Jad Mouawad reports on the recent rises in oil prices in the Times today. In the report he covers a lot of ground, possible economic recovery, long term fundamentals and so on.

He misses one very basic point. We are talking about the dollar price of oil. Once upon a time the dollar was valuable because people believed that they could use it to buy high return, secure assets. They thought that our houses were worth something and that we would indeed repay our mortgages using the rising value of our houses.

They needed dollars to loan to us and they paid high prices, lots of euros and pounds and yuan and so on, to get those dollars. Dollars bought more.

Now that this does not seem like such a grand idea they are cutting back on their demand for dollars to buy our IOUs. The dollar price of oil is rising and will keep rising.

This is not a bad thing. If we don't like it we can always change the way we do things and use less energy. Not so good for Chevron. Great for everyone else.