Oil, The US Dollar, and the Middle East

This week’s Georgia Straight had an interesting article by Braun McAsh about the connection between the US dollar and oil.

My understanding is that oil has always been bought and sold in US dollars only, creating a substantial global demand for the US dollar and keeping the dollar’s value high against other countries’ currencies.

Shortly before the US invaded Iraq, Iraq had started selling their oil for Euros too. Iran started selling their oil for Euros on March 23, 2006, which is why they are now on the US radar according to McAsh.

Here’s a link to the article, which is much clearer than the blurb I’ve written here:

Military action may halt currency meltdown

By Braun McAsh
Publish Date: 4-May-2006

Let’s imagine that one morning you awake to find that gasoline is $10 a litre at the pumps. The Canadian dollar is worth half the U.S. dollar, which itself has been seriously devalued against other currencies. Any product that requires gas to transport to market now goes for 10 times its previous value—$12 for a head of lettuce, for example. Absurd? Consider the following.

Link to the rest of the article