BCT Editorial – 3/27/05

This page was last updated on March 27, 2005.

Dollar daze; Editorial; Beaver County Times; March 27, 2005.

Below is a detailed critique of the subject editorial.

“One reason Americans are paying a lot more for gasoline these days is because of the weak U.S. dollar.

“Oil is priced in dollars, and the weaker the dollar the less foreign oil producers can get for their money. One way to make up for that is to charge more for oil.

“An example of the impact of the weak dollar popped up in, of all places, a story on the ‘80s English band The Fixx that appeared in The Times on Tuesday.

“The band usually tours about 100 nights a year, mostly in the United States. However, because of the devaluation of the dollar, the band now has to do about 120 shows to make the same amount of money.

“Foreign oil producers are doing the same thing: Because of the weak dollar, they are raising the price of oil to maintain the same buying power they once had.”

[RWC] Without getting into a deep argument of the pros and cons of a strong/weak dollar, it was entirely predictable the editorial listed the negative points of a weak dollar but failed to mention a positive aspect of a weak dollar. Just as a weak dollar makes the purchase of foreign products and services more expensive to Americans, a weak dollar makes American products and services less expensive to foreigners. This includes making the United States more attractive to foreign tourists. Even to American consumers a weak dollar makes American products, services, and travel more attractive than foreign products, services, and travel. That means increased demand for American businesses and possibly increased employment to meet that demand. I wonder why the editorial failed to note that point? If we had a strong dollar and the reverse were true with respect to business, it’s my opinion the Times would be screaming about it.

One other point the editorial failed to note is the inflation-adjusted price for oil is still far below its all-time high of the early 1980s.