The Peak Oil Crisis: The Year of the Dollar

Our peak oil crisis is morphing into a dollar crisis. Despite record inventories, and millions of barrels sitting in anchored tankers, oil prices continue to rise. Earlier this week the average price of gasoline rose to $3 in California and many are predicting that the rest of us will be seeing $3 gasoline later this year.

While analysts are moaning that $70 oil is not justified by supply and demand, it seems that oil has become a favored store of value as massive US deficits eat away at the value of the dollar. The dollar goes down; oil goes up. For now there is so much excess capacity that geopolitical developments, stockpile reports and run-of-the-mill oil news has only a minor effect on oil prices.

Much of the recent run up in prices was based on this spring