The pricing of oil in dollars creates an incredible amount of confusion among people who should know better. For example, USA Today tells us that: "how long the weak dollar can support energy prices, if demand is still weak, remains to be seen."
This one deserves a big "huh?" If the dollar falls in value against other currencies, then other things equal, oil should rise in price measured in dollars. That would be necessary to keep it from falling in price measured in euros, yen, and everything else. If the dollar is falling in value against other currencies, then the dollar price of oil must rise just to keep it constant measured against other currencies. So even with some weakening of demand for oil, we should expect the dollar price to rise, if the dollar continues to fall.
It is also worth noting that oil is not necessarily sold for dollars. If the Saudi government signs a contract to sell oil to a European, Japanese, or Brazilian firm, it can agree to accept any currency it chooses. Generally this trade is done in dollars, but there is no rule that requires the trade take place in dollars and often it does not.
I’m writing to you today with a sense of urgency that I haven’t felt since I began my journalism career. As executive editor of The American Prospect, I’ve witnessed firsthand how independent journalism serves as a crucial bulwark against the erosion of our democratic institutions. Today, that role is more vital than ever. Can you step up today and show your support?
The winds of authoritarianism are blowing stronger. We’re seeing alarming signs of a coordinated effort to silence critical voices and undermine the very foundations that support progressive causes. As Bob Kuttner presciently wrote in our August 2024 issue, a weaponized IRS could attack the very foundations of the progressive movement. We need readers to step up and help us dig in for the long haul.
We’re falling behind in our spring fundraising campaign, and with so much at stake we can’t afford to come up short. If you value fearless, independent journalism that holds the powerful accountable and defends democracy, now is the time to step up. The American Prospect depends on reader support to stay in the fight. Pitch in today and help us close the gap. Please consider making a donation today.
–David Dayen, Executive Editor
Copyright 2025 | The American Prospect, Inc. | All Rights Reserved