Oil cheap when adjusted for inflation, low dlr - Iran

[Flabbergasted]

Source: Reuters

Oil cheap when adjusted for inflation, low dlr - Iran
Sat 20 Oct 2007, 7:33 GMT

TEHRAN (Reuters) - Iran's caretaker oil minister said oil was "still cheap" because, when adjusted for inflation and the weak U.S. dollar, the "real value" was almost half the record of $90 a barrel hit in the past week, a newspaper reported.

U.S. crude oil prices struck a record of $90.07 on Friday, spurred by winter supply worries and the weakening U.S. dollar. But adjusted for inflation, it remains below the 1980 peak of $101.70 a barrel, the International Energy Agency says.

"Following the increase in oil price, Nozari announced: Oil is still cheap," the government-owned newspaper called Iran, said in a headline of a story quoting minister Gholamhossein Nozari.

In the story, the minister was quoted as saying: "If we calculate the oil price based on the 2002 index, its real value will not be more than $47 a barrel because of increasing inflation and the decreasing value of the (U.S.) dollar."

Other OPEC oil ministers have also noted that although prices are rising to record nominal levels, inflation and the dollar have softened the impact.



Read more: http://africa.reuters.com/business/news/usnBAN030703.html

[monktonman]

1. Perhaps oil is cheap, its the side effects that are killing us n/t

[Viva_La_Revolution]

2. exactly. :( nt

[StClone]

7. We built our Economy on cheap oil

With an uptick in price adjustments will rattle through the system and cause many a woe. Kind of like the slow rise in Global temps.

[dickbearton]

8. Oil might be cheap in gold or some other foreign currency, but not in dollars...

And we use dollars, that is the side effect.

[liberal N proud]

3. But the economy experts keep denying inflation exists

:sarcasm:

[Skink]

4. for many wages since 1980 have stagnated.

[Deja Q]

5. And Governor Crist wonders why more can't spend...

:shrug:

[bluestateguy]

6. We are rapidly catching up to that 1980 mark

That sound bite about oil being cheaper than the Carter years will be inoperable by the Spring, or earlier.

[Psephos]

9. greedy bastards n/t

[Robbien]

10. Why are they saying everything is cheap but ignore average wages are lower?

Cheap to whom?

Back in 2002, oil was $12/barrel. Now it is $90/barrel. Paychecks of 2002 have not increased to eight times their 2002 amount. In fact they are just about the same.

And since when does a $90 amount equate to half that amount in real dollars using a five year index. That would assume the inflation rate was over 20% per year for those five years. Our government says inflation is only 3% per year for that five year term and our government wouldn't lie. 'course not.

[skids]

11. Ignoring the wages is left as an excercise to the reader...

...an excercise in pollyannaism and stupidity, that is.

The sad thing here is that this guy is half right. Oil is not as uber-expensive as it looks.

It's not "cheap", it's "real price" is going up, so that's bull.

But it isn't super expensive. And the reason it isn't you nailed. Ponder it for a moment.

$47 in 2002 dollar equivalents. Oil is a real good, and isn't getting more expensive that very fast -- it is experiecing growth as supply difficulties increase, but slow growth.

$47 in 2002. Ignoring the slow growth in the real price, that means in five years the dollar has lost bit under half of its value.

The Canadian dollar in 2002 was 62 US cents. Now it is 103. Again, somewhere between 1/3 and 1/2 of the vallue of the dollar -- just up and gone away. Bye Bye!

Not many people I know have been gotten the annual 15-20% raise that would have been needed to adjust for that.

The only conclusion is that in fact workers here in the U.S. have had their pay cut by about 1/3 since 2002, despite what government inflation figures may say.

[modrepub]

12. It ain't cheep

and I'm not spending 1980 dollars. I thought those pundits who said we would see $100/barrel oil were crazy. Not anymore. This is going to eventualy change everything. McMansions, SUVs and sprawl are gonna kill us economically....

[Deja Q]

14. Then we're dead. So live for today!

:party:

[sutz12]

13. "Don't worry, it's not the worst it's ever been.......yet."

:evilgrin: