Oil Prices and Speculators

Larry Kudlow thinks we are in an oil price bubble. So does Tim Evans. I think part of the explanation for the rise in oil prices is indeed speculators. I think another major part of the rise in oil prices is the willingnes of oil producing countries to accept dollars in exchange for their output. One can’t help but notice that oil prices are rising faster than other commodity prices and that the price of Euros has also risen.

My suspicion is that Saudi Arabia, Iran, Venezuela, etc. do not want to store value in dollars because the new post 9/11 rules governing money laundering and terrorism mean that they are more at risk of being discovered funding terrorism and having their accounts frozen. I don’t know how to test this proposition. Any finance professionals out there with an idea?

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One Response to Oil Prices and Speculators

  1. oh boy says:

    i sure as hell wouldn’t invest in dollars right now.

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