Chavez Urges OPEC to DROP the Dollar

Venezuelan President Urges Group To Drop Dollar As Oil Pricing Standard And Warns Iran Attack Could Double Oil Prices

Venezuelan President Hugo Chavez warned the Unites States on Saturday that oil prices could more than double if Washington attacked his country or Iran - part of a provocative opening address here to a rare OPEC summit.

The Venezuelan leader also appealed to fellow members of the Organization of Petroleum Countries to join his crusade for social justice, saying the group should be "at the vanguard in the fight against poverty."

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But Chavez's comments overshadowed another controversial discussion, whether to drop the dollar as the standard for pricing petroleum, reports CBS News correspondent Randall Pinkston.

In part, the move was political -- to embarrass the United States, but there are also basic economics involved. The value of the dollar against foreign currencies is dropping, which in turn is one of the reasons oil prices are rising.

Some OPEC members, including Saudi Arabia and Algeria opposed the idea, which was put forth by Venezuela and Iran, fearing the move could trigger a recession in the U.S. and damage America's ability to keep buying huge quantities of crude.

"We would like to see the dollar, you know, stabilized," said Algeria's minister of energy and mines, Chakib Khelil.

Some economists say this talk signals global concern about the strength of the U.S. economy and foreign investor confidence in the dollar, reports Pinkston.

"If foreigners decide we don't want to hold dollars anymore, and they start to sell dollars for other assets like euros, that means that our dollars buy a lot less in the world," said Benn Steil, director of international economics at the Council on Foreign Relations.

Some analysts say OPEC's threat to ditch the dollar is a bluff, reports Pinkston. OPEC nations have billions of dollars in their reserves, and a sell off would hurt them, as well as the U.S., which buys more oil than any other nation in the world.

Chavez used his position as the summit's opening speaker to further his faceoff against the U.S. "We are witnessing constant threats against Iran," Chavez said. "If the United States attempts the madness of invading Iran or attacking Venezuela again, the price of oil is probably going to reach $200, not just $100," Chavez said.