You may recall that Bush's economic policy, whatever that was, was based on his insistence that a "strong dollar" was the basis for all things American. The only problem is, that in order for a currency to be strong there has to be a basis for that strength.
The strength of the US dollar has been dependent, during the Bush administration, on it being held as a financial reserve and it being used as a primary trading currency. Oil is the commodity and for nearly half a century, oil was traded in US dollars.
Der Spiegel interviewed OPEC Secretary-General Abdalla Salem el-Badri and what he had to say should give everyone a moment of thought.
First is what OPEC thinks of high oil prices.
SPIEGEL: Mr. Secretary-General, the price of a barrel of crude oil hit the $100 mark for the first time in early January. While consumers are burdened with high prices, the producers are busy filling their pockets. Did you celebrate at OPEC on that day?Yes, well, there is the problem that there are still high prices at the pumps and from the trucks delivering diesel as home heating oil.
El-Badri: No, why should we? We are interested in reasonable prices. We want stability. Besides, the average price per barrel was $69 last year. Only a very small amount of oil was traded at above $100, and only for a very short time. It is a gamble. It was a single dealer who miscalculated and lost money as a result.
El-Badri : ... that is your interpretation. We also have the drop in the dollar value against the euro as well as the final bottlenecks in US oil refining. Then you may see any price.It's not here... it's there. What El-Badri is saying is that they are pumping as much as they always did. There seems to be a choke point at the refinery system in the US. Not to mention the fact that the US government, advised by whatever wingnut think-tank of the day says it's absolutely necessary, is filling old salt mines with crude which you will never see.
There is a nugget in this interview however, which should put the US government in a flat spin.
SPIEGEL: You paint a rather rosy picture. But isn't OPEC also affected by the diverging interests of its members? Wasn't there a substantial dispute at your last major meeting -- one that pitted Iran and Venezuela, with their ideas about high prices and their anti-Western agenda, against the "moderates"?
El-Badri : We leave politics up to the individual member nations. OPEC is an economic organization. Besides, it wasn't a real dispute. We speak with one voice. However, we did have a lively discussion in November over whether and how we should generally shift from the reserve currency, the dollar, to the euro for purposes of trading. Some of our member nations have enormous dollar reserves, while others sell in dollars and buy in euros.
SPIEGEL: And are you in favor of abandoning the practice of trading in dollars as Venezuela and Iran have demanded?
El-Badri : The euro is currently the world's strongest currency. A change can be made, but it will take some time. It took many years for the dollar to become a dominant currency in the oil business. But in the future it will not be that difficult to change.
While I wrote this, the above was Cheryl's work. She caught the Der Spiegel article and noted the salient points.