Sunday, April 13, 2008

Oil price $50 higher because of weak dollar

AGI has released a new analysis of the price increase in crude oil in the U.S. They show that the fall in the dollar is cause for part of the rise in oil prices. The graph here shows we pay about $50 per barrel more than if we paid in euros. AGI says, "If the US dollar had remained strong in the global economy, oil might, in theory, be around $65 per barrel. The impact of increased oil prices can not be ignored in the US economy, and, in turn, can further weaken the dollar."

The comparison of oil cost to an ounce of gold shows how commodity prices run parallel.

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