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Originally Posted by jeckyl
When oil is pegged to the dollar, and the dollar drops in global value, oil is cheap to the international consumer. As a result, the price adjusts to the international market. If you look at the numbers, the increase in oil prices reflects has a positive correlation with the devaluation of the dollar....
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You are dead right! OPEC used to peg prices against the US Dollar, but that practice apparently went out the window a few years ago. If you follow the currency rates, oil seems to have been pegged to the Euro and Swiss Franc for quite a while, and the Dollar/Euro and Dollar/SwissFranc exchange rate history matches almost perfectly to the price of oil for US consumers.
Despite all of the commentary on domestic oil exploration and recovery (which we do need!), one needs to examine the currency "futures market" and examing the forecasted Dollar/Euro exchange rate to get a glimmer of what oil prices will be over the next year, or two, or three.