Do Rising Fuel Costs Make US Imports Cheaper?

World Trade has had some great articles of late. Personally, I find it fascinating how a publication aimed at the trade and customs crowd can be of even greater benefit for procurement and supply chain professionals. But unfortunately, I don't think this compact trade rag is reaching many folks that own Spend Management issues within their companies. That's a shame, because World Trade has been serving up some great pieces in recent issues that are very relevent to procurement and operations executives. One of which is worth checking out examines the impact of rising fuel costs on U.S. trade and global sourcing.

In the article, the macro-economic analysis of oil prices and the demand for U.S. dollars should not be missed (I strongly encourage Spend Matters readers to check out the whole article on their web site, when it's available). But what is even more interesting are some more specific observations. For example, did you know that "U.S. imports, in general, will become cheaper with an increase in fuel prices? With the exception of oil and commodities that are sold exclusively for U.S. dollars, countries exporting to the U.S. will receive the same amount of their local currencies in exchange for the goods being exported. However, since the oil markets are conducted in U.S. dollars, and rising oil prices increase the value of the dollar, it takes less U.S. dollars to pay for those goods imported from other countries."

Fascinating stuff. Whoever said procurement and operations professionals should not study basic international trade economics?

Jason Busch

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