October 2, 2014

Creighton University economist says weak dollar hurting gas prices

Gasoline prices have risen about 75-cents a gallon in Iowa since December and prices at the pump nationally have gone up for 36 straight days. While part of the blame may go to refineries making the switch to summer blends and the high price of crude, Creighton University economist Ernie Goss has another scapegoat, the value of the U.S. dollar.

“Since November of 2008, the Fed has been on this cheap money policy which pushes up the price of most products that are traded internationally. Of course, oil is the biggest one,” Goss says. “According to my calculations, about one-fifth of the growth in prices can be traced to the Federal Reserve.”

Gas prices are now averaging $3.76 a gallon in Iowa, up significantly from around the $3 mark at year’s end. Given the current federal policies, Goss says there really isn’t much hope they’ll drop soon.

Goss says, “Consumers out there are already looking at the Social Security tax increase and then you tack on the increase in gasoline prices, we’re talking for the average consumer about $120 a month.” The proposed Keystone X-L oil pipeline will run from Canada to Texas.

Goss says the pipeline should allow Iowans to see lower gasoline prices, eventually. “We absolutely will but it will take a year, a year-and-a-half to get that built,” Goss says. “Those who are opposed to the pipeline say that will actually increase the price of oil, but I would call that voodoo economics.”

The national average price for gas is $3.78 a gallon, two cents higher than Iowa’s average.