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PugetSoundSoldier wrote: “In the EU, it’s the opposite - they can get the commodities for “less” than we pay (less of an increase), but they cannot pass those savings along since most of the cost of what they export is from labor and capital costs, no commodity items.”

Ah, that makes sense. The EU pays less for oil since it’s priced in dollars, but they’re less competitive because it costs them more to produce something with the oil? Is that part of the reason why their prices are rising but not as fast as the exchange rate?

Heating oil is now sitting at 2.70

Unreal.

Ah, that makes sense. The EU pays less for oil since it’s priced in dollars, but they’re less competitive because it costs them more to produce something with the oil? Is that part of the reason why their prices are rising but not as fast as the exchange rate?

this is not 100% correct. it´s true that EU buys less for oil than the US. this is a big advantage from the high euro so this makes production cheaper (but not that cheap that you will feel no impact on the exports).
it´s not true that prices rise in the EU. all imported stuff gets cheaper and the EU made products stay at the same price (for euro zone members). as long it stays in the EU you don´t feel anything about the high euro. the disatvantage is if something is exported outside the EU. it´s getting more expensive for the customer. so your exports are less competive on the global marked against other exporting countries.if you are a chinese for example it´s simple, if you can buy the same product (at the same quality) and you can buy it paying 80$ because it´s made in the USA it´s unlikely that you will pay 100$ for the same EU made product.

Exactly. The price of the commodity used in production is a very small cost for most of the items exported from the EU and the US; software, computer parts, precision machines and the like have very little of their costs tied up in materials. It’s almost all in labor and the overhead for labor (office space, benefits, etc).

Conversely, for items exported from China, Japan, South Korea, and Taiwan (the latter three have most of their manufacturing base in China) commodities make a larger percentage of the cost, but labor costs and land costs are a lot lower and increasing a lot slower than the commodity items.

The run up of the Euro versus the dollar is, in reality, a non-issue for the US in the current position we enjoy. It’s only bad for those hyper-nationalistic folks who insist we need to have the highest valued currency simply as a matter of national pride.

I’d much rather be humble, have a lower priced currency, and expand our dominance of the world’s economy, thank you very much...:)