There goes oil....

I guess we will be back to paying $4/gallon for gas soon. The Fed’s actions have dropped the dollar. Wasn’t our weak currency was part of the reason for the $140/barrel oil.

I thought a strong US dollar was good for oil, as oil is sold in US $.

Trek, I think you’re right. I did a quick Google search and came up with this: Oil, gold and commodities have all been priced in US dollars since 1975 when OPEC officially agreed to sell its oil exclusively for US dollars. From 1944 until 1971, US dollars were convertible into gold by central banks in order to adjust for any trade imbalances between countries. Up to that point, the price of gold was fixed at US$35 per ounce, and the price of oil was relatively stable at about US$3.00 per barrel. Once the US ceased gold convertibility in 1971, OPEC producers were forced to convert their excess US dollars by purchasing gold in the marketplace. This resulted in price increases for both oil and gold, until eventually oil reached US$40 per barrel and gold reached US$850 per ounce. Today, apart from geopolitical threats in oil-producing regions, supply/demand imbalances from Peak Oil and increasing demand from developing countries, the price of both gold and oil can be expected to increase as the US dollar declines.

So is this where the entire demand curve shifts up, resulting in greater supplier at a greater price?