The Dollar and Oil - 4/21/08

Oil hit $115 a barrel another all time high. There have been so many record highs in energy, commodities, grains and precious metals. This is confirmation we are in a commodity super cycle and most likely will be witnessing it for years to come.

Oil started rising up again when the U.S. Energy Department announced a greater than expected decline among oil and gas inventories. Add to the mix, dollar weakness and you have hit $115 a barrel.

The world’s oil supply has become very tight and demand is rising. The world’s oil producers have reached a plateau in output. Some areas like Russia are reporting reductions in output. Depleting older oil fields cannot meet demand.

Adding to this supply and demand issue with oil is all the extra money being printed by the U.S. Fed, pushing the price up even faster if you are using dollars to buy your oil. 87% of the move in the price of oil is caused by the increase in the supply of dollars moving around the world.

Jim Rogers, renowned commodities trader and author of the book “Hot Commodities” gives the Fed chairman Bernanke an “F” and says he should be fired. Rogers was recently quoted as saying, “Bernanke and Greenspan together will probably bring about the end of the Federal Reserve." "We've had two central banks in America that failed and this third central bank will probably fail too, because of Bernanke and Greenspan."

Rogers went on to say, “The U.S. dollar is a terribly flawed currency. I'm trying to get all of my money out of U.S. dollars. I don't know why anybody would put money into the U.S. dollar, and by extension into the U.S., as we stand here today. The U.S. is probably the largest debtor nation the world has ever seen! You haven't seen anything yet! They're trying to drive down the dollar.”

I wonder if Wal-Mart will take Euros.

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