True Price per BBL with a Strong Dollar - $65? - Fuelly Forums

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Old 04-17-2008, 05:43 AM   #1
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True Price per BBL with a Strong Dollar - $65?

This guy shows what the falling dollar has done to the worldwide price for oil. I'm no economist (and I don't play one on the web), but there are many pressures that drive the price of oil and the strength of the dollar is a big one.

Any real economists without a political axe to grind wish to comment?


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http://seekingalpha.com/article/7265...i?source=yahoo





From the </SPAN _extended="true">American Geological Institute </SPAN _extended="true">[AGI]: </SPAN _extended="true">

The chart above shows the spot market price of crude oil per barrel (BBL) in US dollars and in euros from 2001 to today. The price of oil has grown faster relative to the dollar than to the euro. Yet, a portion of the rise in oil prices is due to the fall of the value of the dollar. The graph also shows the number of barrels of crude oil per cost of an ounce of gold, demonstrating the parallel growth in commodity pricing.</SPAN _extended="true">
If the US dollar had remained strong in the global economy, oil might, in theory, be around $65 per barrel. However, oil is priced in dollars, and oil prices continue to rise. The impact of increased oil prices can not be ignored in the US economy, and, in turn, can further weaken the dollar. Resource economics is a complex feedback loop where today?s resource boom is driven by many external factors. This complex system bears watching by all geoscientists.
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Old 04-17-2008, 06:48 AM   #2
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IMO gold is overpriced due to excessive speculation, I could see it coming down to a more "natural" level of about $600/oz, that would make oil worth around $80 a barrel.
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Old 04-17-2008, 06:48 AM   #3
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disclaimer: not an economist (don't pretend to be)

I have heard several people say that the price of gas is just now reaching the proper inflation rate as all the rest of the goods in america. I didn't believe it at first but after looking around, it isn't too far from the truth. that graph just reinforces this theory. the gold standard is pretty much constant so if there was going to be a significant price difference due to something other than inflation, then it would show up in the gold line.

awesome info mr incredible!!
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Old 04-17-2008, 08:14 AM   #4
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Quote:
Originally Posted by Mr Incredible View Post
This guy shows what the falling dollar has done to the worldwide price for oil.
No arguments, really.

But the falling dollar has made US products attractive to outside markets as they are "on sale".

I don't make a product that is that way, so I'm not seeing anything change that way. But the cost of fuels directly impacts my market and my overhead.
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Old 04-17-2008, 08:19 AM   #5
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Quote:
Originally Posted by BEEF View Post
disclaimer: not an economist (don't pretend to be)

I have heard several people say that the price of gas is just now reaching the proper inflation rate as all the rest of the goods in america. I didn't believe it at first but after looking around, it isn't too far from the truth. that graph just reinforces this theory. the gold standard is pretty much constant so if there was going to be a significant price difference due to something other than inflation, then it would show up in the gold line.

awesome info mr incredible!!
I have heard that too but it's a fact that gas prices today are much higher than in the 70s when taken into inflation. Initially the media was reporting gas prices were still lower compared to the 70s when adjusted for inflation. People's wages haven't adjusted in a similar manner.
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