I see that oil today hit $70 per barrel and at the local gas station I paid $3.00 per gallon to fill up the car. Last month I posted an article on energy that can be found here.
It seems like the price of gasoline is going back up to the days after hurricanes Katrina and Rita. This is odd unless one believes that the threat of an imminent attack on Iran might be driving gasoline prices higher and the markets are betting that way. And that may be.
So let's looks at this possibility a litter closer. As I have stated before, oil is denominated in U.S. dollars. Every country in the world that buys oil must pay for their oil with U.S. dollars. This creates demand for dollars which ultimately increases the value of the U.S. dollar. Keep this thought in mind.
It's a known fact that the entire world is either diversifying their reserves out of dollars or considering to do so. This would negatively impact the value of the dollar and result in the dollar losing value against international currencies.
But if the price of oil continues to climb upward, foreign countries would have to forgo their plans to diversify out of the dollar so as to have sufficient dollars to enable them to acquire their oil. Either that or there is a re-pricing by oil producing countries of oil in another, more "friendly" currency like the euro.
Wouldn't it be amazing if it's the case that our government leaders are intentionally driving the price of oil higher via the Iran threat simply to create demand for and to protect the dollar? Perhaps this is the true reason for the U.S. belligerence towards Iran. Whether we strike Iran or not, the dollar is preserved...at least for the time being.
If all of this sounds bizarre, consider that the SUV, the greatest gas guzzler in America today, is classified by our government as a truck and therefore not subject to emission standards applied to all other passenger vehicles. As a matter of fact, if you buy a great gas guzzler like a Hummer, you can be eligible for a tax credit!
All speculation aside, one thing is for certain, any military action on Iran is certain to drive the price of oil much, much higher.
