The price of oil has plummeted from a high of $110 per barrel in February to a current low of around $91 ... just as the summer driving season is getting under way. Strange! But why? Is it those greedy speculators again? Has Obama opened up drilling in the Gulf of Mexico ... or released oil from our Strategic Oil Reserve? No.
There is a simple, straight-forward reason for this drop in the oil price (and gold too, you gold bugs). The Euro has weakened considerably ... from a $1.47 high last summer to a current low of $1.26 ... and, me thinks, it is going quite a bit lower. And, since most commodities are traded in dollars, not Euros, the United States backdoor benefits from all the foot dragging, indecision and political turmoil that is occurring in that Rube-Goldberg of a creation called the EuroZone. (But pity the poor driver in Greece.)
Or this oil-price skid could reverse itself overnight if Iran becomes super unsettled.
2 comments:
Chalk up another victory for the Obama team.
The benefit that comes from EuroZone turmoil may benefit the oil price, but it surely won't help the economy overall. The question then becomes ... which will influence voters more in the fall?
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