John L.

U.S. Recovery Could Push Oil Much Higher

I think many writers make the situation too complicated. Here is a basic recap that summarizes what is going on.

Oil prices are determined by supply/demand and can fluctuate based on perceptions of how this will change near-term. Supply is shrinking, demand is booming in spite of problems in the US economy.

Compounding this of course is the fact that the US dollar has been dropping in real value (the price of gold is the best yardstick) since it went off the gold standard in 1973.

There was a good article in seekingalpha that showed that the price of crude actually hasn't changed for the past 20 years based on how many oz of gold it would take to purchase one barrel. Sorry, I can't find the link