Submitted by Felix Salmon, Nov 27, 2007 08:52

Let's not go too far, here. If the dollar falls in value, then, ceteris paribus, the price of oil (in dollars) will rise. The only way that it won't rise is if the value of oil falls as quickly as the value of the dollar.

The point that I and Hamilton were making is that the *denomination* of the oil price -- the fact that it is *priced* in dollars, as opposed to euros, or yen, or cowrie shells -- makes no difference.

Stephen Gordon's point is just that the value of oil has been rising so fast that its price has been rising in all currencies, not just dollars. But it's certainly possible, if the dollar is falling and the value of oil is otherwise pretty flat, for the price of oil in dollars to rise even as the price of oil in euros falls.

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