The financial media has almost completely ignored the massive rebound in oil prices this year.

(CNNMoney.com) -- Oil prices have vaulted above $78 a barrel this week as investors continue to fret about a weak dollar and the pace of the economic recovery.

When the news media has mentioned oil they've tried to paint it as a good thing - expected demand from a booming economy. Of course the general economy is not booming, or doing much of anything for that matter. Instead the real reason for the rise in oil prices is much more obvious.

The 1-week rolling correlation between the tradeweighted US dollar and front-month WTI crude jumped from 0.73, yesterday to 0.97 this morning; the greenback has emerged as the main driver for the front-end of the crude oil forward curve.

That's nearly a 1-to-1 correlation between a falling dollar and rising oil prices.

Of course the falling dollar isn't the only reason for the rise in oil prices.

"Crude oil has been enjoying incredible momentum and piggybacking on the stock market for the last several weeks, especially with the Dow going over 10,000 yesterday," said James Cordier, president of Liberty Trading Group.

Now some of you might think that physical demand for oil has something to do with the rising oil price. You would be wrong.

But demand for oil that has fallen in recent years in Organisation for Economic Co-operation and Development, or OECD, nations won't be made up, the analysts say.
"The economic downturn has been masking a larger trend in the oil demand of developed countries," said Daniel Yergin, the company's chairman. "The fact is that OECD oil demand has been falling since late 2005, well before the Great Recession began."

In fact, the world is flush with oil reserves right now. Oil tankers and storage facilities are brimming with the sticky stuff. Why doesn't that force the price to drop?
Because the value of the dollar is dropping faster. Simple as that. The Federal Reserve and Treasury, in their rush to bail out Wall Street, have sacrificed the dollar so much that an oversupply of oil becomes a non-factor.

If that wasn't enough, the rise in oil prices has not totally pushed its way all the way through the market. There is still a bottleneck at the refiners.

Refiners are running like they were hit by a hurricane and if you look at their margins for profit for doing business, they kind of were. This was the third lowest run rate of the last 10 years, excluding 2005 and 2002.
Refining profit margins have fallen 83% in the last nine weeks, a drop that has refiners just shutting down. If you can’t make a profit making a product why bother. And what is more it is likely that if demand and margins do not pick up soon we could see further cuts in runs and also in supply.

If the refiners can't make a profit then they won't produce gasoline. Since the price of oil is marching steadily higher the only way that is going to happen is if the price of gasoline marches higher even faster.