I am sure that everyone has heard, seen and even experienced the recent hikes in oil prices. It is so hard to believe that the United States, once an economic powerhouse that had the “last say” on almost everything, no longer is the main “driver” in determining oil prices. This is because the United States is no longer the single strongest market for oil prices. Also, the US has been experiencing a recession. These factors have allowed other developing countries, whose economy is growing at a much faster rate, to “step forward” and keep the prices relatively high, even with market clearing prices to help limit demand.

As I read CNN’s Article, Oil Muscles past faltering US economy, I started thinking about the Network Exchange Theory. The US, for quite a considerable amount of time, can be seen as central center of a social network. Thus, the US enjoyed the benefits of being the “center of the world.” If we apply the theory to the US when it was at its prime (in terms of economy), we can see that the US would have been the central node; it would have had the most power out of all the other nodes. The four major principals of the theory also applied to the US.

• Dependence: It can be said that some countries depended on the US as a source of value. One example is how the some countries depended on the US for resources.
• Exclusion: The US had the power to choose who it wanted to “be friendly” towards. It was to a country’s advantage to be on friendly terms with the US and it was probably devastating to be excluded by the US.
• Satiation: The US definitely made use of this principle. Many times, the US will only be interested in trading or doing business with another country if there was a major benefit for the US. The value of the deal was usually unequal and probably not as fair for other countries.
• Betweenness: Being the “center” of the world made the US a unique access point between many paths from other countries. That gave the US even more power and allowed the US to impose restrictions between other nodes if need be.

Now, due to a weak economy, the US seems to be losing its power in the social network because it no longer has the most power over the prices of gas. The US may have become less powerful in the social networks of nations, but only time will tell if the US will fall from being the central node of the world in the future.

The article discussed in this blog was from CNNMoney.com. The title was: Oil muscles pas faltering U.S Economy. It was written by Steve Hargreaves. A link to this article can be found at: http://money.cnn.com/2008/02/20/news/economy/oil_economy/index.htm