Relationship between Oil prices and USD
3/31/2008


The price of gasoline and distillates, which include heating oil, has roughly increased last week; but the demand for such products is still unreachable. As we all know, the basis for the price of oil is the US dollar itself. In this case, when the demand for oil is high but the supply is low, a price increase is likely to occur.


The US dollar is being used to purchase oil. This is due to its high value compared to other world currencies. The calculation for retailing oil is also being based from the value of the dollar, even in foreign countries. Therefore, the strength of the dollar matches the strength of the oil.


The relationship between the price of oil and the US dollars is considered as something mutual. This means that when the oil demands for a higher price, then the US dollar would have to increase in value too. In this case, countries that are importing oil will be highly affected because the US dollar became stronger, as well as the price of the oil. Therefore, citizens may opt to budget their oil usage so that they can avoid being too much affected with its increasing price
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