Where do you get the idea lower oil prices raises the cost of living? Price of lower Oil should drop the cost of living. {snip}
In Canada, the value of the currency is significantly dependent on commodity prices. The fall in the value of oil is responsible for a 20 cent drop of the $C versus the USD (and oil is priced in USD).
When the currency falls in value over the short term (a few years versus, say, versus the 10 year average when stable) there is not much in the way of trade benefits (lower export prices, thus increasing sales of said exports) ... things move much more slowly than that, so you don't get the exploitation of increased demand for exports by, say, building a plant to expand production.
At the same time, imports increase in cost. How long a period before that affects you varies. A significant portion of our food imports are perishables, so the cost increase can happen in a matter of days or weeks.
With the Canadian economy, as an individual consumer, the increase in import costs affects the food budget significantly while the lowering of the cost of crude oil does not result in a similar lowering of the monthly budget (the retail price of oil does not change in proportion to the cost of crude).
Have the airlines eliminated their fuel surcharges? No, they haven't. Many companies who need long-term price stability will buy what amounts to currency insurance to minimize price fluctuations. But with food this isn't possible; the contracts are too short-lived.
Taken together, the impact on the $C is higher than the impact of lower crude prices in the consumer's budget.
Although the above is specific to Canada, it works the same elsewhere. With the US Dollar, it's somewhat different, because as the dominant world currency the US is immune to some factors that every other nation would have to deal with. (Prior to WWII, it was the British Pound that was the dominant currency and probably before this century is over, it will be the Chinese Yuan).
In essence, a trade factor that might cause the Australian Dollar (for example) to swing in value abruptly might only alter the value of the USD slightly or possibly not at all. No-one else enjoys that protection, however.
It's a complex system. In the last decade or so we've seen where the $C has ranged from roughly $US 1.10 to $US 0.70. That's a big swing.
(Plus, you and I both live in 'toon, so we experience the same local economy. We live in the province that has the highest exports as a % of GDP, so our local economy benefits the most from a fall in the $C. Plus the nature of SK export production allows us to react quickly to take advantage currency value changes. Most places in Canada don't have it as good, they pay more for imports but earnings and jobs are much slower to materialize for export earnings).
Since this reply is somewhat off-topic, I won't be replying to any subsequent posts on the subject.
