"Please don't drop the dollar!" 

On the left, U.S. Treasury Secretary Paulson...on the right, the Saudi Finance Minister; in the middle, (unseen) the value of your dollar. Paulson made a trip for one purpose, fear that more nations drop their dollar peg. The price of oii is rising for two reasons. One which Paulson spoke of, is demand. More buyers means that sellers can ask more money, that is, until buyers say no. (Like our housing market today.)

The other reason, and the most important today, is the dropping value of the dollar. Too many dollars means each one is worth less. For 60 years, oil across the globe has been priced in dollars. Nations must buy dollars to buy oil; ergo, there has been a steady demand for U.S. dollars. That is changing.

Paulson, and this administration, is afraid that more nations like Kuwait, will drop the dollar and accept other currencies for oil. Kuwait, among many others, did it last year, and saw their currency appreciate by nearly 8% against the dollar.

Smart move Kuwait.

http://afp.google.com/article/ALeqM5hLLlAl_g9VXJQGtGolKHK84ryWhg