It's just that simple!
How much of the higher price of gasoline is the Fed's fault?To a first approximation, zero. Oil is priced in dollars in the international market. The falling dollar has no effect on the price of oil. And inflation is a tiny contributor to the huge increase in gasoline prices. The huge increase is due to the fact that a lot of people want to consume oil, but producers have been slow to supply additional quantities. When demand goes up and supply doesn't, prices rise.
I don't exactly know who's out there blaming the Fed singularly for the high price of gasoline--perhaps some liberal straw man out there--but here's a second-approximation thought: There are currencies in the world that are not called "dollars". Many of them have, in recent times, performed very well relative to the American dollar. And as such, countries that trade in those currencies--any country on the Euro, for instance--can better afford to pay a greater price for dollar-valued oil. Which, if I too remember my intro economics, ought to drive the price of oil northward.
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I'm a little concerned by your lack of critical thought concerning who is to blame for the high price of oil. Yes, it can successfully be argued that other currencies that are performing "very well relative to the American dollar" are driving up oil prices. However, who is responsible for such a phenomenon? Why is our dollar so weak and who is to blame for it? If one (someone other than a "liberal strawman") can pin point that, though it may be multi-faceted, he might be able to make a claim that, yes, the Feds are partly to blame for the high price of oil. Let's look at all the reasons for a cheap dollar, Mr. Beutler: Iraq war, American debt, lack of manufacturers, poor exports, NAFTA, WTO, a poor American housing market, that yes the Feds new was coming which is why they made it harder for Americans to file Bankruptcy... In essence, the Feds are somewhat responsible for driving down the value of our dollar which made it possible for other countries with much fairer currencies than ours to buy cheap oil and therefor drive up the prices. The Feds are not responsible for everything, I understand that, but they do play a major role as to why oil prices are as high as they are, and that's coming from a flaming liberal.
I don't see where we disagree.
This is true. However, the countries that a) have those higher currencies and b) consume significant amounts of oil tax the bejeesus out of its consumption; the tax, not the price of the oil, is the dominant factor in gasoline and heating oil prices abroad. Thus, the elasticity of demand to the core oil price there is fairly low.
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