Recent Examples of petrodollar from the Web
Saudi Arabia’s young new crown prince has big ambitions: to kick the country’s addiction to petrodollars and ready it for the post-oil world.
The petrodollars earned by Gulf exporters during the oil-price spikes of the 1970s were deposited in American banks, which lent them incautiously to Latin American governments.
But shortly after Chávez died, oil prices worldwide collapsed and the petrodollars dried up.
Those heady early days of Nigeria’s space endeavors were bolstered by the influx of petrodollars into the Nigerian economy.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'petrodollar.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use of petrodollar
Financial Definition of PETRODOLLAR
What It Is
How It Works
Let's assume that country XYZ sold US$40 billion of oil in 2008. The money that country XYZ deposits into an American bank is called petrodollars. Country XYZ does this in order to earn the highest return possible on the money and perhaps later use it to fund infrastructure projects, combat budget imbalances, or other governmental initiatives.
A December 2006 study published by the Federal Reserve Bank of New York found that oil exporters use about half of their petrodollars to import goods and services (particularly from Europe and China), while they invest the other half in foreign assets (particularly in the United States). This is important because when oil prices are up, imports to the oil exporting countries go up, which stimulates the economies of the countries the oil exporters are buying from. Likewise, when oil prices are up, the oil exporters make more foreign investments, which tend to drive up prices of securities in the markets in which they invest. However, the reverse is also true. When oil prices are down, fewer petrodollars flow to foreign countries.
Why It Matters
Petrodollars are a good example of how one country's economic prospects affect other countries. For instance, countries that rely on petrodollars for economic stability can experience windfall gains when the price of oil increases. Likewise, they are hard hit by decreases in oil prices, which often causes foreign investors to flee the market and can ultimately prompt these countries to diversify.
[InvestingAnswers Feature: 3 Profitable Ideas to Offset the Rising Price of Gas]
Learn More about petrodollar
Seen and Heard
What made you want to look up petrodollar? Please tell us where you read or heard it (including the quote, if possible).