Boston Real Estate for Sale

According to Boston Fed President Eric S. Rosengren, the weak dollar isn’t behind the meteoric rise in gasoline prices.

Boston Fed chief rebuts theory that rate cuts spurred oil prices; Run-up in petroleum dwarfed dollar’s decline – By Robert Gavin, The Boston Globe

Although the decline in the dollar against other currencies has been a popular explanation for oil’s record run, Rosengren said data show the increases in oil prices have far outstripped the pace of the dollar’s decline. In the past year, the dollar has declined 13.6 percent against the euro, while a barrel of crude oil was priced at $131.31 yesterday on the New York Mercantile Exchange, up 99 percent from a year ago.

Oil trades in dollars. Many analysts say when the dollar loses value, it prompts producers to demand higher prices to offset the loss. The weaker dollar also raises demand from buyers who hold stronger currencies and investors seeking a hedge against inflation, analysts say.

I was hoping it was the reason, since it’s the only economic theory I can actually follow.

Other guesses?

Call Now