It's not just oil and gas prices heading higher - this is about the value o

It's not just oil and gas prices heading higher - this is about the value of the dollar in your pocket

Bottom Line: It's been awhile since oil and gas prices have been as high as they are today. Last week, at $66 per barrel, oil reached three year highs. You're liable to hear a number of reasons for this that may or may not be all that accurate (OPEC cuts in recent years, the US exporting more oil, higher demand due to a stronger economy, etc.). While there are a number of factors that come together to determine the price of oil and gas - the single most important of them all is the value of the dollar you're using to pay for it. If you've heard of rising oil prices and haven't heard about the recent decline of the US Dollar... You haven't been properly informed of what's going on and how you'll be impacted on every commodity you'll buy. 

The value of the US Dollar, as determined by the US Dollar Index (value of the dollar against a basket of leading world currencies), has been dropping in value for a year now. Here's a quick rundown: 

  • US Dollar is down 3% in 2018, 5% in the last quarter and just over 11% year over year

What does that mean? It means that if there were no changes in supply, demand, cost to produce, etc. oil and gas would be 11% more expensive. Btw, that's true of all commodities so you've likely been seeing a bit of an incremental impact at the grocery store for example. It's also showing up if you're traveling internationally as it's likely to be more expensive for you to travel outside of the US as compared to the past couple of years. The question is if the US Dollar has bottomed and will begin to regain value from here. With the fed likely to raise interest rates throughout 2018 - the answer is probably yes - which hopefully should keep gas prices and other commodities from rising substantially from current prices. This btw, is a travel tip for you as well. If you're traveling outside of the US - you should probably be keeping an eye on the currency exchange rate throughout the year. 


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