Bailouts affect on oil prices

The recent bailout that I talked about in the last blog has done something that many people probably did not expect. I have discussed in my classroom and on this blog the issue with gas prices. There are many reasons that gas prices are so high. One of those reasons is the value of the American Dollar. When the American Dollar is weak, the prices of commodity items rises. When we buy something that is on the world market, the value of our dollar compared to other countries can effect the price to us. Thus commodity prices change. Commodities such as OIL.

The value of the dollar has risen lately and has helped contribute to the lowering of gas prices. Oil has dropped nearly $50 in the last couple months. Then just after this weekend the price jumped some $20 almost. Why? The value of the dollar. Now why did the value of the dollar go down so quickly? Our wonderful governments bailout of our financial markets. Thankyou Washington!! When the government bails a company out, they must get the money from somewhere. It is not in the already large government budget. SO they must either print the money or they must borrow it from other countries. Either way it adds money to our economy that would otherwise not be there. When money is added to the economy, the value of each dollar drops. Thus the price of commodities begin rise. Thankyou, Washington.