Is the price of oil really going up or is the value of the dollar going down??

Question

I buy and sell on Ebay with folks in England and Canada. About 18 months ago, the exchange rate between British pounds and US Dollars was about $1.50=1 British Pound. Now it is $2.04=1 British Pound. It now takes about one third more dollars to buy a British pound than it did 18 months ago. The Canadian $1 is now about on par with the US $1. 18 months ago, it took about $1.20 Canadian dollars to buy one US $1.

It also takes about one third more US dollars to buy a barrel of oil than it did 18 months ago. Is the cost of a barrel of oil going up, or is the value of the US dollar going down?

Is the price of a barrel of oil going up in Britain and Canada as fast as it is in the US? Not if their currency is worth more than it used to be on the world market compared to the US dollar.

If the purchasing power of the US $1 has diminished 20% or more in the last 18 months, isn't that runaway inflation?

To simplify, let’s assume a British pound was worth around $1.50 US 18 months ago and the price of a barrel of oil was approx $75 US 18 months ago. So, while we (U.S.) were paying $75 per barrel, the Brits were paying an equivalent 50 pounds a barrel.

Today, a British pound is worth about $2 US and the price of oil is near $94 per barrel. So we are paying $94 per barrel ($19 or 25% more) and the Brits would pay an equivalent 47 pounds (3 pounds or 6% less).

The US dollar buys 25% less oil than it used to and the British pound buys 6% more.

Answer 1

You're right. Both are happening together. Oil prices, in general, are being artificially manipulated and are rising while our declining value of the dollar are putting us at a disadvantage.

Answer 2

http://www.economagic.com/em-cgi/charter.exe/var/west-texas-crude-long
has a chart of oil prices vs time. The fall of the dollar has had an effect recently since oil is traded on a world market but the growing demand for oil in developing countries, the loss of most of Iraq's exports, and risk premium because of political instability has also effected the price for oil futures.
Imports including oil account for only 10% of our consumption, so roughly speaking a 20% increase in the price of 10% of what we buy will produce 2% inflation. This is not "runaway" but in the normal range. People are very aware of the price of gas because they buy it weekly, but it accounts for only a small percentage of most people's consumption.

Answer 3

US dollar is the main suited forex as a results of fact the mode of value and grant of $ is constrained via US vital economic organisation.. value of dollar relies upon on the call for and grant of the forex under modern-day freely fluctuation substitute value. Now OPEC united states prefers dollar as a results of fact the medium of value from just about each and every of the worldwide places different than some Barter deal and another stressful currencies. With the upward thrust in value of oil the call for for dollar additionally will advance from diverse worldwide places world extensive. consequently upward thrust in call for $-> upward thrust in value of $ and fall in call for $ -> fall in value of $ .

Answer 4

i believe its both if that's an option because I've been doing some business in Poland and the money did int come up (when i sold dollars to polish money) it was supposed to come up to about 3,000 but it was much less than that because the dollar is going down and the oil price is going up because of the war in Iraq they don't want to sell more oil

Answer 5

The dollar is falling... this is by design. The federal reserve controls the dollar by how much or how little is in circulation. Keep in mind that the federal reserve is controlled by bankers, not the government. They are bringing the dollar down to make way for the Amero.

Answer 6

Both!

Answer 7

I think Meg nailed it pretty well.