Yesterday I blogged on how the weak dollar is responsible for roughly $30 of the $90 a barrel of crude has (so far) topped out at. And I’m being doubted by some in our comment section and on Digg. Today, more confirmation from the folks at Bloomberg:
Crude oil breached $90 a barrel in New York for the first time as the dollar traded near a record low against the euro, enhancing the appeal of commodities as an investment….
“The weak dollar is pushing the price higher,” said Simon Wardell, energy research manager with Global Insight Inc. in London. “It’s hard to see how this is going to turn around quickly.”…
The U.S. currency fell to $1.4302, from $1.4279 yesterday, and traded at a record low of $1.4319 earlier in the day.
A lower dollar makes oil cheaper in countries that use other currencies. In U.S. dollars, West Texas Intermediate, the New York-traded crude-oil benchmark, is up 46 percent so far this year. Oil is up 35 percent in euros, 40 percent in British pounds and 42 percent in yen.
I rest my case.
And for you yahoos who can’t understand how this can be possible when they’ve always heard that the price of gasoline is so much higher in Europe…We’re talking about CRUDE OIL, people. A raw commodity. Refined gasoline is indeed more expensive in Europe, because, largely, European governments choose to tax it to pay for roads and schools and health care and to discourage people from buying ridiculously big cars. Now you can argue about whether that is a good thing or a bad thing, but at least argue over the same issue.