Falling Dollar Pushes Oil Prices Up, Weakening Economy

…I would point to the concerns out there that are really growing about whether we’re going to have proper supplies five, six years down the road. Will oil supplies continue to be able to meet demand? Or will there be a moment when demand might possibly exceed supply?

And this particular concern, which is a sort of peak-oil concern that some people are raising, is filtering into OPEC. The oil minister of Saudi Arabia yesterday was saying that this particular pessimism, which he calls “unfounded,” is one of the reasons that’s really driving oil up, as investors think, “Wow, this is a commodity that may become increasingly scarce down the road.”

RAY SUAREZ: Do these two factors push each other, a weak dollar and strong oil? Is there a sort of chicken-and-egg thing going on at the center in this?

NEIL KING: Yes, there is very much. I mean, the previous segment you had about that was also about inflation, obviously, the more oil goes up, the more inflation goes up, the more that it weakens the dollar, the more that investors move into oil as an investment. And that, therefore, pushes the value of oil up at the same time.

Oil has gone up about 64 percent over the last year in dollar terms. It’s gone up about 49 percent in the last year in euro terms. So this is obviously something that’s hitting the U.S. a lot more than it is the Europeans. And that gap is sort of the dollar variance right there.

PBS (transcript, audio, and video)