Coping with $60 Oil, in Euros and Pounds

World oil markets quote and sell oil in US dollars. In December 2005, world oil prices averaged $49.42 per barrel and the dollar was trading at $1.1861/euro. In December 2006, world oil prices averaged $56.13 and the dollar/euro ex-rate was $1.3205. The decline of the dollar and the strength of the euro over the last has benefited Europe as follows:

Priced in euros, oil in December 2005 was 41.66 euros, and in December 2006 was 42.50 euros, an increase of only 2% (in euros). Although the dollar price of oil increased by 13.5% over the last year, the appreciation of the euro by more than 11% over the last year insulated Europe from higher energy prices.

That is one reason that the world economy is coping so well with $60 oil, read more here.