From Econbrowser:
Although movements in the value of the dollar are one factor contributing to recent changes in the dollar price of oil, I do not believe they are the most important factor. Here I review some of the evidence that persuades me of this....
...The dollar has depreciated by 30% over this period while the price of oil today is 10 times what it was in 1999. Obviously something other than the pure inflation effect has been involved.
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...Between January 1, 2007 and July 14, 2008, the dollar depreciated by 18%. If we take that most recent coefficient estimate of 1.76, the regression above would have predicted a logarithmic increase in the price of oil of 31%, or a move from $61/barrel in January 2007 to $83 in July. In fact, oil peaked at $145 on July 14. Since, then, the dollar has appreciated by 5.9%, while the price of oil has fallen by 23%....MORE
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