Chaos Magnet

OPEC hurt by weak dollar

Here's an interesting little example of how interconnected the world is. Today I read that OPEC appears ready to defend $60 floor on oil prices. Now, as somebody who has a 12 mile drive to the nearest grocery story -- each way -- this really bothers me, because I don't like paying $2.40 a gallon or more, but it's obvious things have been ratcheting up for a while. Prices spike until they're ridiculously high, people complain, and then they come down to where they started -- and gradually work their way up to where they were at the height of the spike, but nobody complains. (Unless you count general grumbling.)

But what I find interesting is this. High oil prices hurt the US economy, which weakens the dollar against other currencies. OK, fine. But most of that oil money OPEC is bringing in comes in as dollars, so as the dollar weakens, OPEC nations have LESS PURCHASING POWER with those dollars.

A bright spot in the discussion, I guess. :)

Technorati tags: OPEC | oil | finance | global economy | economy |

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