Friday, April 4, 2008

Oil for Dollars

This is something that has rather bugged me recently. People seem to believe oil is rising because of the falling dollar. If that was the case oil wouldn't have risen so much against even the euro. This quote pretty much summed it up:

"Moving on to the weak U.S. dollar as a primary cause for skyrocketing oil prices—there is "some" truth in that statement. But consider this: The dollar has depreciated 30% against the world's currencies since 2002, while the price of oil has gone up 500%. So is it the weak dollar that has caused a 500% increase in the price of oil, or is it the extra $241 billion worth of speculation? You can make the call on that one."

Most of that article is clueless, but the part on the dollar hit the nail on the head. The rest of the article he seems to be assuming oil supply will increase dramatically this year(ignoring that it has been 3 years since it has done so) then saying: look! there is no supply problem!

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