The U.S. dollar is tanking. Students are well aware our dollar is worth less and less when they go up to Canada for a weekend, study abroad in Europe or travel to Mexico for spring break.

Oil prices are continuing to increase every weekend, causing gas prices to hover around $3.10 - $3.30 per gallon

and OPEC's latest word wasn't promising.

People are starting to ask me what's going on with the U.S. economy. People want to know if we're entering a recession, what the job market is going to look like upon graduation, if the housing bubble is going to burst, when will gas prices stop rising and if we can expect the U.S. dollar to regain value.

While I cannot answer all of those questions, I will address the falling dollar and oil prices.

OPEC met in Riyadh, Saudi Arabia Nov. 18, 2007 for a rare meeting called together by the Saudis. At this meeting, President Hugo Chavez of Venezuela and President Mahmoud Ahmadinejad of Iran berated the United States for the high gas prices.

President Chavez said gas prices are high in the United States because of the weakened dollar — prices are now at $100 per barrel — and hinted that prices might rise to $200 per barrel if the United States attacked Iran or Venezuela.

Despite how hard the Saudis are working to reduce turmoil in OPEC's ability to deliver oil and to keep OPEC an economic coalition — and not a political one — gas prices are unlikely to fall. OPEC is also spending millions of dollars to promote safe carbon storage to make oil and the environment compatible.

Although many Americans despise the WTO and free trade, here is a classic example of where free trade could correct the gas prices: Gas prices sell in Venezuela $0.07 per gallon. Gasoline is so subsidized by President Chavez that the wealthy can afford Hummers and can fill the tank of an entire Hummer for roughly $1.50.

While President Chavez is all about populism and helping the poor in his country, his low gasoline prices are benefitting the wealthy, who own several cars, drive at their leisure and have access to gasoline cheaply. The poor don't own cars.

As for the economy, just like gas prices, things look bleak. The economists who have been predicting no recession finally threw in a cautionary note during Thanksgiving week about the slowdown of the economy. While GDP in the third quarter was 3.9 percent, the economy looks gloomy despite the high earnings.

The housing market has imploded. Housing prices nationwide have fallen by 5 percent in the past 12 months and residential investment has collapsed. A glut of unsold homes constructed earlier means housing prices will drop even further.

The housing market is a key player in the economy because houses are frequently used as collateral for credit and investment, without which people would spend less, invest less and lead to a stalling economy.

What is going on with the weakening dollar?

The logic is that monetary exchange rates are on a floating supply and demand graph with imports and exports. The higher value the money, the more something costs. And a country with a weaker currency won't want to import your stuff because your stuff is more expensive. So if the U.S. weakens its dollar, the logic is that we can make up for GDP growth through more exports.

The problem is, even with a weaker dollar, there is a lot for the economy to overcome. The increased GDP from exports is cancelled by the loss in consumer markets due to the housing market collapse and higher gas prices, which are squeezing consumers.

The biggest concern of the economic recession is the abandonment of the U.S. dollar. As the world is now depending on emerging economies as well as the U.S. economy, the U.S. dollar is less important to ensuring a stable global economy. This means the world has less of a need for the U.S. dollar, which used to mean everything.

It's hard to be uplifting with such a bleak economic forecast. The good news is many economists don't believe a recession will really hit and can be avoided. Other good news includes the newly emerged stability of the global economy, which can now better cope with a recession in America. Sometimes it's hard to be optimistic, but the truth is, the United States has survived some pretty bad recessions and it's doing OK.

[Reach columnist Sandley Chou at opinion@thedaily.washington.edu.]