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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Howard Henick who wrote (43793)	1/18/1999 12:55:00 PM
From: Merritt	Respond to of 132070

Howard: While that's certainly true for a while, eventually the price of the commodity has to reflect the cost of production. The weak dollar of the early seventies (after Nixon took the international dollar off the gold standard) is what forced the OPEC countries to band together, despite all their political differences, and cut production in order to raise the effective price of oil. Right now we have had, the last time I looked, over 40,000 U.S. stripper wells closed in because of non-profitability. Sooner or later an equilibrium will be reached, and oil prices will remain fairly constant no matter how poor economic conditions are. That's probably why the euro and Swiss franc are seen to be "safe haven" currencies (much, possibly most, of the most recent currency drain from Brazil went into those currencies). They're both backed, to a degree, by a commodity (gold).