Weak Dollar Responsible for High Gas Prices
May 18, 2011
The weakening of the dollar since 2008 has added 56.5 cents to the price of gasoline, the congressional Joint Economic Committee (JEC) has found. The average price of gasoline would be $3.40 per gallon, instead of the current average price nationally of nearly $4, if the dollar hadn't declined, says the Weekly Standard.
- The study of the dollar's impact was conducted by Republican congressman Kevin Brady of Texas, vice-chair of the bipartisan committee, and Republican staff.
- They blamed the Federal Reserve and its efforts to spur economic growth for the price increase.
- "Since the Fed launched its program of quantitative easing in late November 2008, the value (trade-weighted) of the U.S. dollar has declined 14 percent," the study calculated.
- "The declining value of the U.S. dollar has added $17.04 per barrel to the price of oil (Brent Crude)," thus driving up the price of gasoline.
The study used several yardsticks to measure the dollar's effect.
- For instance, while the price of oil has risen 150 percent in the United States since the end of 2008, it has gone up only 96 percent in Canada.
- The Canadian dollar's value has strengthened in recent years against the U.S. dollar.
Source: Fred Barnes, "Study: Weak Dollar and Federal Reserve Responsible for Sky-High Gas Prices," Weekly Standard, May 16, 2011. "The Price of Oil and the Value of the Dollar," Joint Economic Committee, May 16, 2011.
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