Oil Prices and the Falling Dollar - cougarguard.com — unofficial BYU Cougars / LDS sports, football, basketball forum and message board

Levin · 07-24-2008, 03:18 PM

Waters has attacked oil speculators for the rise in oil prices. I don't disagree with him. But something I had wondered about was the impact of the falling value of the dollar on the price of oil versus real factors, such as increasing demand or reduced supply. See these charts that summarize the data. http://www.eurotrib.com/story/2007/10/26/14216/498

The data show that the rise in the price of oil is partly due to real factors and partly due to monetary factors. The site at this link http://www.theglobalist.com/DBWeb/St...x?StoryId=4511 summarizes the evidence that over the past several years the price of oil has more than doubled in dollars and risen about 50% in Euros. So if my crude math skills are working today, that means that if gas was $2 a gallon a few years ago and is $4 a gallon today, we would be paying $3 per gallon if the value of the dollar had not fallen so precipitously.

So it seems that we not only have an oil price crisis, but an exchange rate crisis as well.

My conclusion: instead of more drilling, we need to get our national budget under control and take moves that will strengthen the dollar.

MikeWaters · 07-24-2008, 03:26 PM

Yes, this is talked about in the news all the time.

As the dollar falls, oil becomes more attractive for foreign investors, whereas investment in the dollar becomes less attractive.

A stronger dollar will mean lower oil prices (in dollars).

07-24-2008, 03:18 PM	#1
Levin Senior Member Join Date: Mar 2008 Posts: 1,484	Oil Prices and the Falling Dollar Waters has attacked oil speculators for the rise in oil prices. I don't disagree with him. But something I had wondered about was the impact of the falling value of the dollar on the price of oil versus real factors, such as increasing demand or reduced supply. See these charts that summarize the data. http://www.eurotrib.com/story/2007/10/26/14216/498 The data show that the rise in the price of oil is partly due to real factors and partly due to monetary factors. The site at this link http://www.theglobalist.com/DBWeb/St...x?StoryId=4511 summarizes the evidence that over the past several years the price of oil has more than doubled in dollars and risen about 50% in Euros. So if my crude math skills are working today, that means that if gas was $2 a gallon a few years ago and is $4 a gallon today, we would be paying $3 per gallon if the value of the dollar had not fallen so precipitously. So it seems that we not only have an oil price crisis, but an exchange rate crisis as well. My conclusion: instead of more drilling, we need to get our national budget under control and take moves that will strengthen the dollar. __________________ "Now I say that I know the meaning of my life: 'To live for God, for my soul.' And this meaning, in spite of its clearness, is mysterious and marvelous. Such is the meaning of all existence." Levin, Anna Karenina, Part 8, Chapter 12

07-24-2008, 03:26 PM	#2
MikeWaters Demiurge Join Date: Aug 2005 Posts: 36,365	Yes, this is talked about in the news all the time. As the dollar falls, oil becomes more attractive for foreign investors, whereas investment in the dollar becomes less attractive. A stronger dollar will mean lower oil prices (in dollars).