Gasoline Prices Higher
by Keith Burton - GCN 12/06/06 Updated 12/08/06
Motorists on the Coast have no doubt noticed that gasoline prices are rising again. Currently, prices for regular 87 octane gasoline are at $2.24, which is eleven cents more per gallon than just a month ago.
Gasoline prices are still well below their highest level at $2.96 a gallon back on August 6, 2006. It is likely that gasoline prices will continue to rise as a result of the dollar's decline in value.
A weaker dollar erodes income from the dollar-denominated oil sales of Opec members and could encourage them to seek a higher price. OPEC officials will be meeting December 14 in Nigeria to discuss cutting production to keep the price higher. OPEC officials have repeatedly expressed concerns over lower value of the dollar.
The dollar's value against other currencies has seen a significant drop over the year, down over 10 percent against the Euro. While the dollar is not officially pegged to any specific commodity, such as gold, it does have a relationship to the price of oil as the dollar is the primary currency used to purchase oil internationally. As a result, changes in its value does influence what U.S. consumers pay for oil and gas products. A lower-valued dollar would then mean it takes more dollars to pay for oil. This would mean U.S. consumers have to pay more for gasoline at the pumps, even if inventories are higher and no shortages exist.