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Dollar Drops Further -- Oil Prices Soaring
Dear friends,
The Department of Energy released a report this morning that sent Oil futures skyrocketing. The weak dollar continues to add fuel to the fire.
The value of the U.S. Dollar is falling rapidly again today, causing oil producing nations to demand more U.S. Dollars for each barrel of oil. This downward trend, in the value of the U.S. Dollar, has been going on since the "War on Terrorism" started.
The Fall of Rome?
For more news on this story, please visit the following link.
Joel
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Dollar Drops Further -- Oil Prices Soaring
Sounds more like 'equalization' than anything else.
A gallon of gas for $4.05 ????
Where do I line up? I filled up the car last night on my way to dinner with the little lady, I paid (including US / CDN exchange) $5.25 a gallon for premium, the regular was selling for $4.80 a gallon.
My family in Ireland says gas prices currently are nearly $8.00 a gallon and I have friends who just got back from the south of Europe (France, Portugal & Spain) they said gas was above $8.00 a gallon everywhere they went, and in one spot it was above $9.00 a gallon.
Despite the fact that I'm a raging capitalist, I think we've been a little too spoiled for too long when it comes to things like gasoline, water and food.
The US uses, on average, 1,635.2 liters of gasoline per person, per year. In contrast to other countries, that is something like 6 times the European average consumption, and more than double that of all other "high income developed countries. It's even 36% higher than it is up here in Canada.
Sounds like it's belt-tightening time.
Best of luck.
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Dollar Drops Further -- Oil Prices Soaring
Murf,
There are many people in the U.S. who believe that the high price of oil is caused by an "oil shortage". Nope. There is no oil shortage. Everyone has all the oil they can get their hands on. There are no lines at the pumps, because every station has plenty of gasoline, and there's no threat of it running out.
The sudden increase in oil prices -- from about 45 dollars per barrel during Clinton's terms in office, to now over 135 dollars per barrel, just 10 years later -- is mostly due to the SHARP drop in the value of the U.S. Dollar.
Oil, throughout the world, is sold in U.S. Dollars. The Dollar is the basis for the price of oil, world-over. However, the Euro recently took off. The Dollar is now weaker than the Euro by a WIDE margin....and it continues to fall.
Due to the higher value of the Euro, oil producing nations are demanding more U.S. Dollars in order to make up the difference.
War is a very expensive undertaking. Wars require huge sums of money, which brings on debt. The resulting debt severely harms the value of the war-making nation's currency. This war on terrorism has caused more harm to the people of the world than any raghead and his friends ever could.
Joel
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Dollar Drops Further -- Oil Prices Soaring
I disagree.
It's not the falling dollar, it's not a shortage, it's not the war, and demand is high but supply can rise to fill it.
The rising price of oil is caused by the environmentalists and the politicians who are at their beck and call. We can't use our own oil and coal resources, we can't build nuke plants, we can't build refineries, we have to import everything. That puts us at huge risk from a cartel that consists mostly of people who want to destroy us.
Sustainability comes from using our own resources rather than importing everything. Somehow the whack jobs think sustainability comes from using other countries resources, be it timber, oil, or labor.
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Dollar Drops Further -- Oil Prices Soaring
Kwschumm,
It is true that the eco-kick, nut-jobs have hindered many oil exploration projects. They've made it nearly impossible for investors in such projects to ever get a dime back on their investments, due to delays concerning environmental impact studies, lawsuits, etc. This fact does not have any impact on the recent spike in oil prices, however.
The two biggest factors, regarding the price of oil on the world market, are high increases in usage by China and other up-start industrial nations, which creates additional demand for the oil -- coupled with the falling value of the U.S. Dollar.
The U.S. Federal Government is very fearful that the OPEC nations will soon stop accepting the U.S. Dollar as payment for oil. There's a whole lot of talk in the middle east that those nations may soon start demanding payment in Euros. If that happens, the price of a barrel of oil, here in the U.S., will jump MUCH higher.
There's talk on Wall Street that some nations are already basing their oil sales on the value of the Euro, even though those foreign governments have not yet officially announced the change......possibly because of fear of U.S. retribution.
Joel
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Dollar Drops Further -- Oil Prices Soaring
The lack of domestic oil development has to affect prices - it reduces supply. The lack of refinery capacity also affects prices - we are now importing refined product instead of just crude.
Regarding the other, if high oil prices is the price we have to pay to once again become self sufficient energy-wise then in the long run it will be a good thing, although very painful in the interim.
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Dollar Drops Further -- Oil Prices Soaring
If you're buying an offshore tractor, grab one that's already here. The cost of shipping a standard 40' container, $3000 in the year 2000, is now $8000 and rising. If you're a manufacturer who's been screwed by cheap offhsore imports, relax and smile.
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Dollar Drops Further -- Oil Prices Soaring
On ABC news this morning they were discussing the foreign companies buying of US property and companies (even railroad) much due to the dollar's drop. FYI, they credited it to not the cost of war but the large debt. Look at who ran up the debt and then think about the promises being made by at least one presidential candidate.
I think it could be time to import politicians. We sure have a few we need to export at low, bargain prices. kt
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Dollar Drops Further -- Oil Prices Soaring
Kthompson,
Debt is the result of too much spending........and NOTHING costs more than fighting a war.
Over the past several years, the Federal Reserve has continued to print more and more money, in order to help feed a very hungry Federal Government, who can't seem to get enough money to feed itself and its expensive habits.
This HUGE increase in the money supply (M3) has driven down the value of the U.S. Dollar, to near record low levels.
On the brighter side..........
The Federal Reserve announced this morning (Thursday June 12th) that the high inflation rates are we are currently experiencing are a result of too much cheap money. Therefore, the Fed is making plans to increase interest rates in the coming months, but possibly not until after the national elections are held, this coming November.
This is good news. Higher interest rates make the U.S. Dollar harder to get our hands on, and therefore drives up its value. The U.S. Dollar is STRONG this morning.......way up against both the Euro and the Yen.
The stronger U.S. Dollar also plays a major role in the price of crude oil, which is also down by over 3 Dollars per barrel in early trading today.
Joel
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Dollar Drops Further -- Oil Prices Soaring
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The sudden increase in oil prices -- from about 45 dollars per barrel during Clinton's terms in office, to now over 135 dollars per barrel, just 10 years later -- is mostly due to the SHARP drop in the value of the U.S. Dollar. Oil, throughout the world, is sold in U.S. Dollars.The Dollar is the basis for the price of oil, world-over.However, the Euro recently took off.The Dollar is now weaker than the Euro by a WIDE margin....and it continues to fall.Due to the higher value of the Euro, oil producing nations are demanding more U.S. Dollars in order to make up the difference.
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Joel, with all due respect, you're a little off the mark here.
First off, if you look at the price of oil & the US $ / Euro exchange rate over the last few years it looks like this;
2001 - US$/Eur. = 1.11691 (100%)
2002 - US$/Eur. = 1.06106 (94.99%)
2003 - US$/Eur. = 0.88540 (79.27%)
2004 - US$/Eur. = 0.80510 (72.08%)
2005 - US$/Eur. = 0.80443 (72.02%)
2006 - US$/Eur. = 0.79714 (71.37%)
2007 - US$/Eur. = 0.73096 (65.44%)
2008 - US$/Eur. = 0.65533 (58.67%)
The US$ is worth 58.67% of what it was worth against the Euro in 2001. so it has lost 41.33% of it's relative value.
The price of oil over the same period (in US$ as annual averages for West Texas Inter. crude) has been;
2001 - $25.98
2002 - $26.18
2003 - $31.08
2004 - $41.51
2005 - $56.64
2006 - $66.05
2007 - $72.34
2008 - $132.30 (as of today)
So, as of today, the price of oil is up some 509% over the 2001 average, while the dollar has only lost 41.33% of it's relative value against the Euro., or less than 1/12th of the increase in the price of oil.
Further, I think you're confused about one small point, oil is QUOTED in US$, but there is no correlation between the value of one and the other. It is merely a common denominator, sort of like speaking English as a common business language. The price of oil is determined by an auction if you will on the world market, the price people are willing to pay, now (spot) and in the future (futures) determine the sale price.
Currently many factors, not the least of which is the sub-prime mortgage problems, and associated massive, losses are pushing institutional investors to buy heavily in the oil sector.
BTW, it's not just oil that's up either, the price of gold has gone from ~US$275/oz in 2001 to over US$1000/oz this spring, although it's eased back to ~US$875/oz now. That's well over a 300% increase also.
Best of luck.
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