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The world’s production of oil is at an all time high, but so is the world’s demand for oil. Fuel supply and costs have a huge impact on our economy. Rising fuel prices pose a threat to the US economy, which has depended upon a cheap supply of oil and gas to fuel the country’s desires to import or export.

In particular, the rise in the price of oil plays a major role in the automotive industry. “The world consumes over eighty-two million barrels of oil per day (BPD), with the United States taking roughly twenty million BPD” (McFarlane). Oil provides ninety-seven percent of the transportation fuels that helps to run the cars, trucks and other vehicles on the nation’s highways (Heinberg). Thus, when the price of oil rises, the auto industry is especially vulnerable. Sales of the gas-guzzlers such as trucks and SUVs drop as consumers’ demand for more fuel-efficient automobiles increases. Car dealers are left with large stocks of expensive and unwanted inventory that they must sell at reduced prices. At the same time, these dealers must compete with one another to obtain the less expensive, fuel-efficient models and when available, hybrids to satisfy customer demand. In some cases, consumers are unable to afford to purchase these high demand fuel-efficient vehicles. Faced with retooling factories to produce a different type of automobile, automobile manufacturers are faced with closures and worker layoffs. While no industry is spared from the increase in oil price, the automotive industry is especially hard hit.

The demand for oil and the difficulties in building and securing oil refineries are major causes for the increased oil price. Oil is used primarily for two purposes: to make gasoline and for use in tire production. Gasoline prices in the US have increased dramatically during the last few years reaching averages over $ 3.00 per gallon in early 2008(Energy Information Administration). In addition, oil is the major ingredient in the production of tires....