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Originally Posted by Spuds
One of the reasons for our higher prices is because of the drop in the value of the dollar, in large part from the budget deficits we've been running up.
When buying oil on the world market our dollar is simply not worth what it used to be, as a result it takes a lot more dollars and will till the slide in the value of the dollar stops, according to he article.
I read a comparison where the price of oil versus Euros, has not made as drastic of a climb. Their high taxes on gas is also in part what drives their prices up.
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I'm new to these boards, so forgive me for the critique:
You are right on track with the devaluation of the dollar leading to higher gas prices, but with respect to the trade deficit - devalued currency actually lowers the nominal and (perhaps) real value of the trade deficit. Supply and demand of a particular currency will determine that currency's value.