The Volokh Conspiracy - Oil Prices and the Falling Dollar:

Something I had wondered about was the impact of the falling value of the dollar on the price of oil versus real factors, such as increasing demand or reduced supply. These charts summarize the data. What it looks like is that the rise in the price of oil (and hence the rise in the price of gas) is partly due to real factors and partly due to monetary factors. This site summarizes the evidence as over the past several years the price of oil has more than doubled in dollars and risen about 50% in Euros. If I'm doing my math right, that means that if gas was $2 a gallon a few years ago and is $4 a gallon today, we would be paying $3 per gallon if the value of the dollar had not fallen so dramatically.

If so, then it is not obvious from a public policy perspective whether we have a gas price crisis, exchange rate crisis, both, or neither.

	[Todd Zywicki, July 22, 2008 at 4:01pm] Trackbacks Oil Prices and the Falling Dollar: Something I had wondered about was the impact of the falling value of the dollar on the price of oil versus real factors, such as increasing demand or reduced supply. These charts summarize the data. What it looks like is that the rise in the price of oil (and hence the rise in the price of gas) is partly due to real factors and partly due to monetary factors. This site summarizes the evidence as over the past several years the price of oil has more than doubled in dollars and risen about 50% in Euros. If I'm doing my math right, that means that if gas was $2 a gallon a few years ago and is $4 a gallon today, we would be paying $3 per gallon if the value of the dollar had not fallen so dramatically. If so, then it is not obvious from a public policy perspective whether we have a gas price crisis, exchange rate crisis, both, or neither.