Serves me right for blogging while on the phone. I excerpted the wrong part. First from my Productivity Guy:
Jonah – Your quote from Feldstein stopped before you got to the part that was most relevant to your question. His article goes on to say
I don’t think the quote from Martin Feldstein addresses the question you asked. You asked whether drilling for oil in the USA would affect the price of the dollar. Feldstein addressed the question of whether denominating oil prices in dollars (or euros) would affect the real price of oil. The two questions are only distantly related.
To answer your question: Yes, all things being equal, producing more oil locally would increase the value of the dollar. (With the very large caveat that “all things” would never be equal.) Producing more oil locally would, over time, reduce our trade deficit. Over time, a lower trade deficit should result in a stronger dollar. The problem for economists and investors would be in determining how long it would take for the expected result to manifest itself.