Petro Dollar
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PETRO DOLLAR
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USD earned by a country through the sale of
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its Petroleum to another country country.. Term coined coi ned in in 1973 – Ibrahim Oweiss
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Oweiss – economics prof at Georgetown Univ
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Recognised the need for a term that could describe the dollar received by OPEC in exchange of oil OPEC- org of petroleum exporting countries
Related Terms •
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Petro Currency – actual national currency of each petroleum exporting countries. Petro $ recycling – earning more money than they could feasibly invest in their economies. Phenomenon of – late 1970 & early 1980 – Peak years of Petro $ surpluses
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Petro $ Warfare – most oil sales throughout world – denominated in USD – countries’ constant constant demand for for $ - US govt govt gains revenues n is always in strong position – stronger USD – thus goods imported in US are very cheap. US enemies want oil denominated in euro n other currencies.
EFFECT ON INTERNATIONAL MONETARY SYSTEM •
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It should be noted, however, that this is not a simple zero sum game in which the loss of one side is the gain of another. oil-exporting nations, which depend mainly on oil revenues, must face a slowing down their internal growth rates. International liquidity is also affected by receding petrodollars, through a discontinuation of the flow of petrodollar deposits in the banking system of international internat ional money marke markets. ts.
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The most obvious economic effect is a negative inflation as rents and prices in general drop, as happened in Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates.
Another negative effect of the drop in the price of oil is the impact on alternative sources of energy energy.. It is also worth noting that the impact of receding oil revenues on unemployment in countries such as Saudi Arabia, Kuwait, the United Arab Emirates.
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Even with it revival of the price of oil in the ffuture, uture, it may take years to repair the economic damage.
