by frog
I wrote a huge post yesterday trying to tie up a whole lot of interconnected issues, so I’ll try not to go on so long again today. Luckily Celsias has already done it for me with a very full article that covers the links between the traditional trade of oil in US dollars (also known as petrodollars), the arrival of peak oil, and the impending crunch that is about to hit both the US and global economies.
In a nutshell the story goes something like this. The US dollar is the world’s default currency. Most US dollars no longer reside in the US, but in other countries as part of the US’s international debt. But the US dollar is not tied to anything – it stopped linking to gold reserves 40 years ago. Now it floats along on the shared assumption that it is worth something. Part of that assumption draws from the fact that most of the world’s economy is based on oil and oil is traded in US dollars. But possibly not for much longer.
As the US dollar falls many oil mining nations (as Celsias says ‘people talk about oil ‘production’, but it’s not produced, any more than gold is produced. It is mined.’) are trying to transition towards trading in much healthier euros. The danger for the US economy if this happens is that the US dollar could collapse like a New Zealand cricket team middle order.
What is standing in the way of that happening is all those other countries that have an interest in the US economy not collapsing. The most obvious of these is China, who manufactures huge amounts of US imports and thus holds huge amounts of US dollars in the form of debt owed. If the economic balance shifts too far though it becomes a better economic decision for China swap its US dollars for Euros. If that happens the New Zealand tail order are up to bat.
Celsias argues that The US has two options; it can continue along its path with the increasingly tricky job of juggling its currency against the pressures of peak oil and massive overseas debt (a strategy which will require further military spending and pressure to keep other countries in line), or it can start to move immediately towards being a post oil economy before the crunch comes:
It is said that “direct US investments in the war, to date, could have paid for 100% of the renewable energy investments required for the coming 25 years to deal with global warming…” and “The $600 billion in direct appropriations for Iraq could have built over 9,000 wind farms of 50 mw capacity, with the total capacity to meet 25% of US electricity loads.”
on the trolls and those who are unable to keep on topic
The US will never give up the petro dollar not with out a fight.
Which is why no one will dare price oil in anything other than US dollars.
If a country started selling oil in something other than US dollars, then the US will go to the UN and tell the world that country is harbouring WMD and
launch a preemptive war of agression. Oh thats right they already did that.
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First Iraq started selling its oil in Euros. The US organised an invasion of Iraq.
Then Venezuela started selling some of its oil in Euros. The US supported an [unsuccessful] military coup in Venezuela.
Then Iran started selling its oil in Euros. The US government is now looking for reasons to invade Iran.
… maybe the other nine OPEC nations will decide its safer to keep selling their oil in US dollars.
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This explains the sabre rattling by Putin and China’s aggressive naval exercises in the vicinity of the US naval fleets stationed near Taiwan and Japan.
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What really triggered the war with Iraq was the fact that Saddam stopped dealing in dollars. Iran has stopped dealing in Dollars and has started an international oil bourse which deals in different currencies. It has called upon the other Oil producing Arab states to do the same. Russia is dealing in currencies other that the dollar, Japan an china have agreed to pay in other currencies then the dollar, Venezuela, Brazil have stopped dealing in dollars. The dollar is already no longer the de facto currency. The US is a walking dead man. The worlds food prices and oil prices are not going up because of increased demand so much as the fact that investment bankers such as John Key are speculating and buying and hyping the prices. Never before have oil companies made so much profit. Additionally the Federal Reserve is actively destroying the world economy by pumping irresponsible amounts of dollars in the collapsing financial system, causing world wide inflation which drives up food and oil prices even more. What we are watching at the moment is the US empire going Super Nova, and if we do not separate ourselves from it’s pending doom we are going to go with it.
I have battened down the hatches and returned to the land, to be able to grow my own and live sustainably I suggest you do the same. Gone is the old paradigm, enter a new one.
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For more information go to:
http://aotearoaawiderperspective.wordpress.com
http://crazyrichguy.wordpress.com
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travellerev,
Thanks for the links.
e
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Hi eredwen,
They are my own blogs, I’m happy you find stuff to your liking there.
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Here’s a link to the Bakken Formation story in NY Times
http://www.nytimes.com/2008/04/11/us/11oil.html?adxnnl=1&ref=todayspaper&adxnnlx=1207941876-dmsrBi8OKwLsp/PM6jhKtQ
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Rumors of war in the middle east.
The US has stock pile oil and the bombing of Syrias wmd (just hope the coverage doesn’t conflict with Te Karere.
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Were talking about those who don’t have sky here Frog.
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Not that I don’t enjoy Te karere . But I was enjoying following the embedded reporters on the Abrahams Tank (Man Stuff!) b4 TRV One switched.
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Everybody’s got sky. That’s why global warming is over everybody’s head.
You need to get outside more often.
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I’ve only got TV One and I don’t go out as Christchurch is too violent
http://www.radionz.co.nz/news/latest/200804131305/6bd1d08
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jh, Thanks for the Bakken story link. 4.5 billion barrels of economicly and technicly extractable oil according to the North Dakota Petroleum Council. Just 2% of the amount GWDenier was getting al excited about. It will take tens of thousands of wells to extract the oil, at $6 mill each. No wonder nobody bothered with the feild when oil prices were only in double digits.
The United States uses about seven billion barrels of oil a year.
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I live in a working class suburb of Christchurch. It’s perfectly safe to walk to the dairy or the doctors during the day. Stop reading the papers and listening to the radio and watching the TV news and you can live in blissfull ignorance of the violence because the odds are you’ll never experience any of it unless you go to the strip to get plastered.
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# Kevyn Says:
April 13th, 2008 at 5:45 pm
> Everybody’s got sky. That’s why global warming is over everybody’s head.
You need to get outside more often.
some people are so influenced by commercialism that they think sky is something you can only see on TV.
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The US won’t give up the petrodollar without a fight, for sure. The US government has already effectively declared war on Iran:
http://japanfocus.org/products/details/2707
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kahikatea, Sadly true.
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Here in the US the TV news networks love to hype up the fear and violence. Since i no longer watch any corporate news i don’t feel any fear.
I do watch the Fox comedy news channel for a laugh from time to time.
You have to love the news alert ticker which shows on the bottom of the screen. Oh and I miss the terror alerts they were so funny.
Note the fear affects people, last year i was getting out of the subway near grand central station and everyone was running towards me screaming into their cell phones to their loved ones that a bomb had just gone off and that the city was under attack. Nope turns out it was just a 100 year old steam pipe exploding. The US might want to spend some money on the 100 year old crumbling infrastructure instead of 1000 pound bombs and guns and super advanced fighter jets.
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It’s not just the violence; it’s the (weak) response people notice and that’s where the level of concern comes in, but that’s another story.
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turnip, the perception factor is well understood by traffic engineers. Placing a safety barrier on the outside of a curve reduces the risk that a crash will produce serious trauma injuries. That is all it does physicly. But psychologically it causes drivers to perceive the curve as dangerous and slow down more than they would if there was no safety barrier there. The result is fewer minor injury crashes. Originally the latter efect was unintended. Now that the phenomenon is well understood it is standard practice to make roads safer by making them appear more dangerous. Of course that requires an understanding of the average drivers level of ignorance of what makes a road safe or dangerous. The same thing is well understood by advertisers, the news media and successful politicians.
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