May 19, 2008

The impact of the dropping dollar on the cost of oil

Part of the increasing cost of oil is due to the drop in the value of the US dollar. Its not just that oil is more expensive, its also cause our dollar buys much less.

For example: Back in ‘99-’00 a US dollar was worth about 1 Euro. But today a dollar is only worth 0.64 Euro So if a barrel of oil went up from $30 in 99 to $120 today it only went from 30 Euro to about 77 Euro. Thats a 300% increase in US dollars but only a 157% increase in EUros.

If the US dollar gets stronger in the future, then the oil prices will look much better to us here in the US.

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