved Information;

Interviews (Five Minimum)

Questionnaires

Conclusion regarding Impact of High Gas Prices

Relevant Research Considerations

Qualitative procedures prove particularly useful and appropriate to present "in-depth" knowledge about a particular concern, situation, setting, subject/group of subjects, etc. As it encompasses the potential to relate a "rich, thick description"(Denzin, cited by Dereshiwsky, 19-99) to characterize qualitative research. In fact, the words "exploratory and descriptive" basically identify a qualitative study.

The following figure (***) portrays two primary research study methods.

Figure in other file

In determining to utilize the qualitative method for this study, this researcher reviewed differences between qualitative vs. quantitative research, as those noted in the above figure (***), along with insight Hoepf (2006) notes regarding the debate related to the relative value of qualitative and quantitative inquiry in the following excerpt of this paper.

Qualitative vs. Quantitative

Phenomenological inquiry, or qualitative research, uses a naturalistic approach that seeks to understand phenomena in context-specific settings. Logical positivism, or quantitative research, uses experimental methods and quantitative measures to test hypothetical generalizations.

Qualitative research, broadly defined, means "any kind of research that produces findings not arrived at by means of statistical procedures or other means of quantification" (Strauss and Corbin, 1990, p. 17). Where quantitative researchers seek causal determination, prediction, and generalization of findings, qualitative researchers seek... illumination, understanding, and extrapolation.... Qualitative analysis results in a different type of knowledge than does quantitative inquiry.

A several considerations qualitative methods can be used to better understand any phenomenon can also be used to gain new perspectives on things about which much is already known, or to gain more in-depth information that may be difficult to convey quantitatively....Thus, qualitative methods are appropriate... where the researcher has determined that quantitative measures cannot adequately describe or interpret a situation.... (Hoepf, 2006)

Dereshiwsky (1999) presents the following table (1), relating qualitative research components, developed by Catherine Marshall and Gretchen Rossman.

Dereshiwsky (1999) contends this design constitutes the best he has found to match up "research questions, designs and qualitative data collection procedures." Dereshiwsky (1999) purports he particularly appreciates this particular guide, as it:

Helps keep the researcher focused on his/her overall goal: to answer the research question(s).

Helps the researcher determine the best way (design and procedures) to consequently answer research questions.

Table 1: Matching Research Questions with Strategy (Adapted from Marshall & Rossman, 1989; cited by Dereshiwsky (1999)

Study Purpose

Research

Question

Research

Strategy

Some Related

Qualitative

Data Collection

Procedures

EXPLORATORY:

to investigate little-understood phenomena to identify/discover important to generate hypotheses for further research

What is happening in this social program

What are the salient themes, patterns, & categories in participants' meaning structures?

How are these patterns linked with one another (to provide the broader explanations for what I'm trying to understand)?

Case study

Field study

Participant observation

In-depth interviewing

Elite interviewing

EXPLANATORY:

to explain the forces causing the phenomenon in question to identify plausible causal networks shaping this phenomenon

What events, beliefs attitudes, & polices are shaping this phenomenon?

How do these forces interact to result in this phenomenon?

Field study

Case study

Ethnography

Participant observation

In-depth interviewing

Document analysis

Unobstrusive measures

Survey

DESCRIPTIVE:

to document the phenomenon of interest

What are the salient behaviors, events beliefs, attitudes, structures & processes occurring with regard to my phenomenon of interest?

Field study

Case study

Ethnography

Participation observation

In-depth interviewing

Document analysis

Unobstrusive measures

Survey

PREDICTIVE:

to predict...outcome of the phenomenon to forecast the events & behaviors resulting from the phenomenon

What will occur as a result of this phenomenon?

Who will be affected (individuals, groups)?

In what ways?

Experiment

Quasi-experiment

Survey (large sample)

Kinesics/proxemics

Content analysis

The following table (2) presents another researcher's perception of the differences between qualitative and quantitative research.

Table 2: Qualitative vs. Quantitative Research (Mays and Pope; cited by Greenhalgh and Taylor, 1997)

Qualitative

Quantitative

Social theory

Action

Structure

Methods

Observation, interview

Experiment, survey

Question

What is X?

How many Xs?

A classification) enumeration)

Reasoning

Inductive

Deductive

Sampling method

Theoretical

Statistical

Dereshiwsky (1999) points out that descriptive research documents a study's primary phenomenon. As this study documents its designated phenomenon, higher gas prices' impact on the automobile industry, albeit, as noted earlier, this researcher also utilizes interviews and a questionnaire to obtain information.

Other research methods commonly used in qualitative research, not applicable to this study, include:

Documents -- Study of documentary accounts of events, such as meetings

Passive observation - Systematic watching of behavior and talk in natural occurring settings

Participant observation - Observation in which the researcher also occupies a role or part in the setting, in addition to observing

Focus Groups - Method of group interview which explicitly includes and uses the group interaction to generate data (Greenhalgh and Taylor, 1997)

Questionnaires/Surveys

Questionnaires and/or surveys may "include open-ended, fill-in-the-blank items of greater or lesser structure. The former might be, 'What specific...' [while] Less structure might be exemplified by: "Please respond to the following in your own words: I....'" (Dereshiwsky, 1999) in addition:

adding some open-ended items such as these to a more traditionally scaled quantifiable survey, such as one with Likert-scaled attitudinal items, and/or "check/off" questions on demographic background variables, is a good way to make the survey "multimethod" in nature. This is because you'd be using that "single" data collection vehicle (survey instrument) to collect your data (responses) in more than one form: quantitative and qualitative! You could ask the same general questions in both forms and then compare the two alternative forms of responses to see if they 'converged,' or agreed, regarding the phenomenon that you are trying to measure via the survey (e.g., attitudes towards school climate). If they do, you can have greater assurance that "there's something real being captured/measured" regarding to climate, rather than some "fluke" or artifact of the measurement process itself. (Dereshiwsky, 1999)

Survey research may be categorized as the questionnaire and the interview. In the past, questionnaires were usually paper-and-pencil instruments the respondent completed. Today, questionnaire may be completed electronically on computer or with other technological tools.

The interviewer bases responses on answers the interviewees give to questions. At times, the difference between a questionnaire and an interview may be hard to decipher as both questionnaires and interviews may ask short closed-ended questions, as well as, broad open-ended ones. (Trochim, 2006) During the past decade, survey research has dramatically changes, Trochim (2006) reports.

Automated telephone surveys utilize random dialing methods and in some public areas, there are computerized kiosks which permit people to solicit input. Another variation of group interview, group methodology, currently claims its place in research. Survey research closely integrates with the delivery of service, such as a survey on the hotel desk or a brief customer satisfaction survey, a waitress/waiter presents with a customer's check. This type survey could also include follow-up phone calls, emails, etc. after an individual receives technical assistance or response to a Web site one visits. (Trochim, 2006) Some individuals relate questionnaires to basically being a mail survey. Mail surveys are generally inexpensive to administer and permit respondents to complete responses when time best suits them. Disadvantages include response rates frequently rank extremely low. Additionally, questionnaires do not serve as effective ways to secure detailed written responses. Group administered questionnaires present some advantages over the mail type while the household drop-off survey proves similar to the mail survey and may or may not be completed, depending on the respondent. The majority of major public opinion polls are secured from telephone interviews, one research method which enables a researcher to access information quickly. Many individuals, however, do not like the intrusion of an interview and may consider the poll an imposition. (Trochim, 2006)

Interviews

Interviews prove to be a more personal form of research as the interviewer works directly with the respondent. During an interview, the interviewer may probe for additional information and/or ask follow-up questions. Interviews, however, may prove to consume inordinate amounts of time. They may also require intensive research. As the interviewer constitutes a measurement instrument component, interviewers need to be effectively trained in how to respond to a number of contingencies. (Trochim, 2006)

Along with completing a content analysis of assessed researched information, information retrieved from a minimum of five interviews, along with information from several questionnaires is presented. For each interviewee interviewed for this study, the individual's name, his/her title and the name of the company employing him/her is identified.

Individuals interviewed during this research effort will constitute the study subjects, to "human-perspective" insight. For the interviewing process, for this researcher's purposes, several points are considered consideration for conducting interviews include the scheduling, the interview setting, and relevant statements and questions.

Style denotes a vital element to consider when preparing to interview an individual. Is the individual:

formal, structure oriented, and driven by detail, or are they casual, comfortable with delegating and focused on results ("How to Conduct an Interview" 2000)?" As an interviewer, this researcher notes the style of the interviewee and matches this as much as possible. Scheduling the time for the interview needs to fit the interviewee's best accessible time, so he/she will not feel rushed or pressured when answering questions and relating relevant information regarding higher gas prices. This researcher schedules interviews to best accommodate the person allotting time to sharing his/her perceptions regarding the focus of this study, the impact of higher gas prices. Setting for the interview, this researcher notes, will need to compliment the interviewee's choice for environment. This researcher additionally takes into account. however, the need to ensure, prior to the interview that the setting/environment will compliment this researcher's ability to not only "tune in" to ideas being expressed, but also be favorable to recording the interview and taking relevant notes. The setting particularly needs to be conducive to the interviewee's ability to concentrate/focus on questions and statement relating to the impact of higher gas prices. Prior to the scheduled interview appointment, this researcher prepared leading statements and questions to be utilized to solicit relevant information. For this pre-planning stage, this researcher additionally researched information relating to the interviewee's company to enhance understanding regarding which statements and questions would most likely produce more relevant responses. ("How to Conduct an Interview," 2000)

Participants

Trochim (2006) relates the following considerations regarding the choice of a population/participants and accessibility for a study.

Can the population be enumerated?

For some populations, you have a complete listing of the units that will be sampled. For others, such a list is difficult or impossible to compile. For instance, there are complete listings of registered voters or person with active drivers licenses. But no one keeps a complete list of homeless people. If you are doing a study that requires input from homeless persons, you are very likely going to need to go and find the respondents personally. In such contexts, you can pretty much rule out the idea of mail surveys or telephone interviews.

Is the population literate?

Questionnaires require that your respondents can read. While this might seem initially like a reasonable assumption for many adult populations, we know from recent research that the instance of adult illiteracy is alarmingly high. and, even if your respondents can read to some degree, your questionnaire may contain difficult or technical vocabulary. Clearly, there are some populations that you would expect to be illiterate. Young children would not be good targets for questionnaires.

Are there language issues?

We live in a multilingual world. Virtually every society has members who speak other than the predominant language. Some countries (like Canada) are officially multilingual. and, our increasingly global economy requires us to do research that spans countries and language groups. Can you produce multiple versions of your questionnaire? For mail instruments, can you know in advance the language your respondent speaks, or do you send multiple translations of your instrument? Can you be confident that important connotations in your instrument are not culturally specific? Could some of the important nuances get lost in the process of translating your questions?

Will the population cooperate?

People who do research on immigration issues have a difficult methodological problem. They often need to speak with undocumented immigrants or people who may be able to identify others who are. Why would we expect those respondents to cooperate? Although the researcher may mean no harm, the respondents are at considerable risk legally if information they divulge should get into the hand of the authorities. The same can be said for any target group that is engaging in illegal or unpopular activities.

What are the geographic restrictions?

Is your population of interest dispersed over too broad a geographic range for you to study feasibly with a personal interview? It may be possible for you to send a mail instrument to a nationwide sample. You may be able to conduct phone interviews with them. But it will almost certainly be less feasible to do research that requires interviewers to visit directly with respondents if they are widely dispersed. (Trochim, 2006)

For this study, this researcher elected to utilize participants within a 30-mile radius of this researcher's location. Other criteria contributing to choices of participants include:

1.6 ORGANIZATION of STUDY

This study's organization adheres to the following design:

CHAPTER I: INTRODUCTION

During the initial chapter of this study, the introduction, this researcher relates the context of the study phenomena/problem - higher gas prices impact on the automobile industry. The primary research question, along with sub-questions answered during this study, is presented, along with the significance of this study, noting the individuals who will benefit from this research effort.

The ways the research design and methodology will be conducted are explained during the introduction chapter. In addition, the organization of the study and this study's tentative

Reference List are presented during the first chapter.

CHAPTER II: The literature review chapter, chapter two, presents a review of the literature accessed from a variety of sources, which include scholarly, official news, and general publications, retrieved from online libraries; Web sites (including government and educational Web sites).

CHAPTER III: During chapter three, the historical progression of higher gas prices is related. This chapter includes a number figures, tables and charts.

CHAPTER IV: The fourth chapter of this study examines the impact of high gas prices.

CHAPTER V: The fifth chapter of this study expounds on the impact on the automobile industry (GM: Ford; Toyota; BMW)

CHAPTER VI: The final chapter for this study, the sixth chapter presents components of the strategic interview, used to obtain personal perceptions for this study. Information retrieved from the interviews will be dispersed throughout and/or included in chapters four and five.

1.7 TENTATIVE

Reference List

The following list denotes the tentative list of references for this study:

www.questia.com/PM.qst?a=o&d=5020524989

Area Sales of Luxury SUVs in High Gear; Gas Prices Don't Slow Down Affluent Buyers. The Washington Times

Foolish fuel follies; Why anti-gouging laws and windfall profits taxes won't lower gas prices, and how 'today's gasoline is not your father's gasoline'," Chicago Sun Times, Bailey, Ronald.

The Hybrid Phenomenon: High Gas Prices and Shifting Consumer Sentiment Point to Bright Prospects for Hybrid Cars. The Futurist. Carr-Ruffino, N., & Acheson, J.

Colo. gasoline price sets record Regular unleaded hits all-time high of $3.363 a gallon.(Business)," Rocky Mountain News (Denver, CO), Chakrabarty, Gargi.

Electronic Textbook - Let Us Count the Ways: Strategies for Doing Qualitative Research. Northern Arizona University. Dereshiwsky, M.

Energy Information Agency (EIA).

Gasoline prices are Falling Lower demand and increased inventories fuel the trend." The Fresno Bee.

How to read a paper: Papers that go beyond numbers (qualitative research)." Greenhalgh, Trisha and Taylor, Rod.

An electric car for the common man." CNNMoney.com. Hargreaves, Steve.

Heartland Energy HEGP Announces Progression at Oklahoma Facility."

High steel prices, gas prices, slipping car sales impact parts suppliers." The Milwaukee Journal Sentinel

Choosing Qualitative Research: A Primer for Technology Education Researchers." Hoepfl, Marie C..

Q&a: What's Behind High Gas Prices?" National Public Radio, NPR.org,

Horsley, Scott. "Impact of High Gas Prices on Small Business: Janet Myhre." Congressional Testimony.

How to Conduct an Interview" (2000). Association Management.

The Associated Press. "High gas prices drag on auto sales," Daily Breeze, Karush, Sarah.

Energy costs, auto industry cuts to hurt state.(high energy prices impact on economy)," Crain's Detroit Business. Lane, Amy.

Over a barrel: how sky-high oil prices affect everything from what you pay to fill up your tank to American influence around the globe." New York Times Upfront, Mouawad, Jad.

Nielsen: High Gas Prices Disrupt U.S. Consumer Spending." (2008).

Grease Is the Word High gasoline prices are driving more car owners to use discarded vegetable oil as diesel engine fuel," the Boston Globe, Ranalli, Ralph.

Car Crash: A Look in the Rearview Mirror; Once it Looked as if the Automobile's Dominance of Transportation Might Be Checked, but it's Still King of the Road. World Watch. Re Renner, M..

What is the Research Methods Knowledge Base? Trochim, William M.K..

To some, high gas prices have a silver lining. (USA)," the Christian Science

Soft or Crash Landing? The Perils of an Oil-Soaked Economy." Diesel Progress North American. Wilson, Rob.

CHAPTER II

LITERATURE REVIEW

Loyalty in the car business isn't what it used to be." rak ("Gas Price, Style Drive," 2007)

Significance of This Literature Review

This literature review chapter constitutes a significant component of this qualitative study as it presents a myriad of research relating the impact of higher gas prices to the automobile industry.

A number of themes are explored during this study evolving from the research questions. This researcher initially reviewed more than 75 sources for consideration of information/data to utilize in this study. These publications included scholarly, peer reviewed journals, books, magazine articles, newspaper articles, and web sites. Ultimately, this number narrowed to approximately 25, as more information/data is retrieved from the interviews completed and results from the questionnaire created for this study.

Key Phrases for Research

For this literature review, this researcher explored information relating to, but not limited to the following key phrases:

gas prices in general;

gas prices and other parts of the world;

the history of gas prices;

rising/higher gas prices; crude for prices; effects of higher gas prices, per se; automobile manufacturers; impact of higher gas prices on the automobile industry; electric and hybrid cars.

A new law regarding fuel requirements for automobile manufactures.

Review of Research Questions

The primary research question, as noted in the introduction for this study, asks: What impact(s) do higher gas prices exert on the automobile industry (GM; Ford; Toyota; BMW; other manufacturers) Subsequent questions include:

How has the price of gas progressed through history?

What do higher gas prices impact?

To begin to answer the research questions, initially noted in the introduction for this study, this researcher contends that a number of other basic questions related to gasoline prices should first be considered, including:

Why components contribute to retail gasoline prices?

How many gallons of gasoline does one barrel of oil produce

What is the price for one barrel of oil?

How high are gas prices currently in the U.S. In the World?

Contributing Components Contributing to Retail Gasoline Prices

According to research conducted by EIA, the petroleum market "blames" the cost of crude oil as the primary contributor to contemporary high gasoline prices consumers now have to pay. In fact, according to this source the cost of crude oil currently constitutes approximately 70% of the price charged at the gas pump.

The high worldwide oil demand for gasoline, relative to the supply reportedly directly relates to today's high crude oil prices.

Other factors contributing to higher prices include political events and conflicts in some major oil producing regions, as well as other factors such as the declining value of the U.S. dollar (the currency at which crude oil is traded globally)." (Energy Information Administration, 2008)

Factors behind the Increase in Gasoline Prices in 2005

Since the beginning of 2005, U.S. retail gasoline prices have been generally increasing, with the average price of regular gasoline rising from $1.78 per gallon on January 3 to as high as $3.07 per gallon on September 5, as Hurricane Katrina further tightened gasoline supplies. But the hurricane is only one factor, albeit a dramatic one, which has caused gasoline prices to rise in 2005.

A major factor influencing gasoline prices in 2005 was the increase in crude oil prices. The price of West Texas Intermediate (WTI) crude oil, which started the year at about $42 per barrel, reached $70 per barrel in early September. Crude oil prices rose throughout 2004 and 2005, as global oil demand increased dramatically, stretching capacity along the entire oil market system, from crude oil production to transportation (tankers and pipelines) to refinery capacity, nearly to its limits. With minimal spare capacity in the face of the potential for significant supply disruptions from numerous sources, oil prices were high throughout 2005.

In addition, Hurricane Katrina had a devastating impact on U.S. gasoline markets, initially taking out more than 25% of U.S. crude oil production and 10-15% of U.S. refinery capacity. On top of that, major oil pipelines that feed the Midwest and the East Coast from the Gulf of Mexico area were shut down or forced to operate at reduced rates for a significant period. With such a large drop in supply, prices spiked dramatically. Because two pipelines that carry gasoline were down initially, some stations actually ran out of gasoline temporarily. However, once the pipelines were restored to full capacity and some of the refineries were restarted, retail prices began to fall. Increased gasoline imports in the fall of 2005, in part stemming from the International Energy Agency's emergency release, also added downward pressure to gasoline prices. However, retail prices are likely to remain elevated as long as some refineries remain shut down and the U.S. gasoline market continues to stretch supplies to their limit. (Energy Information Administration, 2008)

Report from the Nielsen Company

The Nielsen Company, a privately held company active in more than 100 countries, has headquarters located in Haarlem, the Netherlands, and New York, USA. As a global information and media company, Nielsen holds leading market positions in marketing information (ACNielsen), media information (Nielsen Media Research), online intelligence (NetRatings and BuzzMetrics), mobile measurement, trade shows and business publications (Billboard, the Hollywood Reporter, Adweek). ("Nielsen: High Gas Prices," 2008) Nielsen's study in 2007 shows that as a result of higher gas prices, consumers' weekly spending on gas dramatically increased. "Per trip spending rose significantly, up 40% from $24.42 per trip when gas was at its lowest price, to $34.11 when gas prices hit their peak....Overall weekly gas spending rose from $32.02 to $46.72 per household - a 46% increase." ("Nielsen: High Gas Prices," 2008)

Despite consumers changing their habits to try to counter higher gas prices, the amount of money they spend on gas each week is still claims a large portion of their budgets.

Hale stresses that retailers need to address the impact of rising gas prices through assortment, pricing and promotional strategies as consumers today make a point to seek out value and convenience. ("Nielsen: High Gas Prices," 2008)

One Barrel of Oil

In response to the question: How many gallons of gasoline does one barrel of oil produce?: the EIA reports that when refined, one barrel (42 gallons) of crude oil produces about 19.6 gallons of "finished motor gasoline." The remnants of the barrel are used to produce jet fuel, distillate fuel oil, residual fuel oil, and other products. (Energy Information Administration, 2008)

Products from crude oil include gasoline for automobiles (includes trucks): jet fuel; petrochemical feedstock (products derived from petroleum primarily used to manufacture chemicals, synthetic rubber and plastics); propane; asphalt. "The most common products from petroleum are energy products: gasoline, heating oil, and diesel fuel. Other petroleum products are: ink, crayons, bubble gum, dishwashing liquids, deodorant, eyeglasses, records, tires, ammonia, and heart valves." (Energy Information Administration, 2008)

One barrel of oil produces these products as portrayed with percentages in the following figure (***). Due to the approximate gain of 5% in processing, the percentages in figure (***) total more than 100%.

Figure ***: Products from Crude Oil (adapted from Energy Information Administration, 2008)

Prices for a Barrel of Oil During 2004, the average price for crude oil totaled $36.98 per barrel.

At that time, crude oil costs constituted 47% of the cost for a gallon of regular gasoline.

In 2005, the price for one barrel of crude oil averaged $50.23, with crude oil contributing approximately 53% of a gallon of regular grade gasoline's cost. Crude oil's contributing share to the cost of gasoline varies over time and in different areas. (Energy Information Administration, 2008)

Impact on Automobile Industry

Small Car Sales Strong

Despite an overall weakening in the U.S. auto market, small car sales reportedly set a new record during 2007. Things that fuel the growth of these (small) cars will not likely go away, according to Jesse Toprak, senior analyst for the Edmunds.com automotive Web site. Toprak perceives that gas prices, the housing market, the fashion aspect of these cars," said "The segment is really hitting at the right time." ("Gas Price, Style Drive," 2007)

Sales of compacts such as the Honda Civic and subcompacts, including the Fit, reached 2.7 million in the U.S. during 2006, according to George Pipas, Ford Motor Company's s top sales analyst.

This unforeseen impact from higher gas prices, contributing to an unexpected sales boom for the automobile industry notes one of the few perks from higher gas prices. Pipas reports that foreign automakers currently control 76% of the U.S. small car market. This statistic causes Detroit to take notice as small car buyers are often young buyers.

One goal of Detroit is to capture young buyers and keep them for life. ("Gas Price, Style Drive," 2007) With their spending, buyers voted Toyota Yaris as the best-selling subcompact during the first seven months of 2007. Ford sells subcompacts outside the United States, while Autodata Corp reports the Toyota Corolla to be the most popular compact car. Currently, the only domestic subcompact in the U.S. market is the Chevrolet Aveo.

During 2007, Chrysler LLC reported its plan to partner with China's biggest automaker "Chery," to develop a small car.

This small car will be exported in 2010 to join the competition in North America. Ford currently sells subcompacts outside the United States, but also unveiled a concept car next at the Frankfurt Motor Show. This car is expected to serve as the basis for a global subcompact to enter the U.S. market by 2010. General Motors Corp. plans to redesign its Aveo hatchback.

In the past, due to the week profit margin in small cars, U.S. automakers historically gave short shrift to them.

Small car prices usually start at $10,000 to $15,000. Because sales of small cars do not provide automakers five-digit profits that can be obtained from a fully loaded sport utility vehicle, small cars have not traditionally been the primary focus for U.S. automakers. ("Gas Price, Style Drive," 2007) Aaron Bragman, an auto industry analyst with the consulting firm Global Insight points out that in response to high fuel prices prompting the bulk of the contemporary shift to small cars, changes and improvements have been made. Small cars are now much safer and present more style than in the past. One example, BMW's Mini illustrates the fact that, even though "mimi"-sized, small cars may possess deluxe features, similar to their larger counterparts. Bragman explains: "The Mini was not cheap. That started people thinking that size doesn't necessarily equate to how good something is."

Gas Price, Style Drive," 2007) Now competitors have upgraded small car interiors and safety systems, and U.S. buyers are responding because the cars are far safer than their predecessors, he said.

Electric Cars

By 2009, if one company's plans materialize, a $30,000, 80-mph battery-powered sedan will be on the market. This anticipated you all electric, Chinese-made sedan will reportedly sell four little more than the 2008 cost of a Camry. "Electric cars are nothing new, (Hargreaves, 2007) notes. "But until now they've either been very expensive to produce or, if not that, then small and relatively slow - little more than glorified golf carts." Miles Rubin, albeit, with his $30,000 Miles XS 500, hopes to change that particular perception. Rubin, Founder of Miles Automotive Group, purports that the XS 500 travels at a top speed of 80 miles per hour.amd can travel 120 miles at 60 miles per hour, approximately the speed of GM's late-90s era electric car, the EV 1. The XS 500 will be reportedly much less expensive to produce than previously built electric cars. (Hargreaves, 2007) the low cost and the high range for the XS 500 can be attributed to outsourcing its concept and manufacturing to China. In China, low labor costs help keep prices down. For the XS 500, State-sponsored research into battery technology yielded "an advanced lithium ion power pack produced by Lishen Battery." (Hargreaves, 2007) Company literature informs customers and potential buyers that when the boundary runs down, they simply plug the car into a normal wall socket and, six hours later the XS 5000 is fully recharged. Rubin, cited by Hargreaves (2007) contends the XS 500 his company manufactures in China, has superior safety features which include reinforced doors, along with front and side airbags.

Critical challenges for the XS 500 currently merit consideration, however, and include:

Ensuring Car Reaches Market: Need to secure safety approval from U.S. regulators and complete additional battery testing.

Competition:

Phoenix Motors plans to market its four-door utility truck with similar performance capabilities approximately the same time.

Tesla Motors manufactures and expects to market its $100,000 all-electric Tesla Roadster. Traditional big automakers are entering the electric game with plug-in hybrids.

General Motors aims to mass produce its Volt plug-in by 2010.

Convincing potential customers that a Chinese vehicle is safe, as recent recalls of Chinese produced products made international news. To ensure quality of the XS 500, inspectors will be employed in both Chinese factories manufacturing the car. (Hargreaves, 2007)

In regard to short-term energy and summer fuels outlook for 2008, the Energy Information Administration (2008) notes the following highlights:

April 8, 2008 Release

Highlights

West Texas Intermediate (WTI) crude oil prices, which averaged $72.32 per barrel in 2007, are projected to average $101 per barrel in 2008 and $92.50 per barrel in 2009.

Weekly diesel prices have already crossed the $4.00?per-gallon threshold in many regions of the country.

U.S. consumption of liquid fuels and other petroleum is expected to decline in 2008 by about 85,000 barrels per day (bbl/d) as a result of the economic slowdown and high petroleum prices. After accounting for increased ethanol use, U.S. petroleum consumption is projected to fall by 210,000 bbl/d in 2008.

U.S. real gross domestic product (GDP) is expected to decline in the first half of the year and then start growing again, with annual growth in 2008 at 1.2%, the slowest annual rate since 2001. An expected modest economic recovery in 2009, combined with lower petroleum prices, is projected to boost total U.S. liquid fuels and other petroleum consumption by about 200,000bbl/d.

The Henry Hub natural gas spot price averaged $7.17 per thousand cubic feet (Mcf) in 2007 and is expected to average $8.59 per Mcf in 2008 and $8.32 per Mcf in 2009. Higher prices this year and next reflect continued strong demand, high oil prices, and the need to replenish more stocks this year than last year. (Energy Information Administration, 2008)

On the Net

The following identify the Web sites for five primary automobile companies who manufacture cars in the U.S.

Chrysler LLC, http://www.chrysler.com

Ford Motor Co., http://www.ford.com

General Motors Corp., http://www.gm.com

Honda Motor Co., http://www.honda.com

Toyota Motor Corp., http://www.toyota.com

Chrysler LLC

Chrysler purports its company to offer "The best warranty coverage in the industry, "The Chrysler Lifetime Powertrain Limited Warranty." Chrysler claims this "lifetime" warranty constitutes the first of its kind ever offered by any automaker. With this warranty, Chrysler states, the customer is covered, and the warranty lasts as long the person purchasing vehicle owns it. (Chrysler, 2008)

Chrysler's 2008 Sebring Sedan reportedly has the best gas mileage, as noted on Chrysler's Web site.

A www.chrysler.com/en/smartway/"

The SmartWay® certification system identifies each vehicle's air pollution and greenhouse gas performance.[1] Lower emissions earn a higher score, and those vehicles with the best scores receive certification.

LX

Touring

Limited

Limited AWD

2.4L DOHC 16V VVT Engine

4-speed Automatic transmission www.chrysler.com/en/smartway/"

21 city / 30 hwy*

2.7L DOHC 24V V6 Engine

4-speed Automatic transmission www.chrysler.com/flexfuel/"

19 city / 27 hwy*

3.5L High Output 24 V6 Engine

6-speed Automatic transmission

16 city / 26 hwy*

15 city / 24 hwy*

2008 EPA estimated miles per gallon, actual mileage may vary with driving conditions.

E85 fuel economy rating not shown. Use of E85 in your Flex Fuel capable vehicle will greatly lower your engine's fuel economy. Please see your dealer for details.

[1] Based on 2008 EPA SmartWay Designation. Please visit www.epa.gov/greenvehiclesfora list of the specific vehicle types that meet the SmartWay standards. SmartWay is a service mark of the U.S. Environmental Protection Agency. (Chrysler, 2008)

Ford Ford Motor Co., on its Web site, http://www.ford.com, publishesthe following related to better fuel economy, addressing concerns regarding hybrid batteries: Improving Hybrid Batteries

As we continue to work on producing cleaner and more fuel-efficient vehicles, the study of battery technology has gained momentum. Advances in battery technology will allow us to further improve hybrid systems and pave the way for other electric propulsion systems.

Cleaner Way to Drive

The primary advantage of a hybrid is better fuel economy, but there are significant emissions benefits as well: hybrids have lower tailpipe emissions and emit fewer greenhouse gases than conventional vehicles because of their ability to drive in electric-only mode. And by increasing fuel efficiency, these vehicles also reduce reliance on foreign energy sources

Hybrid Batteries

Although batteries have been used to power vehicle accessories and even propel entire vehicles for many years, the high-voltage batteries used in hybrid vehicles are still considered a relatively new technology, and as a result, they're costly. Low volumes, lack of commonality in battery configurations among automakers and limited battery suppliers are all contributing factors to the higher price tag.

In addition to cost, there's also customer concern regarding the robustness and durability of hybrid battery systems. Questions about battery life are the most frequently asked by potential hybrid customers.

2004 Escape Hybrid

When we designed the 2004 Escape Hybrid, we produced a highly sophisticated and reliable battery system capable of working for 10 years and 150,000 miles. The work we did on the 2004 Escape Hybrid became the benchmark for evaluating battery life capability in our next-generation hybrid vehicles, as well as providing a methodology for evaluating and comparing alternative battery technologies both for hybrid and fuel cell vehicle applications.

Battery Innovation

Nickel metal hydride (NiMH) batteries are preferable for use in today's hybrid vehicles. However, because of chemistry constraints, there is not much room for improving NiMH energy and/or power density. In addition, as volumes rise beyond several hundred thousand units, NiMH batteries become uncompetitive in terms of cost with other batteries due in most part to their large nickel content.

For near and mid-term automotive applications, Lithium-ion (Li-ion) batteries are the most promising alternative. Li-ion batteries use much less nickel and have significantly more energy and power than NiMH batteries. The use of nanomaterials, smart materials design and good cell engineering should further enable the development of these higher power cells.

The primary concern with Li-ion batteries is that they can become overcharged or internally shorted. To prevent this, we've found that using an external control system is effective in maintaining the proper state-of-charge of the cells in the battery pack.

Although Li-ion batteries seem to have a promising future, cost once again plays a part. Presently, Li-ion batteries are too expensive for mass-market automotive applications. The United States Automotive Battery Consortium (USABC), a collaboration involving domestic automakers (including DaimlerChrysler, Ford and GM) and the U.S. Government, is working toward established cost targets.

The Future

We believe that not only are advancements in batteries important for current hybrid applications, but they're also key enablers for future technologies like plug-in hybrids, battery electric vehicles and fuel cell vehicles.

Customer acceptance will also play a role in the future of battery technology. As customers weigh the costs and benefits associated with owning hybrid vehicles, their concerns about durability, battery replacement and safety must be addressed.

Recycling Batteries

Due to the high cost of these batteries and the environmental concerns associated with throwing them away, simple one-time use and disposal is unacceptable.

We believe these batteries need to be designed to be easily and economically collected, reused, reprocessed and recycled. Currently, the infrastructure for recycling Li-ion batteries from consumer electronic devices is only in its early stages of development, but the USABC has been developing a strategy to make recycling easier through efficient identification, disassembly, reuse, remanufacture and recovery of spent batteries. (Ford Motor Company, 2008)

General Motors

The following figure portrays the "Loyalty Has Its Rewards: on General Motors Corporation's Web site: http://www.gm.com.

Efficiency throughout GM's portfolio

Fuel economy will not be the exclusive domain of Chevrolet however. The GM exhibit in L.A. also includes the new 2009 Cadillac Escalade Hybrid, just introduced at the Miami Auto Show; and the first public showing of the all-new, fuel-efficient 2009 Pontiac Vibe compact crossover.

The Escalade Hybrid is the world's first fuel-saving hybrid applied to a large luxury SUV. Powered by GM's innovative, patented 2-Mode Hybrid system, the 2WD model of the Escalade Hybrid will deliver a significant improvement in fuel economy in city driving over its gasoline-only sibling - all while delivering the same distinctive style, segment-leading features and full-size capability that have made the Escalade a cultural symbol from hip-hop clubs to country clubs, from Los Angeles to Dubai to Shanghai.

Also in L.A. fresh from its Miami debut is the 2008 Cadillac Escalade Platinum, a special edition that takes Cadillac's dramatic design, elegance and technology to its fullest expression. Offered on Escalade and the extended-length Escalade ESV, the Platinum edition includes a blend of technical innovations and aesthetic enhancements. Escalade Platinum will be the world's first SUV to be equipped with Cadillac's advanced Magnetic Ride Control (MRC) technology, the industry's fastest-reacting suspension system.

The 2009 Pontiac Vibe is a modern re-mix of a classic hit, infusing the functionality of a compact crossover with a bolder attitude of muscular styling, increased performance and tight handling. With the base model's 1.8L engine and the standard manual transmission, fuel economy is estimated at 26 mpg in the city and 32 mpg on the highway; with the automatic, fuel economy is estimated at 25 in the city and 31 on the highway. (General Motors Corporation, 2008)

American Honda Motor Company

For its incentive, Honda Motor Co., on its Web site, http://www.honda.com, sponsors the following contest.

Figure in other file (American Honda Motor Company, 2008)

http://automobiles.honda.com/Hondaen Espanol (American Honda Motor Company, 2008)

Frequently Asked Questions (about hybrids)

Over the past two decades, Honda has been a worldwide leader in developing exceptional vehicles that reduce emissions and improve fuel economy. If you'd like to know more about the Civic Hybrid, you're not alone. Below are answers to our most frequently asked questions:

Q: What is a hybrid vehicle?

A: A hybrid vehicle combines a gasoline-powered engine with an electric motor to provide increased gas mileage and help lower emissions. Specifically, the Civic Hybrid utilizes the Honda Integrated Motor Assist IMA® technology, which uses a 1.3-liter i-VTEC® engine for primary power, then an ultra-thin electric motor provides added power.

Q: Does it require a special kind of fuel?

A: No, the Civic Hybrid uses regular unleaded gasoline.

Q: Is it true that the Civic Hybrid achieves remarkable fuel efficiency?

A: Absolutely. The Civic Hybrid achieves an EPA-estimated city/highway fuel economy of 40 city/45 hwy miles per gallon* (Actual mileage will vary.)

Q: What kind of warranty does the Civic Hybrid have?

A: The Civic Hybrid comes with a 3-year/36,000-mile limited warranty and 5-year/60,000-mile limited drive-train warranty, just like every other Honda. Its IMA battery pack comes with an 8-year/80,000-mile warranty, or a 10-year/150,000-mile warranty in CA, CT, MA, ME, NY, RI or VT. See your dealer for details.

Q: Will I ever have to plug in the Civic Hybrid?

A: No, never. The battery pack is self-sufficient and recharges itself automatically when decelerating through regenerative braking, as well as when cruising.

Q: Is there a specific maintenance schedule the Civic Hybrid should adhere to?

A: Just like any other Honda Civic, oils and fluids should be changed at scheduled intervals. All 2008 Civic models share the Honda 100K +/- Miles No Scheduled Tune-Ups** feature....(American Honda Motor Company, 2008)

Toyota Motor Corp

On its Web site, http://www.toyota.com, ToyotaMotor Corp., recommends ways for consumers to save gas on its Web site.

Toyota's Recommendations

Toyota.com offers advice about improving mileage on the Prius FAQ page, as well as on the Understanding Fuel Economy white paper. Here are some additional tips for getting the most out of your mileage:

Keep tire pressure at recommended levels; under-inflated tires use more gas.

Avoid driving at speeds that are higher than necessary, especially on the highway.

Avoid jackrabbit starts and, when possible, avoid sudden stops.

Don't carry items in the car that you don't need; additional weight means lower mileage.

Use air conditioning in moderation.

Hybrid drivers weigh in the mileage tips below come straight from hybrid drivers, and contribute to facilitating the sharing of ideas in the hybrid community.

One hybrid owner offers an imaginative analogy for getting the "Zen" of thrifty hybrid driving:

Imagine pedaling a bicycle with your own leg power. You cruise as much as possible. No need to go full throttle before a stop. Glide to a stop instead. Don't race to cruising speed. Take it easy on the engine just as you would on your legs." (Toyota Motor Sales, 2008)

Hybrid and hydrogen vehicles are making news.

Hybrids have earned universal recognition as environmental and market successes, and hydrogen-powered fuel cell vehicles (FCVs) are regarded as promising zero-emission solutions for the future

In addition to Hybrid Synergy Drive®, Toyota has been in the forefront of FCV development for years, and has demonstrated several fuel cell SUVs and buses. A small number of Toyota fuel cell vehicles now operate on public roads in the United States and Japan as part of Toyota's FCV development. Program. (Toyota Motor Sales, 2008)

BMW

No other premium automaker provides such comprehensive benefits for absolutely no cost." That claim stands on BMW's Website: http://www.bmw.com/com/en/index.html.

More hybrid, more BMW - less CO2.

Thanks to BMW Efficient Dynamics technologies, our internal combustion engines are more economical than ever before. That's no reason for us to rest on laurels though. In fact, we've already moved on to the next phase of fuel consumption and emissions reduction: BMW ActiveHybrid. Hybrid represents the intelligent management of energy flows within the vehicle. The strengths of electric motors, such as the ability to deliver maximum torque from zero rpm, make them the ideal partner for the sporty and efficient BMW petrol engines.

BMW presented a hybrid BMW 5 Series as early as 1985. Since then, electronic control systems and batteries have become far more efficient, and the time is now ripe for a hybrid system that offers genuine driving pleasure. That system is BMW ActiveHybrid. (BMW, 2008)

CHAPTER III

HISTORICAL PROGRESSION HIGHER GAS PRICES

History

Components contributing to retail gasoline prices throughout history have varied, however, the primary contributor as noted in the literature review is attributed to crude oil costs. Other factors are noted in the following figure ***, however these reportedly impact gas prices on a much smaller scale.

Figure in other file

Figure ***: Factors Contributing to Higher Gas Prices (Energy Information Administration, 20

The following figure (***) depicts past, present and projected future prices for crude oil, per barrel.

Figure in other file

Figure ***: Past, Current & Projected Crude Oil Prices (Energy Information Administration, 2008)

Figure in other file

Figure ***:

Current Diesel Price in Numerous Regions (Energy Information Administration, 2008)

Figure in other file

Figure ***: Projection for U.S. Petroleum Consumption in 2008 (Energy Information Administration, 2008).

The following three figures present samplings of prices from 1990 through 2008, including:

crude oil prices; gas prices; crude oil compared to gas price increases; compared with criminal purposes from 1990 to 2008.

Figure in other file

Figure ***:

Examples of Crude Oil and Gasoline Prices from 1990 to 2008 Compared (adapted from Energy Information Administration, 2008)

Figure in other file

Figure ***:

Example of Crude Oil Prices from 1990 to 2008 (adapted from Energy Information Administration, 2008)

Figure in other file

Figure ***:

Example of Gasoline Prices from 1990 to 2008 (adapted from Energy Information Administration, 2008)

Figure in other file

Figure ***:

Example of Gasoline Prices from 1990 to 2008 Condensed (adapted from Energy Information Administration, 2008)

Figure in other file

Figure ***:

Example of Gasoline Prices Different Parts of World (2008 Cable News Network)

Ratings of Countries Producing and Using Oil

The following table presents the top 10 oil producing countries. This researcher notes that the U.S. ranks number three in oil production, yet only produces 7.97% of total produced in the world. (GeoHive, 2000-2008)

Energy: Oil Production (in Million Tons) rank country percent of total

Saudi Arabia

Russian Federation

USA

Iran

China

Mexico

Canada

Venezuela

United Arab Emirates

Kuwait (GeoHive, 2000-2008)

Energy: oil consumption (in millions tons) rank country percent of total

USA

China

Japan

Russian Federation

Germany

India

South Korea

Canada

France

Saudi Arabia (GeoHive, 2000-2008)

Current world population (ranked) rank country area sq.km.

A population (all estimates) yearly growth yesterday daily increase today

World

China

India

United States of America

Indonesia

Brazil

Pakistan

Bangladesh

Russia

Nigeria

Japan (GeoHive, 2000-2008)

Gas Prices in the U.S.

The following figures depict recent and current gas prices in the U.S.

Figure in other file

Figure **: Average Gas Prices from 2004 and 2005 (Energy Information Administration, 2008)

Figure in other file

Figure *: Average Gas Price; March 2008 (Energy Information Administration, 2008)

Figure in other file

Figure *: Average Diesel Prices March 2008 (Energy Information Administration, 2008)

Figure in other file

Figure **: Products from Crude Oil (adapted from Energy Information Administration, 2008)

Current Prices

During 2008, for the first time, the U.S. average gasoline surpassed $3.50 per gallon. Regionally, prices increased throughout the U.S. with the highest price increases occurring in the East Coast, Gulf Coast, and the Midwest. On the East Coast the average price increased by 14.9 cents to $348.4 per gallon, 64.9 cents higher than at the same time during 2007. In the Midwest, gasoline prices increased by 11.2 cents to $347 per gallon, up by 69.5 cents from 1997. (Energy Information Administration, 2008)

The average price in the Gulf Coast shot up by 12.6 cents to 341.1 cents per gallon but still remained the lowest price of any region. The average price in the Rocky Mountains increased to 341.6 cents per gallon, up 9.2 cents from the previous week." (Energy Information Administration, 2008) on the U.S. West Coast, the average price for a gallon of gas increased the least of any region, as it increased 7.2 cents to $373.4 per gallon, 51.6 cents higher during 1997. In California, the average price for a gallon of gas increased by 7.2 cents to $384.6 per gallon. (Energy Information Administration, 2008) During 2008, the U.S. average diesel price also dramatically increased, setting a new record high.

The U.S. average price for diesel increased to $414.3 per gallon.

The following table () portrays gas prices in the U.S., as well as, in various states during three weeks in April 2008. Percentage changes are also noted from one week two and other, and from 2007 to 2008.

Table ***: (Energy Information Administration, 2008)

Weekly U.S. Retail Gasoline Prices, Regular Grade

Dollars per gallon, including all taxes

Change from Change from week ago year ago U.S. www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_us_mini_report.html"

East coast www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_1_mini_report.html"

New England www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_1a_mini_report.html"

Central Atlantic www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_1b_mini_report.html"

Lower Atlantic www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_1c_mini_report.html"

Midwest www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_2_mini_report.html"

Gulf Coast www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_3_mini_report.html"

Rocky MTN www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_4_mini_report.html"

West Coast www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_5_mini_report.html"

West coast less California www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/padd_5b_mini_report.html"

Figure in other file

Figure **: Record of Retail Gasoline Prices Rising (Energy Information Administration, 2008)

Petroleum

Petroleum basically denotes crude oil or the refined products, such as gasoline, diesel fuel and other products refined through the processing of crude oil. A barrage of everyday products routinely used in the U.S. contain petroleum-based components and include, but are not limited to, medicines, plastics and food items. During 2006, the U.S. imported approximately 60% of the petroleum it consumed from other countries. "Crude oil accounted for 82% of net petroleum imports and about 66% of the crude oil processed in U.S. refineries was imported."

Figure in other file

Figure **: Top Petroleum Producing States in the U.S. (Energy Information Administration, 2008)

The five primary source countries, along with their current share of U.S. total net petroleum imports include:

Canada (17.5%)

Saudia Arabia (11.9%)

Mexico (11.8%)

Venezuela (11.2%)

Nigeria (9.1%)

Figure in other file

Figure **: Percentages of Petroleum Imported from the Five Primary Foreign Countries to the U.S. (adapted from Energy Information Administration, 2008)

Figure in other file

Figure **: Price of Crude Oil (dollars per barrel) in the Past; Currently; Projected Future (adapted from Energy Information Administration, 2008)

The following figure (***) relates a graph depicting the prices of crude oil well, along with factors figuring into the increasingly higher prices.

Figure in other file

Figure **: Price of Crude Oil and Factors Contributing to the Price (Crude Oil Prices, 2008)

Crude Oil Prices. (2008). http://www.wtrg.com/oil_graphs/oilprice1947.gif

Oil tops $119 after report of Iranian boat firing." MSNBC, April. 25, 2008. http://www.msnbc.msn.com/id/12400801/

Fuel economy standard will be 31.6 mpg." NBC. The Associated Press. April. 22, 2008. http://www.msnbc.msn.com/id/24258714/

Analysts currently predict that crude oil price will reach from $125 to $130 a barrel during 2008. On April 25, 2008, NBC reported, "Oil prices rose sharply Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two boats in the Persian Gulf. Retail gas prices as expected rose further into record territory, nearing $3.60 a gallon." ("Oil tops $119," 2008). Even though later reports stated the boat's origin of the boats was not clear, the incident increased the price of crude for June delivery up to $119.55.

CHAPTER IV

IMPACTS

Dave Terebessy, a market analyst with the automotive forecasting firm CSM Worldwide, said if buyers feel good about a vehicle's quality and reliability, they'll stick with the brand.