If the price of oil goes up, is this good for the U.S. economy?

Question

Is it true that oil can only be bought with U.S. dollars? If this is so, then is it true that the price of oil going up is a good thing for the U.S. economy? Wouldn't that increase the strength of the U.S. dollar?

Answer 1

It is not true that only U.S. dollars can buy oil. When oil prices rise it makes it profitable for oil companies to spend exploration dollars to look for the harder to reach oil and natural gas reserves.When oil prices are down it is cheaper for oil companies to buy foriegn crude, ship it to the U.S. and refine it into the products we use day to day. Oil companies employ thousands of employees and hundreds of thousands of contract labor in the U.S. and world wide, most of these people make very good money that is spent in the U.S. Most of the easy to access crude oil/natural gas reserves in the U.S. have been discovered and used up. No one begrudges Microsofts profits, or Walmart's profits, but when gasoline prices are up everyone jumps on the oil companies "exhorbarrant" profits. There are no companies, that I know of, in business to lose money. What is not highly understood is how much of those profits are, when oil prices are high, used to search for domestic reserves, whether it be high in the Rockies, out in west Texas or in 15,000 feet of water they are trying to find it, these searches are very costly and if you miss on just one oil well in 15,000 feet of water the cost are as much as 75 to 100 million dollars.Now take into consideration that all those people envolved in that search, engineers, drilling people, cooks, boat operators, support personnel onshore, vendors all get paid whether the well produces a drop of oil or a million barrels of oil.The risk are high, the returns are sometimes low, but without price support it doesn't happen. Chances are that no matter where you live in these United States someone you know personally is making their livelyhood from the oil industry either directly or indirectly.
Oil companies have huge endowments at many universities that educate our youth. I believe Americans outside of the industry should educate themselves on just how much our economy is driven by oil. Eventually we will become like Europe and pay very high gasoline prices forcing us to conserve and find alternate fuel sources. We will always need crude oil, because of the products that derive from it. We as Americans must reduce our addiction on foreign oil or we are doomed to another millinea of mid-east crisis. The middle east Iraq, Iran, Kuwait, Saudi Arabia have vast easy to reach reserves that will out live us all, but those very reserves enslave us to the despotic leaders of those countries. Same thing in Russia, parts of Africa and South America. We are the largest comsumer with diminishing reserves. China is beginning their Industrial Revolution, 2 billion people with a new economy that will be in competition for foreign oil.
Our children, grandchildren and Americanna as we know it are depending on us to do our part.

The short answers to your questions would be:
1)If the price of oil goes up, is this good for the U.S. economy? Yes
2)Is it true that oil can only be bought with U.S. dollars? No
3)If this is so, then is it true that the price of oil going up is a good thing for the U.S. economy? Good for the overall economy but not because oil can only be bought with U.S. dollars.
4)Wouldn't that increase the strength of the U.S. dollar? It puts the strength of the U.S. dollar in alot more people's pockets than you realize.

Answer 2

Higher oil prices do not improve the strength of the US Dollar. It only improves the profits of the big oil companies owned by the Bush Administration, the bin Ladens and several South American oil producers. The economy suffers under the weight of such prices.
When you have to pay more for it, then you have less to spend on other things, which in turn makes those companies (losers) experience loss while the big oil (winners) experience gains. This hurts the economy because only the few (big oil) are making the money and the others are not. No even playing field means chaos.

Answer 3

Why would you only be able to buy oil with US dollars? What about the Chinese, and those living in every other country on earth?

The answer is no, rising oil prices do not help the economy, only 1 sector if it--the oil industry. The rest is harmed because companies need to spend more on energy, meaning either less profits or increased prices, which in turn leads consumers to either rethink or reduce their purchases.

I personally budget $100 per week to spend on gas, food, entertainment, clothing, etc--(not very much, but its what I can afford). If I am spending $20 weekly on gas, that only leaves $80 for other things. If the price of gas goes up, I don't earn more money to pay that much more, I just don't spend on something else. So, while the oil companies are getting more money, that necessarily means another industry isn't. I'd probably buy less at the market, not buy some piece of clothing, or not eat out...so while one group is getting more, another is getting less.

Answer 4

No, why simply put the cost of oil is in everything. There is nothing you can buy that at one point or another have teh cost of oil in it. If it was shipped or something used to mak it was shiped your paying for oil. This means that it will drive inflation up which is never good.
Another problem with the rising price of oil is our most common substitue corn-based ethanol is being used is driving up the price of corn even faster then the price of oil corn is used in so many foods think about how many animals eat it, meaning that now we will have 2 factors driving up inflation very fast. So unless you like inflation going out of control and an unstable economy rising oil prices are not good.
However they have not reached levels high enough to make an unstable economy, and perhaps with the rising price of oil we will finally put the needed money into onvesting in alternative fuels, and investment always helps the economy in the long run so maybe it is good.
To add comment about the dollar you want a strong dollar but not to strong. To high a value on the dollar will make our goods more expensive to the rest of the world and would decrease the demand for our goods, meaning that we would trade less and import more being bad for domestic industry, which is already hurting in many sectors.

Answer 5

No, it removes disposable income from consumers so they have less to spend, which slows down the economy like a tax hike. What increases the strength of the dollar is an increase in interest rates. Foreigners will buy dollars if the rate is higher than they can get elsewhere which would put a demand on the dollar.

Answer 6

Not really, High oil prices, of course, impose a tax on consumers that erodes their spending power while impinging on businesses' bottom lines. The perception that the on-going oil price shock is more permanent tends to intensify its negative spending impacts. However, it is worth emphasizing that, after adjusting for inflation, the current price of oil is still well below the inflation-adjusted peak price reached during the oil shocks in the early 1980s. Moreover, the energy intensity of the U.S. economy is far lower than it was in those days.
Data during the late spring and early summer suggested that aggregate demand was stronger than had been previously thought, implying greater momentum in spending. Moreover, the data showed a drop in the pace of inventory accumulation, especially for autos. Therefore, most forecasters were predicting fairly rapid growth for the second half of the year, as firms rebuild their inventories, with a return to trend-like growth in 2006. This potential for a bulge in growth in the second half of 2005—with labor markets apparently already near full employment—was seen as raising inflationary risks.

Answer 7

No the only thing it helps is a few rich greedy bastard's wallets, the rest of the economy suffers b/c the prices of everything go up due to the prices of shipping going up from the rise in gas prices, there for less thing are being purchased and overall hurtint most of the economy execpt thoes in the oil business.

Answer 8

Raising oil prices will not make the economy better just like most everyone has said. It's making Bush and his people richer meanwhile they devalue your dollar and reduce production on oil. Why do you think you hear about refineries closing in the US? They are trying to put a limit on your use while increasing their profit. It is the demise of this country. You and I break our backs (Some of us melt our brains) to try and make a living but when needed Items like oil go up. Most of us just take it up the butt with no Crisco. It is painful for us to live like this.

Answer 9

I used to work at a gas station and when the gas prices went up, we had less customers for that period which meant less sales for each day. Although customers, mostly regulars, would still pump gas, their visits were non-regular. now if you expand this to a long period, you would drive the gas station to close due to lack of business. If the gas prices go up, then the prices for other services would need to go up such as Bus fare, Delivery fares, etc.
This would cause a great impact on the ecconomy because for that you would need to raise the minimum wage and well that's not gonna happen..and people won't be able to afford to travel, or simply buy a new car. So is a chain of bad reaction.

Answer 10

no that's false because when i went on vacation to Germany and had to buy some oil for my rented car i purchased it with the german mark.
yes... the price of oil going up is good for the u.s. economy if you are an american who owns a gas station, but other than that no.
no it will not increase the strength of the u.s. dollar because the paper it is printed on is too flimsy. maybe we should print u.s. currency on card stock if we want to increase it's strength.

Answer 11

No, the United States purchases oil with US dollars and the more we have to pay for oil the larger our trade deficits grow. The higher cost of crude oil is passed on to US consumers in the form of not only higher gas and home heating costs but higher prices for manufactured goods and services as well. For these industries rely on goods delivered by trucks who have higher operating costs and businesses who pay higher fuel costs for deliveries and stores with higher heating, cooling and lighting costs. So, it is not a good thing for the US economy.