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US Buck and OPEC

In the Intermed I class this week I asked why gold was $800 and oil is about $100.  The answer is the low level of the US Dollar. This topic was proposed at the OPEC Meeting. No friends of the US, Iran and Venezuela, suggested that OPEC would do much better by diversifying out of the dollar, the low level is causing OPEC to lose money. Yet many Mid East economies are tied to American trade.  Sadam Hussein was threatening the same thing shortly before the US invasion of his country.

A move to the Euro would collapse demand for dollars, running the buck down even more. You will study currency transaction accounting in Advanced ACCT when companies bring earnings home from overseas.

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2 responses to “US Buck and OPEC”

  1. Amanda Wong Avatar
    Amanda Wong

    WOW! “Some OPEC members have said they will consider increasing transactions in euros. The dollar has fallen almost 15 percent against the euro in the past 12 months” that is crazy how the dollar can go down so quickly and down by so much..it is scary how a dollar today can not worth a dollar tomorrow and “The dollar’s share of global reserves fell from 71 percent in 1999 to 64.8 percent in the second quarter this year”…that is really not a good sign…will OPEC be forced to price its oil in other currency if this keeps happening so they wont be losing too much money?!

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  2. Dennis Elam Avatar
    Dennis Elam

    My guess is that Venezuela and Iran will continue to press for this, as OPEC members they may not be able to do this themselves but they will only be more emboldened as prices continue to rise. Over $100 why do they need OPEC anyway, OPEC was created to get the price up anyway, my guess is the V and I split from OPEC, adopt the Euro, and then pressure their trading partners Syria, Russia, Bolivia to do the same thing.

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