OPEC Too Is Hurt by the Falling Dollar
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As a professor of international relations, I would give the Dec. 13 article, “Dollar’s Fall a Mixed Bag in U.S.,” about the impact of the U.S. greenback’s devaluation only a C-minus.
A B-grade essay would prominently mention that OPEC sells oil worldwide in U.S. dollars, meaning that a fall in the dollar’s value against the euro, pound or yen also means a fall in OPEC’s buying power in those countries.
An A essay would demonstrate how hundreds of billions in U.S. federal budget and trade deficits signal to OPEC that its dollar-linked oil is going to buy even less in Europe and Japan as dollars flood international currency markets.
An A-plus essay would relate how the Bush tax cut, by exacerbating those deficits and the fall of the dollar, compelled OPEC to raise prices, thereby swallowing up most of the fiscal benefits of the tax cut by gas price increases.
In the end, the Bush tax cut went to Saudi Arabia, which now has us over a barrel.
Larry Martinez
Assoc. Prof., Political Science
Cal State Long Beach
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