Washington, DC --A weak U.S. dollar due to the Federal Reserve's unprecedented pumping of dollars into the American economy is adding 56 and a half cents* to the price of every gallon of gasoline, according to a new study by the Joint Economic Committee Republican staff.
Titled The Price of Oil and the Value of the Dollar, the study notes the value of the U.S. dollar has declined 14 percent since the Federal Reserve began its program of quantitative easing in November of 2008. With oil an international commodity that trades in U.S. dollars, the declining value of the dollar has added $17.04* per barrel to the price of Brent Crude oil. Crude oil is the primary input in the process of making gasoline.
"Americans are paying a steep price at the pump as a result of the weak dollar policies pursued by this Administration and the Federal Reserve", said U.S. Congressman Kevin Brady, the vice chairman and top Republican on the Joint Economic Committee. "There are two lessons here. Rather than pointing fingers at energy manufacturers the President should be looking to his own Treasury and the Fed for answers to the high price of fuel. And this drives home the point that the Federal Reserve should have one mandate, price stability, to prevent inflation and preserve the value of th U.S. dollar."
The Federal Reserve has maintained an exceptionally low target Federal Funds rate for an extended period of time. The Fed's program of quantitative easing known as QE1 and QE2, the purchase of GSE obligations, mortgage backed securities and Treasury securities have been accompanied by a steady decline in the value of the dollar.
Download a full PDF of the study below.