Why is the value of our dollar connected to the price of oil?

I heard that when we went off the gold standard we tied the value of dollar to oil because we found a ton of oil up in Alaska. Instead of drilling up there we made a deal to buy foreign oil and tie our dollar to oil. We are keeping the oil off the coast of Alaska in reserve. I have heard there is as much oil up there as there is in Saudi Arabia.Why is the value of our dollar connected to the price of oil?
The value of the dollar is not tied to the price of oil, but oil is traded in dollars because at the time these things were standardized, the dollar was the only effective reserve currency around, since Europe and Japan were still recovering from WWII and all that.





This means a couple of things:





(1) Other countries need to keep a supply of USD to pay for oil. This creates additional demand keeping the value of the USD artificially high.





(2) If people expect the value of the USD to go down, people will buy oil futures as a hedge against that. This artificially. drives up the price of oil.





As for the amount of oil in Alaska, estimates vary, but I haven't seen any that give anything even close to the amount in Saudi Arabia except from oil companies pushing a ';let us get rich and all your problems will be solved'; agenda.Why is the value of our dollar connected to the price of oil?
You shouldn't believe everything you hear. We ARE drilling for oil in Alaska; we are also pumping millions of barrels a day into the Alaska pipeline. We made no such ';deal'; such as you suggest, with anyone.





The dollar isn't ';tied to oil';--if it was, it would be the strongest currency on earth right now, and you or I could buy a new Mercedes for $500!!





Since no one knows how much oil is in Saudi Arabia, no one knows if there is as much oil there as in Alaska.
Here's my understanding on this from research, but you mostly have the answer yourself in your own question. The U.S. went off the gold standard in 1913. The U.S. gov. which could print money for ';free'; backed by gold let a private bank(s) known as the Federal Reserve Bank (which is not federal at all, it's just a a name) print our money basically out of ';thin air';. It's backed by nothing, that's why inflation has been so exorbitant since 1913 til the present. The more you have of something, the less it's worth. My understanding in a round about way is that the dollar is connected to oil only in that oil is traded in U.S. dollars world wide, that's the only connection. There is no real connection. I haven't put all of the pieces of the puzzle together myself, but who really has? Why do you think no one knows really why the price of oil goes up and goes down goes up and goes down! And as for Alaska, I believe you are correct, but don't even concern yourself with that now, because by design that will not come in to play for quite some time!
The dollar is not backed by a barrel of oil. If it were, the US Treasusry would have to redeem your paper dollars for barrels of oil, which they are not about to do.