I read some place (I forget where) that the Iraqi war was about the price of oil being measured in euro dollars instead of U. S. dollars. If that were so, what difference would it make whether the price of oil is in euro or U. S. dollars? How would it effect the economy? Keep is simple please.
This makes no sense. It’s not like it is very difficult to convert Euros to Dollars. We would neither profit or lose by changing the currency that a product is measured in. By the way, I do not know whether oil is priced in Euros or not.
First, there is no such thing as a euro dollar. The European currency is the euro.
Contracts for futures are made in currencies which are stable with respect to other currencies or which are stable with respect to the interests of the parties to the transaction. If both parties use the same currency then that is the one they will normally use, but otherwise they will find the most stable and widespread and that was the dollar for the most part. But the dollar has been falling quite a bit and so, it is possible that many contracts that were made in dollars are now being made in euros.
An example: if today the rate USD/EUR is 1 and I contract to sell oil at USD30 /barrel in six months to one customer and at EUR30 /barrel to another customer, then if the USD falls 10% in the next six months, I lose 10% of that sale when measured in Euros. As you can see, it mainly depends on your measuring unit which wuld be the currency you use the most.
It doesn’t only affect the profits of the companies but also the prices for customers. Especially when we are talking about petrol/gas where prices are changed from day to day. A weak or strong Dollar or Euro will have the influence on the costumer price.
See this Great Debates thread for why the answer is “no difference”.