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gruffydd

Oil Price Surge

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Yes - today's dollar denominated oil price is almost as high as last year. However, the dollar has lost some 12% to the pound over the last year so almost $10 of today's price can be discounted in pound terms. It's pound denominated prices that influence inflation in other pound denominated things.

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Will this put even more pressure on the Stock Market? Downward pressure, of course...

The oil price has risen and fallen independently of global stock markets for years.

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Like the 1970's, you mean?

Is it too much to ask for a justified comment on history around here? If you have a point re the 1970s could you make it and justify it? You may be correct in whatever doomsday evidence you come up with, id just like to see a scrap of evidence inform the view that we will all return to a barter economy by 2020.

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The oil price has risen and fallen independently of global stock markets for years.

The correlation isn't strong as you say. Here's a reasonably well informed article on the subject: http://lloydsinvestment.blogspot.com/2005/...mean-lower.html.

What's also interesting is that stock prices also don't seem to be strongly correlated to interest rates and inflation either.

All of this ignores tail risk of course - in the event of oil prices tending to infinity over a short period (i.e. oil runs out without 20-30 years notice) I wouldn't put my money on stocks not tanking (actually, the only place I'd put my money in those cirsumstances would be into a well stocked bunker in in Montana).

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Is it too much to ask for a justified comment on history around here? If you have a point re the 1970s could you make it and justify it? You may be correct in whatever doomsday evidence you come up with, id just like to see a scrap of evidence inform the view that we will all return to a barter economy by 2020.

Sorry but thats a ridiculous position to take.

Can you provide a scrap of evidence that we wont be in a barter economy by 2020?

Of course not.

Maybe I can provide it for you in 2021.

Would that do?

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I've said this before, and I'll say it again.

The remarkable thing about the 'record' oil prices (or 'near-record' if you strip out the effect of dollar weakening) is that this is occuring in the absence of any major supply shock!

There is no hurricaine, no cyclone, no war in Iran, no civil uprising in Saudi Arabia, no mass unrest in Nigeria. The only way for oil prices now is up (unless bird flu hits, in which case they'll plummet for a year or so).

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