I heard a financial talk show host that blames the price of fuel, at
least in part on the weak dollar. Almost never, do I hear anyone
blaming the poor value of the dollar on oil prices.
The dollar slide has had a huge affect on oil prices. (one dollar = .643
Euro) Oil producing countries are charging more to make up the difference.
Oil prices are given in dollars but some countries are charging in Euros,
most notable Iran and Venezuela. Other countries are exploring dropping the
dollar in favor of the Euro or a market basket of currencies. The market
basket approach allows them to pick and choose the best rates. If either of
those approaches were chosen over the dollar you could expect even further
slides in the dollar, the need for oil importing countries to purchase
dollars is one thing propping it up..
The dollar is down for many reasons. A big one is the rest of the world
looking at out unified budget debt and cringing. That debt is somewhere
around $18T and growing. Other things like the credit crunch are adding to
world wide worries and the Iraq quagmire looks to be another huge drain on
our economy. Inflation worries are also making our currency less than
desirable on world markets.