Sweet Crude Oil
The Automotive Industry is a very diverse industry primarily stemming from crude oil supply. This relationship includes the fuels that power our vehicles such as (no caps) Diesel fuel, Gasoline, and Kerosene type jet fuel. Crude oil is a major input of the components of the actual Automobile such as tires and steel. All of these are areas of interest and are directly or indirectly related to the crude oil market. The fuels them(compound word)selves that are directly linked are: Kerosene type jet fuel, Unleaded Gasoline local, Diesel fuel, Gasoline V's SUV market, as well as Hydrogen fuel cells. Many of the components of the automobiles are produced with the use of Crude oil such as the petroleum in tires. Some of our topics are indirectly related to oil but directly related to other Auto-product markets such as steel production. Rubber production. But it is not hard to see that the auto industry is a massive industry and has many economic inputs that must considered when looking at the viability of each individual market. All of our individual products are markets of within their own rights, but each of them is effected by the supply and demand of crud oil in exactly the same way. As the cost of crude oil increases the cost of producing the individual product increases which alternatly decreases the supply of all of our products and therefor increases the price. The entire automotive industry works in much the same way but it has all of our products to deal with as well as many more. If one individual product used in the production of the automobile market increases its prices, it forces the entire markets price up with it. Our individual reports will support this concept and introduce many more elements that affect the automotive industry. Technology has been improved over the last few decades in the aviation industry, but the marginal benefits are small because the volume of airline travel has increased dramatically. The typical consumer base of aviation travel has expanded geometrically due to the global economy as a whole. The price fluctuations of Kerosene type jet fuel are largely due to political events. The socio-economic climate that we live in today pushes the entire automotive/fuels industry at will. The major changes in the past are due to both Gulf wars and Wall Street doing very well in the later part of the last decade. Everything in this market sector is run by sweet crude oil prices that are to a large degree influenced by OPEC. They have a cartel that controls supply in an attempt to increase and/or stabilize their position. Each of our products in our group is directly affected by the supply of crude oil. The price of oil directly affects the local prices of gasoline, which in turn affect the cost of labor within a specific market. Industrial production like tires/rubber or steel are proportionally related to the cost of the fuels. The higher crude prices drive up production cost while driving down volume. This will influence research methods to produce more fuel efficient engines, or to shift to different power plants that do not rely on fossil fuel at all. Demand for Kerosene type jet fuels should increase within the private/commercial sectors as soon the Middle East situation stabilizes. When consumer confidence is restored in the region and with added confidence in corporate America faith in the future will drive prices down. As long as the real estate market does not take a dive, long term economic recovery within the fuels/automotive markets should be market but slow, resulting in a stable crude oil price as seen over time thus proportionally stabilizing kerosene jet fuels. When the Fed steps in and bails out the airline industry, after some of the dead weight is gone, and with lower input prices on travel itself, the increased volume of air travelers will drive down the marginal cost of the aviation fuels increasing aggregate quantity while lowering prices and returning aviation volume back to a nominal healthy economic window of operation. Within the last twenty years the major events that shaped the scarcity of crude oil and its elasticity have been to a large degree the Gulf Wars. The events that happened on 09/11/02 and the problems with Enron and WorldCom have had their effects as well. The auto/fuels industry are a price takers to a large degree based on the cartel OPECís influence, and the scarcity of crude as related to the barriers of entry in these markets.