Gas Prices

The FED lowered interest rates today, which means we will soon pay even more for gasoline. The link is a little tortured, but direct. We, the USA, finance a lot of our government debt by selling it overseas. The FED today said we will pay less interest on that debt, making it less attractive to foreign entities. That lowers the value of the dollar, and indeed, the dollar’s sinking value has also been a matter of news lately in this country. Since we buy a lot of our oil with dollars, a weaker dollar means we have to use more of them to purchase a barrel of oil. Higher oil prices of course mean higher gasoline prices. With lower interest rates it may cost you less to buy a new car, but more to drive it.

Today’s economics lesson brought to you by Pedigree Dog Foods (We’re For Dogs). Bo gets Pedigree in the morning and sure seems to look forward to breakfast, which must in some way contribute to him being so smart and good looking.