“Economics of Petrodollars”, Ibrahim Oweiss1974-03-01 (, ; backlinks)⁠:

The placement of petrodollar surpluses of the Arab oil exporting nations in the United States may be regarded politically as hostage capital.

In the event of a major political conflict between the United States and an Arab oil-exporting nation, the former with all its military power can confiscate or freeze these assets or otherwise limit their use. It can impose special regulations or at least use regulations for a time, in order to attain certain political, economic, or other goals. It may be argued that such actions are un-American, since they are a direct violation of the sacred principles of capitalism and economic freedom. Nevertheless, the US government resorted to such weapons twice in the 1980s against Iranian and Libyan assets.

It follows, therefore, that governments placing their petrodollar surpluses in the United States may lose part of their economic and political independence. Consequently, the more petrodollar surpluses are placed in the United States by a certain oil-exporting nation, the less independent such a nation becomes.

…The revolutionary oil era of the 1970s [eg. 1973 & 1979] was unique in the history of Third World countries. To study it, therefore, that is, to help describe the new phenomenon and cast some light oil its ramifications, requires an innovative approach and a new terminology.

This paper addresses the economics of petrodollars and petrodollar surpluses, which have so far had two major peaks, in 1974 and in 1980, after which they tended to decline gradually at the beginning but sharply afterward, following the substantial drop in the price of oil since the last quarter of 1985. This paper also presents a contribution to statistical demand theory based on the demand for oil.

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Economics of Petrodollars