While I believe the trend in increasing oil prices is fundamental (a finite & static/declining supply and increased demand), I can’t argue that part of the current run up isn’t attributed to the weak dollar and inflation hedging (speculation). To what degree, I do not know. I do know that oil has also increased in euros, albeit to a lesser degree (~4.5x increase in EUR since 02 lows & ~7x for USD), so the medium of exchange isn’t the only factor.
In addition the “parabolic” move may be the illusion of linear graphs vs. logarithmic & breaking the psychological $100 mark. The increase in the last 6 months (100 to 140) in “only” a 40% increase. The price of oil was ~$20 in 2002, and doubled TWICE to $80 last year, and I don’t remember fx or speculators being blamed, nor the parabolic arguments proffered until recently. On the other hand the dollar has been falling since then, and seems to really have accelerated starting in mid 2007 (imagine that…), so your argument of medium of exchange is definitely a factor that should be included in the scope of the debate.
I would posit that the environmentalists are also to blame for our currency crisis. Anyone interested in the “facts” knows that these notorious limosuine liberals are in bed with the Federal Reserve. Environmentalists are to Bernanke, as peanut butter is to jelly…
I’ve included a graph of oil in USD and Euros.
[img_assist|nid=8129|title= Oil in USD & EUR|desc=|link=node|align=center|width=446|height=330]
