Q: Can you help your readers and write an article clearly tracing the $140 per barrel of crude to the final $4.00 cost per gallon of gas? Follow the money.....your readers will figure out who is really making the money.

Submitted by Peter O'Connell from Key Largo, Fl

A: it's not as easy as it seems, or more directly this approach doesnt tell the whole story because there is old oil, being pumped out of the ground for 20 years, which has one cost structure, and new oil, subject to oilfield inflation and higher costs for everything associated, making it much costlier to pump out. the sell price for oil is about the same for each, the former makes a killing, the latter a more modest profit. that's just production. then there's the distribution and transportation, refining, marketing and retail etc. and state and local gas taxes. my understanding is the marginal cost of a new barrel of oil is about $75, and those other things add another $20 to $25 so the "true" cost of a barrel is around $95 to $100. The weakening dollar has resulted in roughly $8 a barrel increase when factored as the slide of the dollar against major currencies. That gets us to about $108 a barrel on the high end. And $30 more per barrel from "speculators".... How much of that speculation is excessive is now the debate. The tight supply/demand balance is the trigger that allows this "speculation" and hedging to take place. So you have to allow for a certain amount of risk premium as part of the normal workings of future markets. If you arbitrarily called it $10 thanks to "healthy" or "normal" futures market activities, we're up to $118 a barrel, leaving roughly $22 more a barrel thanks to the wash of non-traditional speculative money pouring into commodities (about $280 billion in oil futures these days). So your original question, who is making the money? If you own an old U.S. or Saudi oil field with low production costs, you are making the most money. If you are an investment bank taking investor money and pumping it through the commodities markets with one-way bets on higher prices, you are making a lot of money. If you are a refiner, you're not making so much money, nor are the gas station owners, and even the hedge funds who don't take long positions in oil but bet on fluctuations are not doing well because there is too much volatility and direction is hard to ascertain. That's a condensed answer to a good but complicated question.

Answered 07/02/08 11:39:46 by Kevin Hall and Tony Pugh

Q: Mr. Jefferson George has written in The Charlotte Observer, in "With weak dollar, exports skyrocket", that weak dollar is a bonanza to U.S. economy. I think that the article has a big flaw. The weak dollar is a fool's gold! In the short run, the weak dollar will benefit the wealthy who own manufactuting companies. But in the long run, the employees of those companies will have nothing to retire on! I am absolutely opposed to a weak dollar. The weak dollar may be a temporary necessity, but it must be strengthened again and soon. The globalization has deprived the U.S. from the tax dollars necessary to pay for future retirees. The taxes are now being paid by the Chinese to the Chinese government! Is this OK? I don't think so! This is the unspoken and seldom mentioned tragedy of globalization! The United States cannot survive as a superpower without workers paying taxes! Yet we have decided that the Chinese do all the work! What do you think?

Submitted by Bohdan Szejner from Kraków, Poland

A: As in an earlier question, currency traders determine the value of the dollar in large measure based on the perception of the health or weakness of the U.S. economy. And right now there aren't many things to be bullish about but exports. A bright spot. But unless we hope to be the new China, they're a bright spot and not an economic miracle. As to the tax questions, we seem as a nation to want it all, the best infrastructure, the best healthcare for retirees, the best schools and parks etc. and oh, by the way, we want it for free. Taxes are bad, evil, undermine everything that's good for America. You can't have it all, lawmakers will have to come to some sort of agreement on what we need and what we want and how to pay for it. Right now, my kids and grandkids will be paying for our current spending spree, given the $9 trillion in govt debt and $50 trillion or so in unfunded liabilities, according to the Comptroller General, the nation's chief accountant. The Chinese have helped the American consumer by holding inflation in check with low and lower prices. This won't last forever and the recent inflation data and manufacturing cost info coming out of China suggests we will increasingly import Chinese inflation in the form of higher priced imports.

Answered 07/01/08 11:46:26 by Kevin Hall and Tony Pugh

Q: As of Friday the dow has lost more than 2500 points froms it's high water mark last October. Is there any real potential of a major, one-day stock market crash, and if so, can companies like GM survive?

Submitted by Erik from Eau Claire, WI

A: Interesting question, not sure how best to answer it. I'm doubtful of a crash, and it appears a bear market is more likely. we are almost 20 percent off the high and there's reason to think we will float in this 20=25 percent range for awhile. but the stock market is a mystery. just as many market watchers can argue that perhaps this is the bottom from which the market begins climbing etc. that's what the stock market is all about, guessing the sentiment and playing the odds. Surprises or shocks usually are the spark that causes a market crash. The Federal Reserve was worried enough about that to intervene and broker the sale of Bear Stearns. My gut tells me we know what the problems are -- subprime mortgage losses, freeze up in credit markets -- and these are now known matters. The size of losses may surprise etc but a market crash would have to come from something like some major British or European banks suddenly going bust, a surprise invasion of Iran that goes badly and keeps oil of intl markets etc. I hope I am not wrong!

Answered 07/01/08 11:41:18 by Kevin Hall and Tony Pugh

Q: Warren Buffett has 61 billion and I, as American as he and probably more educated, starve on 765 dollars Social Security! This cannot be American Dream ... for me! All I know is this: today, when I drove past the money exchange billboards in a major town in Poland, I was frightened to notice that the dollar has lost four cents from last night's 2.22 złotych exchange rate. This has been the story in Europe for three years, and this means hunger for thousands of Americans living here. Every American citizen who for whatever reason lives in Europe, undergoes a trauma each morning watching the dollar slide a few cents! When I studied in Rome, between 2000 and 2005, each year I was in Poland on vacations, the dollar was steadily at 5 złotych. Then, in 2005, the dollar began to slide, reaching 2.18 zlotych this morning! What does this say to America? Except for the rich who got richer, 250 million American citizens, many without noticing it, are 54 percent poorer than they were three years ago! Their dollar is now worth 46 percent of what it was worth three years ago! How does this affect future retirees? It's a monumental tragedy, I think! We are becoming a banana republic ... except for the rich who get richer! The linkage between the cost of oil and dollar slide is abundantly obvious: the Saudis want more dollars for their oil! Where this will end, only God knows! If dollar continues to be devalued, the oil will proportionally cost more. Whoever decided that dollar be brought to the level of a banana republic currency, must have been insane! It was a criminal act against the citizenry! Correct me if I am wrong.

Submitted by Bohdan Szejner from Kraków, Poland

A: I wont go as far as to label it a criminal act, but currency traders largely set the price based on the perceived strengths or weaknesses in the currency, the growth picture etc. It's hard to be bullish about much in the U.S. economy right now. Weak regulation and weak congressional oversight (by both parties) allowed the abuses in the housing sector that have led to a distrust of virtually any sophisticated financial instrument being offered to investors. That's led to a credit crisis, whose worst days may still be in front of us, not behind us. Add to the mix high energy prices that are causing inflation and limiting the Federal Reserve's ability to respond without tipping the economy into recession and it's easy to see why currency traders would be bearish on the dollar. If the European Central Bank raises interest rates Thursday, as expected, that would strengthen the euro even more against the dollar, eating further into your government check and driving oil prices even high. Fasten your seatbelt, seems like a bumpier ride is coming in months ahead.

Answered 07/01/08 11:35:52 by Kevin Hall and Tony Pugh

Q: Your columns have stated that speculators drive up the price of oil through speculative trading in the futures market. But how does that specifically drive up the price of oil? What is the process? Do some entities buy oil and hoard it until the price goes up to a certain level?

Submitted by Jay from columbus, ohio

A: First, not all speculatoin is bad and it is an important part of how futures markets work. Second, no one can say with certainty how much of today's prices are due to speculation, in part because there is a real supply-demand variable that is at the root of it all. The question then is how much is fundamentals, how much is speculation and how much is other factors. The biggest "other" factor is the sagging dollar. This forces producers to ask more for their product to offset the loss they face when converting their dollars into euros or their own currency. And oil has become an asset class like gold, in which money pours when there are signs that the dollar is or will be worth less. Oil has become a hedging instrument. Now to your question how speculation might drive up prices, the most common theory is that investment banks like Goldman Sachs and Deustch Bank offer big pension funds, endowments and other big institutional investors the chance to invest in an index of commodities, weighting the investment so if they plunk down $100 million, 18 percent might go into oil, 12 percent into corn, 17 percent in sugar etc. They are "exposed" to a broad range of commodities but in all cases they are playing it long, that's to say they are betting that the future price for these commodities will be more than it is today, given the growth of China, India, Brazil and other global players. Some see this as a rational move, others see it as a speculative bubble that will be the next asset bubble to burst. Those who think this is running up the prices argue that this massive amount of money places in one-way upward bets -- about $280 billion -- distorts the functioning of futures markets and drives up prices. And the sad truth, is regulators don't have a complete view on what is really going on and are scrambling to get a sense of whether or not there is nefarious activity going on in dark, unreglated places that might be pushing prices higher than they otherwise would be.

Answered 07/01/08 11:30:46 by Kevin Hall and Tony Pugh

Q: I have read some of your Q/A's. What concerns me is why everyone is so upset with the price of fuel. Has anyone in the US ever took the time to see what other countries are paying and how long they have paid the prices? Can you agree that our prices for fuel are so high because we are not the top buyers anymore? Can you agree that the other countries are growing (as far as trying to catch up with us)? Their dollar value is not as low as ours right now, right? So therefore…they are the real reason for our price of fuel to be higher? Not trying to cast blame. They deserve to have fuel too. So, what I see is the oil producers are sitting there and seeing buyers from all over wanting what they have? Then the truth be known we only care about their oil? We do not show respect to them….we only want from them what we need and we want it cheap! I do not like paying the high prices either, but would you agree that we can make some changes on our own? (Please read my 2nd submit before commenting)

Submitted by Mary from Quanah, TX

A: let's try this again. wrote a long answer only to have it disappear into the technological netherworld. I heartily agree that we've come to expect low oil and gasoline prices as some sort of God-given right. It isn't "our" oil and producers are doing what any business does, try to get the highest price a buyer is willing to pay. Oil prices, however, differ from most other products given everything about oil is opaque, from production and consumption stats to the futures market that is dominated by big investment banks who have no intention of ever taking delivery from oil. The good news in high oil prices is that if they remain sustained for a long period, it will drive development of alternatives, which will cause two good things to happen. one, it would lessen our use of oil and two, it will lower the price of what oil we do use because the future demand for oil will have lessened. it's the transition period that is likely to be unpleasant but make no mistake about it, high oil prices will bring innovation and alternatives.

Answered 07/01/08 11:20:01 by Kevin Hall and Tony Pugh

Q: more info from our editors on the weekend oil producers meeting, please. I see somebody tossed out my "what if" but that's ok. I mean, "what if" Bush's visits to Saudis are related to the kindness with which Saudis bailed W. out of his own oil bankruptcy in year _____ - and what if this was payback, Bush and cheney going in and trying to gain control over Iraq oil (hydrocarbon contracts Iraq refused to sign), to benefit Saudis. Right after that "smart" remark here, i read that Saudis Call Oil Meeting this Weekend. told you so. erase that. i am just trying to provoke more thinking about why, why, the war, the oil, the whole mess. Peg from birmingham

Submitted by peg from birmingham alabama

A: Appreciate any and all attempts to provoke more thinking. Not sure I see your connection between the Saudis and Iraqi oil. The underlying presumption by critics of the war was the U.S. is after Iraqi oil. I would suggest the implicit strategy was the U.S. didnt want Iraqi oil in unfriendly hands, looking at Iran as unfriendly and 9-11 showed the Saudis as weaker on internal controls as first thought. The chance that the three great oil producers could have regimes unfriendly to US and West was I think a driver in the neo-con thinking -- right or wrong gets into political debate, but I think that was an implicit thought. I suspect the Saudis are less worried about Iraqi oil as competition, and more about Iranian influence over Iraq and Iraqi oil. Iran battles Saudi Arabia for the heart and mind of orthodox Islam. Iran is shiite, Saudis are sunnis, and from here it gets far more complex. All this to say that the politics of Middle East oil are as complex as the broader political battle being waged for the intellectual and relgious direction of the region.

Answered 06/27/08 11:33:46 by Kevin Hall and Tony Pugh

Q: have you heard the song that beings, Bodman Schmodman.... drill drill drill? Hysteria is busting out all overrrrrrrr. I think i asked before and nobody heard me, do you think the speculators are really the terrorists without planes? Consider it. It could be done by counterfeit money, they used to say. Somebody said, they will do it through medicine (i cant finish that rhyme without risking my neck). (i.e., charging medicare/medicaid and sending $$ overseas.There i said it. Or water supplies. But darn what if it is taking away our money for food, gasoline, roads, schools...by speculation. Isnt that terrorism, right here at home?

Submitted by peg from birmingham alabama

A: I wouldnt go that far. But I think attention is beginning to focus on who is pumping money into these commodity indexes, arguably driving up prices with one-way bets that prices will continue rising. These bets are all placed through investment banks and during a recent hearing, the representatives from several investment banks all conceded that they invest on behalf sovereign wealth funds. they didn't say who the owners were for these funds -- which are investments controlled by a government. The Saudis and Kuwaitis have these sorts of funds, so do the Russians, Chinese, Chileans, Norwegians. This will likely be a controversial topic in months and years ahead since there is something odd about a state-run fund washing through private markets, at times perhaps crowding out private investors.

Answered 06/27/08 11:27:26 by Kevin Hall and Tony Pugh

Q: There is no commentary about how financing the wars is the root cause of inflation. The U.S. is printing $10 billion a month, so there are way more dollars now floating around, that have to gravitate somewhere. Every previous war was inflationary. Your take on this ?

Submitted by Mike Lowrey from Tucson

A: That's an interesting question and too broad for this forum methinks. The last comment seems true, but today's inflation really seems caused by high oil prices and how they are bleeding into other areas like food production. And other factors like the crush of money moving into commodities of all sorts and driving up the price seems to be another factor in inflation. If the war is inflationary it may be a contributing factor but the oil shock still seems the most reasonable explanation. (How the Iraq war affected world oil prices is another matter)

Answered 06/27/08 11:23:34 by Kevin Hall and Tony Pugh

Q: I have what I think could be very helpful in the recharging of the battries on these hybrids without gasoline but I'm not sure who to talk to .. GE ??? or car manufacturer like ford??

Submitted by Philip Clephane from Brooklyn, Indiana

A: Try the folks at Calcars.org, they may be able to direct you. All the automakers and GE are certainly conducting their own research into batteries, but if you really think you have a solution you may want to look into getting a patent for your idea.

Answered 06/27/08 11:20:27 by Kevin Hall and Tony Pugh

Q: Would McCain's 3R Ec Plan work? This isn;t supposed to be out yet. Progressive Candidate John McCain comes through for America with his 3R economic plan. In the aura of Theodore Roosevelt, McCain’s plan just makes sense. 1. RETHINK: America must rethink the global views on what America is capable of in our current state of technology, engineering and the demands that face the world. “RETHINK” in terms of re-action means to set forth this plan. Most Americans know where the USA falls short in the ways of manufacturing and valuable jobs. It’s time to meet the change of global demands with Made in USA quality and a new American workforce. Oddly enough, the framework is ready and waiting for this plan and active participation. The Progressive attitude of John McCain to get things done will resurrect America. 2. REFORM: America must rise to these demands and compete aggressively in a global economy. We must demand higher quality products and less restricted trade routes for Made in USA components. ”RE-FORM” is simple to comprehend as through John McCain’s Progressive attitudes, the USA will reform our manufacturing and hit it full steam ahead! 3. REINVENT: America and Americans must reinvent themselves to reach and maintain these standards and by sheer American ingenuity, control the world’s marketplace in the competitive manner, as we have always been proud to rule. Can you hear Theodore Roosevelt shouting this? ”RE-INVENT” is the exciting part of McCain’s 3R plan. Americans in need of a future and without the desire, funding or free time to spend 2 to 8 years in college can go back to a re-invented manufacturing education. There is more, but space is limited. Fuel taxes would be replaced with new corporate and mfg, increased employee income .

Submitted by John Lewis Mealer from Show Low, Arizona

A: I try to stay out of the political debate, so I'll let your comments stand as written. If another reader responds, howver, I'd beg that you try to steer the debate toward the economic issues and steer clear of politics. There are a gazillion forums where you can express political preferences. I'd welcome debate from readers on how to reinvent manufacturing, how to further open markets for U.S. products etc. John has thrown out the first pitch, hopefully he'll generate debate.

Answered 06/20/08 10:11:49 by Kevin Hall and Tony Pugh

Q: A multifaceted approach is needed urgently to confront the dollar-busting oil crisis. One thing of course is to crack down on speculation of all sorts. But there is another problem that must be confronted, and that is the power of OPEC. There is just too much power in a few hands! Each time the Saudi Arabia's Minister of Petroleum and Mineral Resources, Ali bin- Ibrahim Al-Naimi sneezes, the Wall Street rises the price of oil a notch, leaving 250 million Americans in the cold, and plunging the world's poorest nations into an ever-deeper crisis! One man should not have such power over the destinies of the world! The U.S. Congress, the UN, and the EU should counterbalance the power of this man! And, if this isn't enough, the OAS and the ASEAN should also step in! Is OPEC stronger than these organizations combined?

Submitted by Nathanael from Kraków, Poland

A: Tx for your email, old Krakow is one of the world's most beautiful historial areas. Your point is a good one -- in today's world of the World Trade Organization and a global embrace of free trade, a cartel like OPEC is an anomaly. Coffee cartels are gone, as are virtually every other cartel, yet oil remains. I wonder, however, if doing away with OPEC might make things even less transparent, more opaque. Consider that OPEC sets production targets, and when oil was low priced countries simply would pump out above that target to earn more money. With prices high, the opposite may be happening and countries pledge a certain production level but dont meet it in order to keep the supply-demand balance drum tight and prices high. At the end of the day, it is their oil and as much as it hurts, if you were in their shoes, wouldnt you try to get the best price you could for your in-demand resource. They're trying to protect their own interests, offsetting a weakening dollar that erodes their earning power in their own currency. If you sat down in private with an oil minister, I'm sure they'd say that they're seeking that fine line between a price high enough to maximize returns but not so high you kill your golden goose. What we do have control over is demand, and if we get smarter about how we use oil, we get a better hand to bargain with. Higher mileage requirements for cars a good start, but there is a lot more we can do to incentivize the purchase of hybrids and high mileage cars etc. All is not lost, we just need to be smarter about our approach.

Answered 06/20/08 10:08:39 by Kevin Hall and Tony Pugh

Q: Well, maybe that penultimate sentence would read better thus: Canada and Mexico are closer to the US mainland than Alaska, and Japan is closer to Alaska than to Mexico.

Submitted by Steve Jones from Scottsdale, AZ

A: Sounds fine to me. Your point is geography matters in distribution, and its no accident that Mexico and Canada sell us a lot of oil and don't export it to China.

Answered 06/20/08 10:02:08 by Kevin Hall and Tony Pugh

Q: A short clarification to peg from Birmingham: BP became the largest oil company in Alaska when it bought ARCO, the US company which built the Alaska pipeline and infrastructure. As are you, I'm less concerned with the nationality of the firms than the factors driving the prices. I agree with your list of major culprits: supply/demand, speculation, falling dollar, long positions in a somewhat panicky market. Re your reply to John in Monterey, TN, concerning new refineries: Arizona has approved a new refinery in the Yuma area, but the owner simply can't raise the $1B it needs to build. Seems some would rather bet on the futures market than build the future. Pity, that. Also for John of Monterey's question, keeping Alaskan oil in the US seems like a good idea, but taking Japanese money and buying Canadian or Mexican oil with it can also work. Canada and Mexico are closer to the US mainland than Alaska, and Alaska is closer to Japan than to Mexico. Question: are you aware of any other US refinery projects stalled by financing, rather than permitting, problems?

Submitted by Steve Jones from Scottsdale, AZ

A: Tx for the good question. I have written about the Yuma project in the past, and as much as the backers deny it, best i can tell the financing has stalled it. Everything else out there is refinery expansion, which makes sense because it is far less work on permits than starting from scratch. But even there it has moved slowly. Shell and Aramco recently announced the expansion of the giant Motiva refinery, but this was dragged out for quite some time. And a big Illinois refinery that is expanding to handle more oil from Canada just got sent back to the drawing board by EPA -- the Bush EPA -- so things are moving on a slow track here. The good news is the Saudis and Chinese are going gangbusters on new refineries, Kuwait too although Kuwait was reportedly shopping for a site to build a new refinery here in U.S. that project seems to have gone quiet. For the foreseeable future, refinery expansion is happening abroad which means we are likely to keep increase the amount of gas we import alongside oil imports.

Answered 06/20/08 10:01:15 by Kevin Hall and Tony Pugh

Q: My budget price for home heating oil has almost doubled for next year -- from $2.30 a gallon this year to $4.30 next year. In light of that increase, I'm tempted to buy a pellet fireplace insert to heat my home (total cost = $3,500). Would it be wise to purchase the insert right away, or should I wait in anticipation of the oil bubble bursting soon. Fred Como

Submitted by Fred Como from Burnt Hills, NY

A: We're prohibited from giving that sort of personal advice, but if you are asking me more generally what do i think is going to happen to home heating oil prices because of oil costs. Even if oil were to fall back, it's hard to see it falling back below $100 this year. perhaps in year's ahead as more supply comes onto the markets, perhaps if that combines with new rules governing commodities trading etc. But over the next several months, hard to see a steep fallback. I may a bit more informed than the next guy, but this is an opaque market so nobody can say anything with certainty about oil prices.

Answered 06/20/08 09:55:54 by Kevin Hall and Tony Pugh

Q: referring to your reply to (john?) from monterrey tennessee. BP is the largest oil co. drilling in alaska? whoa. isnt that our state? and they dont pay taxes..probably - but they are a british company, no? WHAT kind if interior department policy do we have? if any. thanks for your answer earlier. In a month the cftc may speak to congress. that gives them another month to drive oil prices higher and even get McCain to approve drilling. (to British company, again?) this is indeed a gordian knot. i hope you see it too?

Submitted by peg from birmingham alabama

A: I'm less concerned by the nationality of the oil company and more interested in what really is driving these prices. There are a number of factors beyond supply and demand, and much of it doesnt have to be nefarious speculators. But clearly it would appear the weakening dollar and the crush of new oil futures investment buying oil contracts and sitting on them in long positions is a big factor in rising prices. tx for your input

Answered 06/18/08 16:56:32 by Kevin Hall and Tony Pugh

Q: You mentioned an artical called Breaking the Oil Endgame but I cant seem to find it do you have a direct link? Q

Submitted by Lori Bowles from WA

A: Here is the link to sign up to receive it in pdf form. let me know if it doesn't work... it's not a live link so you will have to cut and paste it. http://nc.rmi.org/NETCOMMUNITY/Page.aspx?pid=269&srcid=269 Here is a pdf of a 28-page summary from the report http://www.oilendgame.com/pdfs/WtOEg_Presentation.pdf

Answered 06/18/08 14:39:53 by Kevin Hall and Tony Pugh

Q: hooray. i have been waiting to see followup to c-span coverage of Prof. Greenberger"s and mr. (moore?'s) comments, which are being ignored by congress largely. I wrote my governor to ask for some attention to the index speculators and changing the law. I read here (from a volunteer) that all pres. bush had to do was to sign it into illegality. (which of course he would not, but surely an investigation and pressure on congress could yield some light). Im thinking of the Teapot Dome Scandal book which McCartney just introduced on booktv. Im thinking a relative's connecting it to the Hunt cornering of the silver market - i understand a chicago court burst that balloon by making that trading illegal. I cannot understand lack of attention to this, and THANK YOU for bringing it out. It would follow that more drilling would only lead to more speculation, which i think is being subsidized by our tax dollars, isnt it??? So i urged the governor of Alabama, find out about regulation or investigation of illegality FIRST then lets see about supply and demand. He has many car manufacturers here, a new airplane involved plant being build, jobs for the state>>>> but how the heck can normal wage-earners deal with transportation, if no gas. thank you. peg

Submitted by peg from birmingham, alabama

A: Thanks for your comments, Sept. 15 is the date the CFTC says it will provide recommendations for Congress. Until then, let's give them the benefit of the doubt. They are moving, even if perceived as late in some quarters, to increases transparency in these markets and that can only be good.

Answered 06/18/08 14:33:11 by Kevin Hall and Tony Pugh

Q: Again, this article mesmerizes me in a superlative maner since it claims that the dollar is cheap because the oil is expensive because the dollar is cheap… ' The weak dollar is also partly to blame for high oil prices since foreign producers demand more dollars for the same barrel of oil to make up for the dollar's diminished value’. Well this paragraph could be very entertaining but it is not funny. Please Kevin and Tony, my faithful economical advisers, could you please decipher this Gordion knot for me and other puzzled readers ?

Submitted by Norberto from Argentina

A: Saudi, Kuwaiti and other foreign producers sell oil in dollars. Most of their imports -- food, clothing, Mercedes Benz cars -- are priced in euros. That means everything they buy costs more if bought with the dollars they earn from oil. So they want to get more dollars for the same barrel of oil to recoup their lost buying power. Although crude oil futures capture the headlines, a lot of oil sales are priced from producer direct to buyer with a flat rate that then rises or falls depending on monthly swings in crude futures prices. But make no mistake, producers are demanding more for oil because of a weak dollar. Iran has threatened to shift to euros for pricing but there has been somewhat limited interest. For the Europeans and the British, especially their airlines, buying oil in dollars is a pretty sweet deal this days. Comprende amigo?

Answered 06/17/08 10:46:04 by Kevin Hall and Tony Pugh

Q: I want to buy an electric plug-in vehicle. On the internet there are some that have a range of 120 miles and have relatively good speeds. I saw the movie about the EV1 and think there is an oil consperacy. It would seem like the private sector could sell a million of them. How come this process is so slow?

Submitted by Andre Jones from Nelliston NY

A: Best I can tell, they really aren't for sale yet. There are converter kits to help you turn a hybrid into a plug-in hybrid. There is a lot of good information on the website of the California Cars Initiative, or Calcars. It's at www.calcars.org. And of course, Nissan and GM vow to have electric cars for sale within two to four years. Let us know if you get something this year and how it works out!

Answered 06/17/08 10:40:07 by Kevin Hall and Tony Pugh