What’s next for oil and the dollar

STOP giving government service workers cost of liveing raises. The USA did not have a dept before the 1970s. Before that we built the interstate freeways Built an awsome dams and electrical system Put a man on the moon all kinds of great things. We cant do any of those good things because of deficets. The dept lies in paying government employees huge ammounts with pleanty of bennifits even 90% pay after they are retired. Geese. Every one of them federal, state,county,City have gone off in their own direction creating Taxes, fees, permits you name it.In ower town it costs $60,000 for permits to build a 1500 sq. ft. house those houses only cost $60,000 just 10 years ago.That kind of abuse causes an extra 180,000 in loan fees over 30 years.Puts contractors out of work. It also stops privet sector americans from home ownership degrading america neiborhoods. Now that the governments of the USA are in fiscal dept. I cannot help but notice the police departments are writing as many tickets as possible. Watch out Americans.They out for as much as they can take from you to better their existance. Most government employees could not make a dime in real America. We need to regulate oil, food markets as well. WE have today ZERO leadership.
Watching the elections unfold I have not seen one real issue faceing America talked about or resolved.Just abunch of name calling smoke and mirrors. The fact that two senators have spent a year running campains tells me that they are not doing their job as a senator. Or at least being a senator requires very little.

There is an inverse relationship between oil and the dollar. Interest rates needs to go up in order to lower oil prices and keep inflation at bay.
Interest rates need to be from 8 to 10 percent when adjusting for actual inflation numbers.
All the problems we face in the economy can be summarize by one word DEBT. Roughly 70 percent of GDP depends on consumer borrowing and spending. The government can create millions of jobs by investing in alternative source of energy, repairing old infrastructure and growing our independent food supply. We must become independent and secure our basic needs. We also need to control spending especially overseas. Stop policing the world spending our treasures, losing precious lives and accumulating debt which further weakens the dollar and causes inflation. Don’t expect the economy to rebound until all the bad investments in real estate hits nadir which can take another 5 to 6 years. Once were through, we got another gigantic problem in retiree entitlement programs.

maybe your article is correct in that fed is done with rate cuts and that should benefit the dollar. i also agree that oil is away from fundamentals so stronger dollar will cause oil to retreat at least in the short term to $100 or hopefully even lower. i don’t understand however why you think this will mark a rebound in the stock market. if Fed stops cutting rates or hikes rates the housing market will deteriorate further and the commercial real estate market will collapse immediately. bank failures will resume – the rate cuts have been the only thing that kept banks alive so far. a rate hike will indeed mark the start of the real recession, which should eventually push oil even lower by shifting the demand/supply fundamentals worldwide

this is the conundrum that Fed now faces and i hope it understands: cut rates and commodities go on a tear, plus we subsidize emerging economies which further fuels the bull fundamentals for commodities; alternatively stop cutting and the banking system collapse continues uninhibited. i think the commodities bubble is a much bigger problem than the banking collapse so looking forward to Fed finally coming to its senses and starting to fight inflation through rate hikes rather than shoring up a large number of insolvent banks.

There will be an investigation in about a year by the Feds and it will be determined that therre was price fixing and minipulation during this time period. They will levy a small fine on some compaines and then things will continue as usual. Futures trading in oil should not be allowed because it opens the door to to much minipulation. The price of oil should be market driven not speculative driven.

Over the course of the next few months, oil prices will decline. When oil goes down, inflation pressure on Europe will ease and the ECB will be less hawkish which will strengthen the dollar.

Reality check: $90/barrel is still very expensive. It was ‘just’ $65 a year ago. And that will still mean $3-$4 per gallon of gas. Some of the comments on here seem to speak fact when they say we are passed the peak of oil availability and therefore prices will continue to skyrocket. So you saw this on Discovery channel or read this on Wikipedia and suddenly it’s fact? C’mon…

The price of crude will remain high as long as we stay in Iraq & the Persian Gulf region remains unstable. The price of crude has steadily been climbing upward since talk of war with Iraq intensified in Oct. 2002. Check your historical commodity price charts.

Talk of oil falling significantly is total nonsense. The economy in the US and the rest of the world is too strong for demand to drop. Any substantial rate hike by the Fed will likely push the US deeper into its economic slowdown. The dollar will likely stay pretty much where it is now and oil will continue its climb towards $150 per barrel barring any storms in the Gulf.

Oil suppliers (OPEC, Big Oil, etc.) will try to hold prices up where they are, and they probably will: sell as few barrels as possible for as much as possible. Supply and production continue to trend down after having peaked about 3 years ago. We are actually past ‘peak oil’ and headed down, but most people don’t seem to realize it.

The dollar is probably about as low against the euro as it will go, for now. Longer term, the dollar will keep trending lower, as long as we run a trade deficit and a federal budget deficit, as both deficits flood the currency markets with ‘extra’ dollars.

Re housing, this issue is only very slightly related to oil and dollar pricing. While it is true that housing prices are falling, it is important to compare the prices to 2000 (the last pre-bubble year, although some say that 1997 was the last pre-bubble year), NOT to one year ago like the media does. Prices will stabilize when they get back to trendline, which is 1997 or 2000 price levels, plus 2% per year for inflation, which is how housing prices have historically grown. In addition, most people benefit from lower, not higher, housing prices. The money that they save on housing is spent on other goods and services.

It’ not really THAT bad, people.

The price rise may moderate over the near term but that could end if a major storm moves into the Gulf oil platform and/or the southern refinery arears.

The underlying problem that sparked the rate cuts, namely housing, is still deteriorating at a record pace (see Case-Shiller index). A quick calculation, 20 trillion $$ in primary residences in the US. An average 25% drop in value before it’s all said and done amounts to 5 trillion dollar in losses. Even if 2/3 of those get absorbed my individual owners we’re still looking at about 1.6 trillion somebody else (banks, investors, etc.) will have to eat. So I’d say we’re only about 25% into the credit crisis, much more to come. Especially if the real estate situation in Spain and Britain gets much worse.
Point is that raising interest rates will lead to an elevated number of bank failures. Probably not going to happen once bank’s balance sheet decline further.
As for oil, it will probably ease a bit for a while. The long term outlook however is down right scary. Production down, demand up…you connect the dots.