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Saturday, July 21, 2007

Why Is Oil So High?


Because demand is so high? Partially, yes, but demand will decrease as price increases. This chart compares the dollar with the price of oil. Not a oerfect correlation, but it does seem that when the dollar dives, oil goes up. In other words, inflation is responsible for most of the rise in oil prices. It shouldn't come as any surprise, them that there is a move in the works by some oil producing countries (Iran, Venezuela, and Russia) to sell oil denominated in other currencies.

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