The Dollar, Oil and Italy

On December 29, 2000 I headed to Italy with a class of 20 students.   We started in Venice and headed to Florence and Rome, spending two weeks in Italy (and celebrating 2001’s New Years Day in Venice).   Earlier that month the Supreme Court stopped a Florida recount and ultimately ruled in favor of George W. Bush in a hotly contested Presidential election.  The Twin Towers of the World Trade Center still stood as New York’s primary landmark.   And although lira was still used as currency, the Euro had become the official standard for determining value, and a Euro cost 77 cents.   A gallon of gas was about a buck.   The students found Italy cheap.  The travel fee was $1200 for hotel, airfare, a rail pass and transportation to and from the airports.  With a good exchange rates people bought leather jackets in Florence and enjoyed fine restaurants.

On Monday I leave for my sixth travel course to Italy (I’ve also done two to Germany/Austria).    I led that first one in 2000 alone, but since then have co-taught the course with Steve Pane (Music History), Sarah Maline (Art History) and Luann Yetter (Literature).   We usually have 36 to 40 students, this year we have 42.   We’ve got the mechanics of the trip honed like a well oiled machine.   We know the hotels, we’ve come to know the cities (still Venice, Florence and Rome) well, have our favorite places to eat and know how much to plan for the students.   We have crafted and refined our seminars (some joint, but students can also choose between different offerings depending on their interests) and know how to help students create their own experiences.

We’ve learned lessons along the way.   We tell students now to NEVER bring dollars, dollar denominated travelers checks, or ever go to an money exchange shop.    Ever since the Euro came into being those places have jacked up fees and made the rate of exchange worse in order to make up for not earning money from European travelers.   Instead, use your ATM card or credit card, or perhaps order Euros from a bank here.   The only travelers check to use is a Euro denominated American Express check — and those can only be cashed at American Express offices (anywhere else you’ll get less than 90 Euro for a 100 Euro check).

We’ve also watched the dollar weaken and travel fares increase.   This year the travel fee is $2120, and it covers far less than was covered the first trip.   No rail pass for day trips; students will have to finance day trips on their own.   Air fare is significantly more expensive thanks to both oil and security costs which are tacked on as fees.   Students find their funds disappearing quickly as the exchange rate ends up being about $1.50 for a Euro.   And, while comparing the experiences of traveling with the dollar worth about half as much as it was ten years ago is a good story to help get students to understand the impact of exchange rates on economic transactions, no student has bought a leather jacket in Florence in recent years.

I usually handle the financial side of things and the logistics.  This year has been especially tough.  The Euro was at $1.33 when I started planning, and our initial quote for air fare was $870 on British Air (flying into Venice and back from Rome).   The first shock was after the unrest broke out in Egypt oil prices rose, and British Air tacked on an extra $100 fuel oil surcharge.   They said that more could be added, so we switched to Iberian Air, who would guarantee the price.  The student fees had already been set, so we couldn’t pass on the increase.   Then the dollar started to deteriorate as the European economies started to look stronger than the US.

I was smart enough to suspect the likelihood that the dollar would lose value, so I budgeted at a rate of $1.50 per Euro.  Yet losing $100 to a fuel surcharge meant that money for things like day trips, museum admissions, public transportation in Rome or perhaps a concert was contingent on exchange rates not reaching my budgeted “worst case scenario.”   Unfortunately, they did — and in an especially frustrating manner.   Most hotels and the trains had to be paid in advance, in April.   That means that even though the dollar has rebounded slightly in the last two weeks, its too late to help us on those costs.    Now it’s down to $1.42 — at least that would make life a bit easier on the students!

Taking a step back, thinking about how proud we are of this travel course we’ve put together and perfected over the years, I sometimes wonder how long we can offer it.   Visions of the dollar sinking below $2.00 a Euro, or oil jumping over $200 a barrel cause me to wonder if such a course won’t soon be out of reach for student budgets — especially students at a working class state school.

I sometimes wonder if Europe isn’t regaining a leadership role in the western world.  Despite crises in Greece and Ireland, most European states are handling the recession reasonably well, still produce as much as they consume, and have made strides in cutting debt.   True, Italy’s been hit hard by the recession — it’s debt is 115% of GDP, compared to the US debt to GDP ratio of about 75%.   Italy’s demographics show an aging society where a smaller work force has to pay pensions on a longer living and larger retired population.  Yet they and other European states have been more able to make reforms (raise the retirement age, cut pensions, etc.) than the US has, and there’s a sense that the future will see improvements.

The EU has met the Kyoto accord green house gas emission targets, and as such has become the world leader in green technology, which has also helped them weather the oil price increases.   New partnerships with China and Russia signal a break from the close US-European relationship in the past.   Similarly, the Obama Administration has shifted focus to Asia and the Mideast.

In Rome one seminar we’ll hold will be on Vico’s theory of history, and will broach the question of whether or not the US is like Rome.   Are we an empire in decline?  Or are we like Rome around 50 BC, a decadent Republic about to lose liberties and morph into an Empire?   Is the EU a future model of political organization, or will the demographic and economic problems within Europe create long term crisis there as well?  Or, perhaps, will the information revolution and technological boom — as well as the potential promise of the “Arab Spring” and globalization lead to surprise developments that will benefit us all?

For now, I’m just getting ready to walk 12 miles a day and enjoy wonderful meals — and cherish the experience of helping students learn about and discover the richness of Italy’s past and present.   Of all my life accomplishments, this course, mixing teaching, friendship with colleagues, helping students expand their horizons, and giving me the personal pleasure of frequently experiencing Italy (it’s cool to think I really do know my way around Venice, Florence and Rome) is one of the most meaningful.    So fmy blog will now switch into Italy mode — I’m not sure how much I’ll be able to blog during the trip (check February 2009’s blog for entries from that trip), but my mind is already starting its journey to Italia!

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