My wife told me something that was said during her bridge club today and I thought it bears repeating and discussion here.

A couple of the women at the club claimed that "Obama is the one causing gas prices to get so high."

I responded to my wife that I never cease to be amazed at how otherwise intelligent people can make such stupid comments. More alarmingly, I don't think they'd say such a thing unless they actually believed it. That's scary.

Here's my take on the gas prices. I'll discuss major variables, but all variables that impact on the price of gas.

I'd argue that "we", the citizens, voters and consumers of the U.S. are responsible for the escalation of the price of gasoline. I might even go so far as to say that the POTUS has very little to do with it. We're responsible because we've permitted, maybe even encouraged the profligate spending done by our government in the recent decade or decade and a half. What does that have to do with the price of gas, you ask?

Almost all the gas we consume in this country is produced from imported oil, mostly from the Middle East. The major oil-producing countries, who control 79% of the world's oil reserves, formed a cartel in 1965 called OPEC. One of their stated goals is to "Assuring the best means for safeguarding the organization's interests, individually and collectively with a view to eliminating harmful and unnecessary price fluctuations; giving due regard at all times to the interests of the producing nations and to the necessity of securing a steady income to the producing countries." One of the requirements established by OPEC is that all payments for oil be in U.S. dollars, not the currency of the countries buying and consuming oil.

But back to why our deficit spending and ballooning debt effects the price of oil and gasoline. As our spending deficits and national debt have grown, many of the countries who had loaned us the money to continue such spending have begun to reduce their purchases and holdings of U.S. debt. They have expressed concern over our fiscal condition to our government and have begun to withold loans very judiciously. Our central bank has had no choice but to print money to finance our spending. You'll heaqr terms like "increase the money supply" or "monetize the national debt", both of which are more polite terms for printing more money. Statistically speaking, in the last year or so our own Federal Reserve has been the largest single buyer of our debt, rising to the current level of about 40% of all debt issued. They buy the bonds we issue to pay for our own debt with dollars that they themselves print. A measure of how much of our debt our Fed is buying? The "assets" of the Fed--bonds and debt instruments that they own--have risen by almost a trillion dollars in the last year or so. Those "assets" that have grown so dramatically are our own bonds, bonds the Fed printed and then printed the dollars to buy them from themselves. If we were a family we'd say that we balanced our budget by borrowing from VISA to pay off the MasterCard bill.

The effect of simply printing more dollars is twofold. First, it reduces the value of the dollar. It also causes price inflation for all products and services sold in dollar increments. So, as you can see, the value of the dollar payments to OPEC for their oil would actually have declined as the result of the less valuable dollar...except for one thing. OPEC could see what was happening and decided to make "adjustments" so that the price of oil would increase at roughly the rate that the value of the dollars they were being paid for it declined. The way they adjusted for the declining value of the dollar was to pump less oil, thereby causing its price to increase.

From a statistical perspective, the coefficient of correlation of the value of the dollar and the price of oil is .7, a very high indicator that those two values are linked--when one goes down the other goes up, or vice versa.

Certainly increased worldwide demand has had some effect on the price of oil and gas as well. And so has new oil production from places like Russia and the North Sea. But the more important driver of oil prices has been the declining value of the dollar.

So who is responsible for the dollar's decline? Did it all happen since President Obama was inaugurated in 2009? No. Did it all happen as the result of the Bush administration? No. About all that can be said is that the decline of the value of the dollar began during the early years of the Bush administrations and has accelerated in the most recent 3-4 years. But is the POTUS, Bush or Obama "responsible for the increase in gas prices"? Decidedly not.

If any one group could be blamed--although even they are not solely responsible--it would be the last four or five U.S. Congresses. They are the ones who have authorized the spending that has lead to the current situation. If you want to go further in assigning blame, one could say that U.S. voters are responsible for their own gas price dilemma. They're the ones who sent the 535 people to Washington and they're the ones who have either demanded the spending or stood idly by as the level of spending has increased to unsustainable levels. The POTUS didn't do it...we did!

Now, how far do you think this argument would go with people who are convinced that "Obama did it"...even if they couldn't explain how he did it.