Steve Beckner told listners this morning that oil prices rose further above $80 a barrel because oil is priced in dollars. This prompted a gargantuan "huh" from the gods of good reporting. When the dollar falls, oil will rise in price when measured in dollars even if oil were priced in peanut butter. The basic story is that if we assume an unchanged value of oil, and a dollar that is worth less, then oil costs more in dollars.
As BTP readers have noted, the price of oil has risen measured in other currencies also. This is true, clearly conditions in the oil market have pushed up the price of oil. However, we have seen a much larger increase in the United States than elsewhere in the world because of the decline in the dollar. If the euro was still at 82 cents (its 2002 low), we would be looking at oil priced in the neighborhood of $50 a barrel. (The change against the euro overstates the decline of the dollar, since it has not fallen as much against other currencies.)
If you enjoyed this article, please consider making a tax-deductible donation today. For over 30 years, The American Prospect has delivered independent reporting that exposes corporate power, investigates political corruption, and analyzes threats to our democracy. Unlike many media outlets, we’re not owned by billionaires or corporations—we’re powered by readers like you.
Today’s independent journalism faces unprecedented challenges. Your support makes our reporting possible and keeps our work free and accessible to all. Whether it’s $5 or $50, every contribution helps sustain our nonprofit newsroom.
Join our community of supporters and make a donation today to help keep independent journalism thriving.
Copyright 2025 | The American Prospect, Inc. | All Rights Reserved