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oswald622
Heavy Crude
Joined: Aug 28, 2005
Posts: 157
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 Posted: Tue Apr 29, 2008 2:43 pm Post subject: How much is the price of oil due to the falling dollar? |
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Has the price of oil changed much in the amount of gold it's worth? Or euros? Or a basket of currencies/metals? Anyone know of any graphs or sources where the "true" price of gas and oil can be ascertained?
From an Opec minister quoted in the Financial Times:
| Quote: | | Each time the dollar falls 1 per cent, the price of the barrel rises by $4 and of course vice versa. |
Is this truly the relationship? |
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3aidlillahi
Intermediate Crude
Joined: Mar 25, 2008
Posts: 713
Location: Alif Lam Mim
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| Posted: Tue Apr 29, 2008 3:19 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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Not exactly up to date. Only around $100/barrel but that is only a month or so ago. The prices have clearly become decoupled at least partially, while they do have the same swings, just the up's for the euros aren't as great as for the dollar. Plenty more on Google searches.
Gold to oil ratio in 2007. It actually fell (oil was a better deal). Currently the ratio is 870/120 = 7.25, significantly below the lowest point in 2007 (~11% drop).
Seems like most are getting out of PM's and dollars and moving into oil for investments. We use up gold but not at the pace we do oil. It's pretty simple.
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Riches are not from abundance of worldly goods, but from a contented mind.
Last edited by 3aidlillahi on Tue Apr 29, 2008 7:06 pm; edited 1 time in total |
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Schadenfreude
Intermediate Crude
Joined: Jan 16, 2008
Posts: 607
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| Posted: Tue Apr 29, 2008 4:08 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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| about 15 percent |
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Cashmere
Light Sweet Crude
Joined: Mar 27, 2008
Posts: 1971
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| Posted: Tue Apr 29, 2008 5:29 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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Why is it just not the inverse of inflation?
If the dollar loses 50% in value, then oil costs 2x as much.
Just run an inflation adjusted graph, and that will filter out the fall of the dollar effect.
The rest is just blarney being propagated to shield PO from the donkeyshit eaters. |
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Micki
Light Sweet Crude
Joined: Dec 07, 2005
Posts: 1856
Location: Australia
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| Posted: Tue Apr 29, 2008 6:46 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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| Quote: | Why is it just not the inverse of inflation?
If the dollar loses 50% in value, then oil costs 2x as much. |
Because there are many factors in play.
Inflation (US and global), supply, demand, sentiment etc.
In the short term there are no perfect markets. It is on in the longer term that fundamentals will show the way it is heading.
3aidlillahi, it is correct we don't use up gold at a great pace.
Silver however seems to be in rapidly depleting stocks. Small investment size bullion etc is is running low and mints are focussing more in producing industrial size (1000oz) bars.
The paper markets, like COMEX settles 90% of the trades in money and very little metal actually shifts hands this way. This has allowed the commercials to take on HUGE short positions in order to surpress silver to a point where we now may see a decoupling. i.e. people wil pay much higher prices for physical silver than they do for the same thing in the paper markets. At some point this would lead to a snap back in the paper markets as investors start calling for delivery for silver bought at discount. Until then, the paper trades are run through technical manipulation and triggering of blackbox selling.
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3aidlillahi
Intermediate Crude
Joined: Mar 25, 2008
Posts: 713
Location: Alif Lam Mim
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| Posted: Tue Apr 29, 2008 6:55 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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Micki,
I know all of that about silver. I simply used gold because:
1) it's a more commonly used indicator of the strength of the dollar (aside from vs. euro/yen/yuan). Gold goes up 5% in a day and it's making headlines. Silver can jump to $50 tomorrow and it couldn't get that attention from the MSM. Okay, maybe that's an exaggeration, but the principle holds true.
2) He asked about PM's and gold specifically and gold vs oil data is more readily available. Do a search for silver versus oil and you only end up with gold versus oil.
3) I'm too busy (and lazy on top of that) to sort through data and post my own graphs of silver and oil.
I am a firm believer in silver over gold, especially short term. I'm currently roughly 90% in silver, 9.5% in gold and the rest in copper pennies and nickels.
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Riches are not from abundance of worldly goods, but from a contented mind. |
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Micki
Light Sweet Crude
Joined: Dec 07, 2005
Posts: 1856
Location: Australia
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| Posted: Tue Apr 29, 2008 7:00 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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No, you did mention silver.
| Quote: | | We use up gold and silver, but not at the pace we do oil. It's pretty simple. |
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Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys |
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3aidlillahi
Intermediate Crude
Joined: Mar 25, 2008
Posts: 713
Location: Alif Lam Mim
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| Posted: Tue Apr 29, 2008 7:05 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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| Micki wrote: | No, you did mention silver.
| Quote: | | We use up gold and silver, but not at the pace we do oil. It's pretty simple. |
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Oops. I didn't mean to include silver. Just a force of habit I guess. Thanks for pointing that out.
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Riches are not from abundance of worldly goods, but from a contented mind. |
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Cashmere
Light Sweet Crude
Joined: Mar 27, 2008
Posts: 1971
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| Posted: Tue Apr 29, 2008 11:06 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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| Quote: | Because there are many factors in play.
Inflation (US and global), supply, demand, sentiment etc.
In the short term there are no perfect markets. It is on in the longer term that fundamentals will show the way it is heading. |
The original question was, how does a falling dollar affect the price of oil.
No crap that supply and demand also affect it.
Did you read any of the original post?
I said, simply, if you want to find out how much of the 117 price of oil is dollar value falling, simply factor in the inflation of the dollar since some past time, and figure out what oil would be.
So in 2000 it was about 25 bucks a barrel.
25 dollars inflated to 30.84 in 2007.
So that tells me that 6 bucks of the price rise in the 97 dollar gain is dollar devaluation.
The other 90 is PEAK OIL.
Just my 2 cents. Seems pretty obvious. |
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Micki
Light Sweet Crude
Joined: Dec 07, 2005
Posts: 1856
Location: Australia
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| Posted: Tue Apr 29, 2008 11:41 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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I responded to this particular question.
| Quote: | Why is it just not the inverse of inflation?
If the dollar loses 50% in value, then oil costs 2x as much. |
Does that explain.
To answer your question posted in the TITLE
| Quote: | | How much is the price of oil due to the falling dollar? |
NOBODY KNOWS.
_________________
Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys |
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Cashmere
Light Sweet Crude
Joined: Mar 27, 2008
Posts: 1971
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| Posted: Wed Apr 30, 2008 5:46 am Post subject: Re: How much is the price of oil due to the falling dollar? |
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| The amount of the rise attributable to inflation. |
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shakespear1
Light Sweet Crude
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Joined: May 13, 2005
Posts: 1557
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| Posted: Wed Apr 30, 2008 9:30 am Post subject: Re: How much is the price of oil due to the falling dollar? |
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There is a lot of talk that speculation is responsible for the high price. If that is so doe it mean that the demand that we see which seems to be on par with supply is due to speculation.
Where the heck is the oil being put away for the speculators? Something doesn't make sense to me.
Speculators
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"...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."
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LastViking
Tar Sands
Joined: Feb 19, 2007
Posts: 94
Location: British Virgins
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| Posted: Wed Apr 30, 2008 3:14 pm Post subject: Re: How much is the price of oil due to the falling dollar? |
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| shakespear1 wrote: | There is a lot of talk that speculation is responsible for the high price. If that is so doe it mean that the demand that we see which seems to be on par with supply is due to speculation.
Where the heck is the oil being put away for the speculators? Something doesn't make sense to me.
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The Long speculators must cover their position by the end of each month. Your intuition is correct. Speculators are redeemed when the market is in ponzi mode and total positions are constantly increasing.
But this is not the case. Total long positions peaked in February. Speculation activity accounts for less than five bucks at the moment. |
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