Petrodollar

see also: Etymology of Petrodollar

One speaks about petrodollar to indicate a financial credit resulting from the royaltie S poured by the companies extractors with the governments of the countries where they extract the Pétrole.

The expression seems to be created in 1973 by Ibrahim Oweiss, professor of economy to the Georgetown University of Washington.

The emergence of the petrodollars is the consequence of the oil crises of 1973 and 1978-79. Following the blaze of the oil prices (which passes from approximately 1,90 USD the barrel in 1972 to 34 USD in 1981, and is in 88 USD today), the benefit of the oil-producing countries explode. This raising of prices is the direct consequence of the restriction of the offer of oil by the countries of OPEC, in reaction to the Guerre of Kippour of 1973 and to the Iranian Révolution of 1979. The massive surge of capital which results from it cannot be absorbed by the economies of the oil-producing countries. The latter then operate placements on the markets of the capital through trade banks, in particular bound for the developing countries of Latin America. It is what one called the recycling of the petrodollars.

The profit governments of these investments can then spend of the capital which does not correspond to their real solvency. And parallel to that, the consecutive Inflation with the rise of the price of the barrel of petrol is painfully felt in the European and American economies.

The reactions antiinflationnists in the industrialized countries are not made wait, and the monetary policies and budgetary become particularly restrictive. In particular, interest rates explode, reaching up to 16% in 1981. The Servicing the debt of the countries which had profited from the recycling of the petrodollars thus increase enormously, whereas the worldwide economy knows an important deceleration. The fall of the price of the raw materials will complete to insert the Pays in the process of development in a spiral of debt which they pain still today to leave.

The gigantic profits of the oil-producing countries are invested massively in the banks and money markets of the industrialized countries. They then lay out broad sums of petrodollars which they lend to the country South, hoping to benefit from their development: it is the recycling of the petrodollars.

See too

Geopolitical of economic oil
War by petrodollars ()

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