As the American government continues dealing with the economic crisis and failures of its major banks, the dollar and oil keep playing on the see-saw of life.  While the world was waiting with baited breath to see what the bailout package was going to look like, oil kept going down, falling to below $106 a barrel with the dollar rising against the Euro.  The up and down was thanks to the pressure being felt by the proposed $700 billion bailout drawing to a final decision.

A tentative agreement was reached Sunday, September 28, 2008 according to congressional leaders, but there are still questions being raised about it.  Currently, legislators want to know whether or not the rescue plan which will use taxpayer funds to buy up the toxic mortgage debt will solve the economic crisis in the United States.  If it doesn’t, then the country is headed straight into a deep recession that could take years and a lot of heartache on the citizen’s parts to get out of.

Light crude for November delivery fell to $106.25, a loss of 64 cents after falling 99 cents earlier.  On Friday the contract had settled down $1.13 at $106.89.  Prices have dropped 28% since July’s record highs of over $147 a barrel.  The economic crisis hurt the demand in the United States and other developed countries and it helped trigger the already unstable economy into the downward spiral.  Gas prices have been steadily going up since the 9/11 attacks in 2001 and the effects of Hurricane Katrina a few years ago.

Investors who traditionally flock to oil and other commodities have also felt the pressure.  They shifted gears and began investing in safer commodities that weren’t affected so severely by the financial crisis and moved away from the ones that were hedges against inflation and the weak American dollar.

Oil prices got some help from the United Nations who allowed Iran, who is the world’s fourth-largest oil exporter, to avoid new sanctions that were being placed on importing and exporting.  This helps the oil prices drop and exerted a modicum of relief at the pumps as gas prices dropped from over $4 a gallon to under $3.50.

With the dollar’s rise against the Euro and the Yen early Monday morning, the bailout decision is now looming.  Investors are hoping it will spur a rally in the American stock index futures, but at this point, only time will tell how the bailout will assist the ongoing crisis.