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Thursday, April 21, 2011

$6 Gas? Could Happen if Dollar Keeps Getting Weaker

CNBC: "All we have to have is a couple badly placed hurricanes which could constrain some of the refinery output capacity in some key locations," says Richard Hastings, strategist at Global Hunter Securities in Charlotte, N.C. "If you get weakness in the dollar concurrent with the strong driving season concurrent with the impact of one or two hurricanes in the wrong place, prices could go up in a quasi-exponential manner."

Using a model that combines "subtle rates of change" with movements in the dollar index [.DXY  74.11    -0.26  (-0.36%)   ] and commodity prices, Hastings figures the low dollar is responsible for about one-third, or $1.31, of the total gas-at-the-pump cost.

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