The common belief is that there is a negative correlation between the U.S. dollar and oil, a result of oil being priced in dollars. "As the dollar declines in value, so does the price of oil in non-dollar terms," explains Michael Woolfolk at the Bank of New York Mellon. "Consequently, foreigners bid up the price of oil and other dollar-denominated commodities. The result is that the price of crude oil and other commodities rise in dollar terms as the dollar falls in value against other currencies."
If, on the other hand, the dollar gains in value, so does the price of oil in non-dollar terms. The traditional argument is that a higher non-dollar price of oil reduces the demand from foreigners, sending oil prices lower.
Senate Democrats once again tried to push through a bill to create a windfall tax on Big Oil profits. And, again, it failed. In order for a debate on the bill to even be opened, 60 votes are needed. Those votes were absent, and so the windfall tax on Big Oil profits dies another day -- probably to be resurrected again in the relatively near future.
WWGD: Will President Bush Veto a Bill that Cuts Tax Breaks for Big Oil? Written By: Miranda Marquit 2007-08-10 13:09:47 Congress wants to take tax breaks away from Big Oil and give the money to alternative energy research. But President Bush may not let Congress fund alternative energy in such a way. He thinks Big Oil should continue to enjoy special status.
