Is Mr.Khelil’s math right? Seems to me if oil is trading at $115 and the value of the dollar falls 1%, it should now cost 1% more (in dollars) for a barrel of oil. My math tells me that 1% of $115 is $1.15. I might be off a couple of cents, depending on exactly how you calc the 1% decline, but certainly not $4. Am I missing something? Where did Mr. Khelil get the $4 figure from?

XBoxBoy

Is Mr.Khelil’s math right? Seems to me if oil is trading at $115 and the value of the dollar falls 1%, it should now cost 1% more (in dollars) for a barrel of oil. My math tells me that 1% of $115 is $1.15. I might be off a couple of cents, depending on exactly how you calc the 1% decline, but certainly not $4. Am I missing something? Where did Mr. Khelil get the $4 figure from?

XBoxBoy

It is of course illogical maths, though no one would be willing to upset him in public by saying so.

Since they, officially, blame the dollar’s decline alone, they have to say that a $1 change in the dollar will lead to a much large change in the oil price.

The reality is that they are constricting supply and the D/S situation will only improve for us by people cutting consumption (as is stating now in the US with declining gas consumption).

There is an alternative explanation. Since most of oil producers reserves are held in dollars and their currencies are linked to the dollar and suffer the same imported commodity price inflation as in the US, they need a four to one change to keep the purchasing power of their countries constant…so they restrict supply to that end. Wouldn’t put that past them.

There must be a silver lining!

CO2 production in the US may be falling.

It is of course illogical maths, though no one would be willing to upset him in public by saying so.

Since they, officially, blame the dollar’s decline alone, they have to say that a $1 change in the dollar will lead to a much large change in the oil price.

The reality is that they are constricting supply and the D/S situation will only improve for us by people cutting consumption (as is stating now in the US with declining gas consumption).

There is an alternative explanation. Since most of oil producers reserves are held in dollars and their currencies are linked to the dollar and suffer the same imported commodity price inflation as in the US, they need a four to one change to keep the purchasing power of their countries constant…so they restrict supply to that end. Wouldn’t put that past them.

There must be a silver lining!

CO2 production in the US may be falling.

It is of course illogical maths, though no one would be willing to upset him in public by saying so.

Since they, officially, blame the dollar’s decline alone, they have to say that a $1 change in the dollar will lead to a much large change in the oil price.

The reality is that they are constricting supply and the D/S situation will only improve for us by people cutting consumption (as is stating now in the US with declining gas consumption).

There is an alternative explanation. Since most of oil producers reserves are held in dollars and their currencies are linked to the dollar and suffer the same imported commodity price inflation as in the US, they need a four to one change to keep the purchasing power of their countries constant…so they restrict supply to that end. Wouldn’t put that past them.

There must be a silver lining!

CO2 production in the US may be falling.

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