Earlier this month, the internet was flooded with reports, stating that the “50-year petrodollar agreement” between the United States and Saudi Arabia had expired and that the petrodollar was now dead. Over the years we've written on the PetroDollar on several occasions. But this time, just as in the case of Mark Twain, "the Death of the PetroDollar has been greatly exaggerated". Ten years ago, we published an article entitled Oil, Petrodollars and Gold. In that article, I showed how the demonetizing of gold eventually led to Henry Kissinger making a deal in 1973 with Saudi Arabia to denominate all their oil sales in U.S. Dollars in exchange for the Kingdom receiving U.S. military … [Read more...]
Inflation Less Than Experts Predict in March
Annual inflation PLUNGED in March according to the Bureau of Labor Statistics CPI report released on April 12th. Monthly inflation was 0.33% for March 2023, compared to 1.34% in March 2022. This resulted in a 1% drop in Annual inflation. But despite the significant drop in inflation, the stock market did not rally. Instead, the NYSE lost a few points, and the NASDAQ lost just over 100 points. March 2023 Inflation Summary: Annual Inflation fell from 6.04% to 4.98% CPI Index rose from 300.840 to 301.836 Monthly Inflation for March was 0.33% Next release May … [Read more...]
Gas Prices Fall, Bringing Down July 2022 Inflation
The Bureau of Labor Statistics reported that in July 2022, Annual Inflation fell from 9.1% to 8.52% Inflation Summary: July 2022 Annual Inflation fell to 8.52% CPI Index declined slightly from 296.311 to 296.276 Monthly Inflation for July was -0.01% down from 1.37% in June. The next release is on September 13th July 2022, Annual Inflation was 8.52%. Jan. 2021 -- 1.40% ** Jan. 2022 -- 7.48% ** Feb. 2022 -- 7.87% ** March 8.54% Apr. 2022 --8.26% ** May 2022 -- 8.58% ** June 2022 -- 9.06% ** July 2022 -- 8.56%% Crude Oil prices averaged over $107.10 per barrel for June and averaged $93.12 in July. While according to the AAA, Regular Gasoline prices averaged $4.99 … [Read more...]
Oil vs. Gold- Why Compare Commodity Prices Against Each Other?
When we think of inflation we generally think of "Price Inflation" i.e. how much the price of a good or service has increased in dollars. However, price inflation is not "monolithic" that is, they don't all increase at exactly the same rate. Some prices will increase faster or more than others. So it is often useful to compare the price of one commodity to another to see the relative increases of each. Over the years we have compared a variety of different commodities including Gasoline vs. Oil and Oil vs. Bitcoin. We've even done a 3-way comparison of Gold vs. Dollar vs. Bitcoin. But since gold is historical money it is useful to use it as the standard yardstick. So we have updated … [Read more...]
The Price of Oil Denominated in Bitcoin
Over the years we have been saying that it is important to look at prices of various commodities in terms of other commodities. For instance, we have looked at not only the Inflation Adjusted Gasoline Prices but also the Price of Oil Compared to Gold. Because of the recent volatility of Bitcoin we thought it might be interesting to look at the price of oil denominated in Bitcoin. Back in 2016, we compared Gold vs. U.S. Dollar vs. Bitcoin and recently we published Gold vs. Dollar vs. BitCoin Revisited. Often, depending on the currency that you are accustomed to using and you earn your wages in your view of the price of a commodity can be vastly different. For instance, if your currency is … [Read more...]
Inflation Expectations and the Massive Fed Stimulus
Inflation is loosely described as a general economic state of rising prices. In February 2020, the US inflation rate dipped from a high of 2.5% in January, to 2.3%. Assuming the standard of steadily increasing prices, driven largely by food, fuel, and living expenses, one can expect the inflation rate to tick higher. Forecasts for April 2020 are at 1.7%. Given that the major drivers of inflation are excess demand (demand-pull inflation), or cost-push inflation, current conditions based on Coronavirus quarantines have created a murky demand climate. Oil Prices and Inflationary Expectations All major US indices, including the Dow Jones Index, have plunged precipitously. Stock portfolios … [Read more...]
Oil Price Inflation Charts and Tables Updated
Oil Price Inflation This month we have updated the Crude Oil Inflation Chart which shows historical crude oil prices and also what they would be if you adjusted them for inflation as of February 2019. We have also updated the Annual Crude Oil Prices Table and the Monthly Crude Oil Prices Table both of which also show prices adjusted for inflation. The nominal price of a barrel of oil was only $1.37 back in 1946 but the inflation adjusted price of oil was $18.92 per barrel. (The nominal price is the price you would have actually paid at the time). The major peaks occurred in December 1979, October 1990, and June 2008 at $125.23, $65.68, and $145.93 respectively (all inflation adjusted to … [Read more...]
February Inflation Virtually Flat
The U.S. Bureau of Labor Statistics (BLS) released their monthly Consumer Price Index report on March 12th 2019, for the 12 months through February 2019. Annual Inflation is Down (Slightly) Annual inflation in February was down very slightly from January's 1.55% to 1.52% February's CPI was 252.776 January's CPI was 251.712 up from December's CPI of 251.233, November was 252.038 Monthly Inflation for February was 0.42%, slightly below last February's 0.45%. December was -0.32%, November was -0.33%. Next release April 10th We've added another bar to the Annual Inflation Rate Chart indicating Quantitative Tightening (QT) check it out here. Annual inflation … [Read more...]
How Oil Prices Affect Inflation
For a very long time, the prices of oil and inflation have been closely related to each other. When the value of the precious black liquid goes up, inflation follows in the same direction. The reason for this is because oil is a major commodity that's linked to a lot of things. Oil is used to heat homes, power public utilities, as well as run factories it is also a direct component in things like plastics. That being said, if the input cost for oil rises, so will the costs of finished products and services. The direct association between oil and inflation was first recorded in the 70s. It was at the time when the cost per barrel rose from $3 in 1973 to $40 in the 1979 oil crisis. This … [Read more...]
How International Inflation and Currency Fluctuations Affect Todays Businesses
With the current low levels of inflation in developed countries, most consumers and even small business owners are largely unaware and unconcerned with the issue of inflation and currency fluctuation. With most currencies more stable than ever in the 21st century, fears of wild inflation seem to be limited only to developing nations and the distant past. However, even small changes in a currencies value can have a ripple effect that causes massive changes in all businesses across the world. Oil the World Over The most readily apparent example of this is in the case of petroleum. For various historical and political reasons, all petroleum in the world today is traded on a dollar-per-barrel … [Read more...]
