Dominators Decline With Dollar
Paris was hardly empty of U.S. visitors last week. But there were far fewer American voices than in past years, and the ones you heard were saying things like, "It's so ex-PEN-sive!"
The U.S. dollar — which once carried the adjective "mighty" before it — is now a shadow of its former swaggering self. In 2000, one U.S. dollar could buy 1.21 euros, the then-new European currency. Now, one euro equals about 1.56 U.S. dollars. Another downhill marker was reached in March, when the combined gross domestic product of the 15 countries that use the euro passed that of the United States.
Oil is priced in dollars, so when the dollar tanks, our cost of oil rises. Had the dollar stayed on par with the euro, Americans would be paying $80 a barrel for oil, rather than over $140.
Because of the strong euro, Europeans haven't suffered nearly the energy-price shock we have. Furthermore, Europe was cushioned by years of national policies discouraging oil use, mainly through high energy taxes. Traffic jams on the highways feeding Paris rival ours, but the vehicles inching along are small and fuel-efficient. And plentiful public transportation keeps many people out of cars altogether.
Rising demand for energy in China, India and elsewhere have also forced up oil prices. That was predicted.
But even unexpected national crises weren't big enough to get Washington off its big rear end and push Americans to cut their oil dependency. The first Gulf War didn't do it, even though America sent half a million soldiers to liberate Kuwaiti oil fields from Saddam Hussein. Sept. 11, 2001, didn't do it, though petrodollars largely funded the disastrous terrorist attack.
Bill Clinton did try to raise vehicle fuel-efficiency standards and impose an energy tax in the '90s, but Congress stopped him. Despite all that happened before and since, the Bush administration has barely lifted a pinky to prepare the American economy for the inevitable surges in oil prices. Americans continued buying big cars and gigantic houses 30 miles from work.
And that's why Americans don't have money, and the Europeans do. It's why chichi New York stores, such as Bergdorf Goodman, are full of foreigners in ratty jeans saying, "Man, that's cheap," in 100 different languages. It's why Asians and Europeans fly to Minneapolis to shop at the Mall of America as though it were a bargain basement.
Now we know what it's like to be a weak-currency country. The airplanes that used to ferry middle-class Americans and a few rich Europeans across the Atlantic have become much more of a euro zone.
How far have we fallen as dominators of the world economy? Listen to this story:
Last Sunday afternoon, I landed at Boston's Logan International Airport on one of five jumbo jets from Europe arriving at the same time. The line for those holding U.S. passports was short. The lines for foreign-passport holders snaked along for an hour.
One aircraft was an Iberia Airlines jet from Spain and another, a Lufthansa jumbo out of Germany. They pulled into their gates right in the middle of the European Championship soccer match between Spain and Germany.
As U.S. Customs disgorged them into the terminal hall, the Iberia and Lufthansa passengers ran to the bar, where the single TV screen was tuned to the soccer game. (Spain won it by one goal.)
It happened that the Red Sox were playing at the same time, and during the soccer game's halftime, some Americans requested a switch to baseball. Request denied.
Imagine that. Sox fans overwhelmed by euro-waving visitors — and in the heart of Bean Town, too. It didn't used to be.