Ken K said:
Remember when Osama said oil should be $100 per barrel? You think he might get his wish....
Not so long ago, the US dollar stood at about 82 cents to the Euro. It is now at about $1.35. A barrel of oil peaked around $57 on yesterday's market. If the oil producers wanted to purchase stuff in Euros and that former parity had been maintained, the price would have been approx $31/bb yesterday.
The exchange rate for the dollar has fallen because of America's unsustainable current account deficit, now reaching an annual rate in excess of $700 billion, and a soaring government deficit. Serious media including Business Week, The Economist etc have been warning for months (and longer) that a collapse in the dollar is a growing possibility. If that happens, $100/ bb oil would soon arrive. And if oil producers then want to be paid in Euros, $100 would seem cheap.
Even so, gas prices in America are cheap compared to those in Europe where taxes are far higher. My family and friends tell me gas resently costs about 4 times as much in UK as here in Michigan.
If anyone in USA wants prices to fall, they must reduce their personal consumption. If every motorist just reduced his/ her mileage by 10%, the effects would be dramatic. USA accounts for at least 25% of world production. The laws of supply and demand would prevail. Moreover, as the current account began to improve, the dollar would get support which MAY have a knock on effect on the price/bb.
As they said in World War 2: "Is your journey REALLY necessary".
