Saturday, May 10, 2008
Another reason to dump the Republicans
Their essentially worthless economic policies are a major reason why the value of the dollar has dropped to such a low level. And when your currency has no value you need more to buy basic commodities.
But even as the presidential candidates debate whether to cut federal gas taxes this summer and legislators look at other ways to ease prices at the pump, a harder-to-control factor is emerging as a main reason behind the increase in energy costs: the sinking dollar.If your dollar won't hold its value, then you put it into something that will and with so much of the available inventory locked up in future contracts, there is less available today, at a higher price. Until the value of the dollar is restored we can expect continued speculative rises in prices. Do we really want an Old Fart who doesn't know much about economics?
While no one disputes that China and other emerging economies are craving more crude, the stunning rise of oil from $62 a year ago is hard to explain as only a matter of supply and demand. After all, analysts have noted adequate inventories.
Over the same period, the dollar has declined nearly 15 percent against the euro, and the jump in oil prices “is very much driven by the dollar,” says Roger Diwan, a managing director at PFC Energy, a consulting firm in Washington.
Simply put, buying oil has become a way for hedge funds, pension funds and other institutional investors to offset their exposure to dollar-based assets like United States stocks and bonds, Mr. Diwan says. And many traders have followed the market’s momentum, aggravating the trend.
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