Hello prof. Wolff, I've come across this expression, the 'petrodollar' as a device to explain the US-Saudi alliance, but I have not been able to find any information on it from sites or journalists I trust. I was hoping that you, as an economist, might perhaps have come across it before and can confirm or deny whether this is an important thing or even a real thing? Lots of love from Denmark.
Yes it is important. It basically refers to the dollars used to buy oil - long priced in dollars on international markets - and to the fact that these dollars were mostly then invested in US financial and other US dollar-denominated assets. This made all sorts of money for dealers in dollars (e.g. US banks especially) and also enabled the US dollar to function as a world currency while bringing the dollars back into the US from which they had issued originally. There might have been real costs had those dollars been used otherwise. So yes, these dollars were an important asset now being challenged as oil-producers and consumers are exploring non-dollar denominated oil pricing (such as certain mid-east countries are doing and as the new Russia-China oil deal entails).