Hitch on Hardball

Doug Henwood dhenwood at panix.com
Fri Oct 18 12:19:35 PDT 2002


Christian Gregory wrote:


>I was just assuming, perhaps wrongly, that if, say oil were no longer invoiced
>in dollars and ME countries no longer recycled their current account surpluses
>in US instruments, that could crimp Americans' styles seriously. Do you think
>that if the US were no longer clearly dominant power in the ME that oil prices
>and supplies wouldn't be seriously changed or disturbed? No short or medium
>term volatility?

There's a war premium in oil prices right now, but I don't think that it matters much for pricing who "controls" the oil. It's a global and mostly competitive market where prices are set by spot and futures traders. I think Chomsky is right that the U.S. is hot to "control" the oil for strategic reasons - for leverage over Japan and the EU, mainly. If oil were quoted in a basket of dollars, euros, and yen, it might have an effect on our economy, but not a major one. And an important reason it's quoted in dollars now is that this is the biggest market, and the best place to invest the cash.

Doug



More information about the lbo-talk mailing list