The term was coined by Ibrahim Oweiss, a professor of economics at Georgetown University, in 1973. Oweiss felt there was a need for a word to describe the situation which was occurring in the OPEC countries, where it was entirely the sale of crude oil which allowed these nations to prosper economically and to invest in the economies of the nations which purchased their oil.

In the West, the word has been used to reference the large financial leverage the OPEC countries held until the turn of the century, and has been seen by some Arab politicians as offensive because it stereotyped OPEC producers as crude nouveau-riche nations interested in purchasing political goodwill. Considerable concern was being expressed at the time, particularly by the American media, that the American economy was in danger of being held hostage by the interests of some OPEC countries.

More recently, speculation has arisen that OPEC may switch from the US dollar to the Euro, inaugurating the Petroeuro. So far, OPEC has resisted this move although some OPEC members (such as Iran and Venezuela) have been pushing for a switch to the Euro. During Iraq's Oil-for-Food Programme, Saddam Hussein did switch to the Euro and some commentators claim this switch was another factor contributing to the 2003 Invasion of Iraq. As noted by Cóilín Nunan, "A move away from the dollar towards the euro could have a disastrous effect on the US economy" because the US's negative balance of trade is largely offset by its role as a reserve currency. On the other hand, the demand for petrodollars is a significant factor in increasing the US' trade deficit in the first place, and it also increases inflation. Given the general tendency for crude oil prices to rise and become more volatile in recent years, it may even be argued that crude oil trading may, in the long term, be a significant liability for the stability of the currency in which the trade is conducted.

Further reading

The hidden hand of American hegemony : petrodollar recycling and international markets / David E. Spiro. Ithaca, NY : Cornell University Press, 1999. xiv, 177 p. ; 25 cm. LOC call # HG3883.A67 S64 1999

See also

• Petrodollar recycling
• Petrodollar warfare
• Petrobourse
• Petroeuro
• Petroruble
• Monetary hegemony
• Petrocurrency

External links

• PetroTalk.com Portal for petro related Articles, Discussion, Links and more
• The Rise of the Petroeuro (excellent Republic article that articulates the relationship between the American dollar, oil, and American imperial hegemony)
• Washington Report
• Petrodollar or Petroeuro? A new source of global conflict, by Cóilín Nunan
• Petrodollar Theories of the War
• MP3 of interview with Carol Brightman author of "Total Insecurity: The Myth of American Omnipotence" in which Saddam Hussein's switch to the Euro is discussed
• A Look At The World's Economy (December 2000) from CBS News
• Petrodollar Warfare Interview with William R. Clark with Jim Puplava of the Financial Sense Newshour
• Colin Nuan story with chart showing syncronisation of Euro/dollar value and actions in Middle-East "Petrodollar or Petroeuro? A new source of global conflict"
• IMF warns trade gap could bring down dollar
• Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse
• History of Oil video done by Robert Newman A vaudeville type story which talks about petrodollar story in the context of the history of oil
• Collapse of the Petrodollar Looming