How Foreign Policy Affects Gas Prices

by Rep Ron Paul

We’ve heard how the value of the dollar affects gas prices – and indeed the price of everything.  I was pleased that my request for a hearing on such was granted by the Financial Services committee and we were able to hear some very informative testimony.  Certainly domestic policies, regarding off-shore oil drilling bans, ethanol mandates, refining capacity, and CAFE standards are interventionist and harmful enough in the energy market.

But how does foreign policy affect gas prices?  One important factor is that oil on the world market has been priced in dollars exclusively since 1973.  Only two leaders have gone against this arrangement – Saddam Hussein in 2000 and more recently Mahmoud Ahmadinejad with the recently opened Iranian Oil Bourse which trades in non-dollar currencies. 

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