{"id":15,"date":"2007-10-19T14:57:44","date_gmt":"2007-10-19T20:57:44","guid":{"rendered":"http:\/\/aspiringeconomist.com\/index.php\/archives\/15"},"modified":"2007-10-19T15:24:08","modified_gmt":"2007-10-19T21:24:08","slug":"is-the-budget-deficit-responsible-for-high-gas-prices","status":"publish","type":"post","link":"http:\/\/aspiringeconomist.com\/index.php\/2007\/10\/19\/is-the-budget-deficit-responsible-for-high-gas-prices\/","title":{"rendered":"Is the budget deficit responsible for high gas prices?"},"content":{"rendered":"<p><span class=\"subhead\">Clara Jeffery, editor-in-chief at MotherJones, <a href=\"http:\/\/www.motherjones.com\/mojoblog\/archives\/2007\/10\/5843_post_8.html\" target=\"_blank\">thinks so<\/a>.  In a post that received over 1300 diggs she notes:<\/span><\/p>\n<p><em> &#8220;Thus, of the $59 increase in the cost of a barrel of oil to a U.S. consumer, more than $30 is due to the depreciation of the U.S. Dollar and the fiscal and trade policies that have contributed to it. Not Middle East tensions, not China&#8217;s increased appetite, etc. &#8220;<\/em><\/p>\n<p>I agree that a falling dollar is going to make crude oil more expensive for U.S. consumers.  Even though oil prices are denominated in dollars, OPEC is a cartel that maximizes profit by setting a uniform price.  As the dollar falls relative to most other world currencies, world demand for oil will increase and OPEC&#8217;s profit maximizing price will rise.<\/p>\n<p>Where Ms. Jeffery goes wrong is when she claims that, &#8220;&#8230;a big portion of it [high gas prices] can be attributed to a growing [budget] deficit.&#8221;  This is contrary to basic exchange rate economics.  <strong>A growing budget deficit puts upward pressure on interest rates which should make the dollar rise. <\/strong><\/p>\n<p>It&#8217;s just hypocritical to be <a href=\"http:\/\/www.motherjones.com\/commentary\/columns\/2006\/01\/progressive_economics.html\">hysterical<\/a>  about our unsustainable trade deficit and then blame the Bush administration when exchange rates adjust.  Gas prices have been rising for a number of reasons, but a growing budget deficit isn&#8217;t one of them.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Clara Jeffery, editor-in-chief at MotherJones, thinks so. In a post that received over 1300 diggs she notes: &#8220;Thus, of the $59 increase in the cost of a barrel of oil to a U.S. consumer, more than $30 is due to the depreciation of the U.S. Dollar and the fiscal and trade policies that have contributed [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-15","post","type-post","status-publish","format-standard","hentry","category-exchange-rates"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/posts\/15","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/comments?post=15"}],"version-history":[{"count":0,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/posts\/15\/revisions"}],"wp:attachment":[{"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/media?parent=15"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/categories?post=15"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/aspiringeconomist.com\/index.php\/wp-json\/wp\/v2\/tags?post=15"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}