Last week we expressed disgust with Dick Cheney's trip to the Middle East to convince "friendly" Arab countries to increase their oil production thereby lowering - according to the White House - America's oil costs.
We didn't buy it.
And raged at Bush/Cheney: It's the value of the dollar stupids, which you put in the toilet!
But a reader wrote us to say that he thought we had put too much emphasis on the devaluation of the U.S. dollar as a reason why oil prices have recently increased.
Here it is in the interest of full disclosure:
Regarding the oil situation, I don't think many in the industry blame the drop in the dollar for the current high price environment. There are a lot of factors, and there are those who say that as much as 40% of the current price is due to speculation over conflict areas, but tightness in supply is absolutely a key issue. The relative value of the dollar is a factor, but not an especially large one.Iraq is one of the most unexplored regions of the Middle East, now it exports no more than 2 mb/d ... I doubt the official numbers reflect reality and believe much less is being produced there. Iran's production numbers are going down, and they are a key flash point. Venezuela's production numbers are going down, and they are a key flash point. China's demand is skyrocketing and India itself hopes to become another entrepot for oil product re-exports.Anyways, not to bore you, but thought that you might want to know that most in the industry don't blame the value of the dollar for the price of oil.
But one point that we are correct about is that it is high time that we dumped fossil fuels entirely.
Period. End of discussion.