How does the value of the dollar elsewhere impact energy costs here?
Almost all energy costs are tied to the cost of oil. If the price of oil were to double, demand for energy derived from coal, for example, would push the price of coal up to a point where it again reaches equilibrium. Oil, in dollars per barrel, is bought and sold in international markets. As the value of the dollar drops, the rising price of oil hits us harder than many other countries. For example, if oil prices go up 10 percent while the value of our currency falls by 10 percent; it is as if the price went up only for us, but stayed the same for other world economies. This also has the result of stimulating oil demand as countries gobble up relatively cheap oil, and this pushes up the price even more. So, is this the same thing that happens with raw materials? Not exactly. The weaker dollar works in nearly the same way to affect the prices of raw material imports as it does with oil, but the problem is compounded for domestically-produced raw materials. Higher energy costs make the
