Demise of the Petrodollar: Gazprom's Possible Switch to Euros

[Kimura]

In another article I've read lately, the claim was made that goods and services in the US would spike by 25% if all those petrodollars suddenly returned home. Do you find that credible?

I have to disagree. Russia and China have been trading in Yuan/Rubles for oil and gas since 2010. It's part of their bilateral agreements. Iran also sells oil in Euro and has been for a number of years.

The US dollar is more dependent of the 17 trillion in real goods and services it’s producing, not some nebulous construct like the “petrodollar”. A nation’s currency is like a credit card tied to its production. The value is related to what our country produces and sells. This is why the Euro, Yen, Pound, Canadian Dollar, etc have value even though they aren't petrodollars, nor do they serve as reserve currencies in any capacity. This is a non-issue, it seems to get be a religion of sorts to the doomsday crowd, guys like Kyle Bass, Peter Schiff, and other glibertarian "economic experts". You'll notice 99% of these people gold bugs, metal nuts and monetary cranks.

What changes when the US begins exporting crude oil again?

"We’ve the news that the US is to allow some crude oil exports for the first time since the ban on them was set in place in the 1970s. This is good news as it removes an economic inefficiency (and removing economic inefficiencies is always good news) but it’s not going to make all that much difference to the nation as a whole. It’s really all a fight between the independent crude producers and the independent refiners. They, obviously, care about how this goes, crude exports or no crude exports, but it makes very little difference to the rest of us."

The US To Allow Crude Oil Exports; Not That It Will Make Much Difference - Forbes

There's also the fact that there has been a massive decline in US consumption of oil starting in the fist part of the previous decade. Demand destruction can take quite a bit of time. It did back the 1980s, but the data for Europe shows us there is an identical situation. We make up half of world consumption, along with Japan and Europe, but the IEA says that demand is increasing globally at around 1%. But we'd have to have massive increases in the developing world for this be the case. Some of the reputable oil analysts say that demand will be down this year, but they also say oil demand and any estimates are pure guesses and fantastical. I tend to agree. If this is the case, and with US production of liquids up over 500K barrels per day, we would assume the oil market would be in surplus.

 

[georgephillip]

I have to disagree. Russia and China have been trading in Yuan/Rubles for oil and gas since 2010. It's part of their bilateral agreements. Iran also sells oil in Euro and has been for a number of years.

The US dollar is more dependent of the 17 trillion in real goods and services it’s producing, not some nebulous construct like the “petrodollar”. A nation’s currency is like a credit card tied to its production. The value is related to what our country produces and sells. This is why the Euro, Yen, Pound, Canadian Dollar, etc have value even though they aren't petrodollars, nor do they serve as reserve currencies in any capacity. This is a non-issue, it seems to get be a religion of sorts to the doomsday crowd, guys like Kyle Bass, Peter Schiff, and other glibertarian "economic experts". You'll notice 99% of these people gold bugs, metal nuts and monetary cranks.

What changes when the US begins exporting crude oil again?

"We’ve the news that the US is to allow some crude oil exports for the first time since the ban on them was set in place in the 1970s. This is good news as it removes an economic inefficiency (and removing economic inefficiencies is always good news) but it’s not going to make all that much difference to the nation as a whole. It’s really all a fight between the independent crude producers and the independent refiners. They, obviously, care about how this goes, crude exports or no crude exports, but it makes very little difference to the rest of us."

The US To Allow Crude Oil Exports; Not That It Will Make Much Difference - Forbes

There's also the fact that there has been a massive decline in US consumption of oil starting in the fist part of the previous decade. Demand destruction can take quite a bit of time. It did back the 1980s, but the data for Europe shows us there is an identical situation. We make up half of world consumption, along with Japan and Europe, but the IEA says that demand is increasing globally at around 1%. But we'd have to have massive increases in the developing world for this be the case. Some of the reputable oil analysts say that demand will be down this year, but they also say oil demand and any estimates are pure guesses and fantastical. I tend to agree. If this is the case, and with US production of liquids up over 500K barrels per day, we would assume the oil market would be in surplus.

I haven't owned a car for over twenty years, but I still wonder if the oil market does show a surplus, would that lower gas prices in this country?

 

[Indofred]

I'm surprised that so few Americans grasp the significance of this story.

They aren't told about it.
No big news stories on CNN, or anywhere else except the financial press, but it's going to totally fuck America.

America's massive debt is nasty and would destroy the country, except for the influence of the petrodollar.
You've pissed off so many people, much of the world is rejecting dollar transactions, in favour of local currencies or gold.
More than 20 % of world trade is now done in non dollar transactions - basically, America is fucked - you just haven't worked it out yet.

 

[georgephillip]

I'm surprised that so few Americans grasp the significance of this story.

They aren't told about it.
No big news stories on CNN, or anywhere else except the financial press, but it's going to totally fuck America.

America's massive debt is nasty and would destroy the country, except for the influence of the petrodollar.
You've pissed off so many people, much of the world is rejecting dollar transactions, in favour of local currencies or gold.
More than 20 % of world trade is now done in non dollar transactions - basically, America is fucked - you just haven't worked it out yet.

I've heard prices in the US could rise by 25% if the dollar loses its reserve currency status; however, I don't understand Economics well enough to know if that's possible or not. I strongly suspect there is a reckoning (or two) in America's future after my government's recent bloodletting.

 

[Indofred]

I've heard prices in the US could rise by 25% if the dollar loses its reserve currency status; however, I don't understand Economics well enough to know if that's possible or not. I strongly suspect there is a reckoning (or two) in America's future after my government's recent bloodletting.

I'm far from an expert, but I read up on pieces by people who are and the gist seems to be:
America's national debt is far larger than its ability to pay it back.
That should mean the value of the Dollar in world markets should be far lower than it actually is.
The use of the Dollar for international trade keeps that value high.

If too many people stop using the Dollar, its value falls like a stone and the US economy is totally banjaxed.

BRICS, along with countries that trade with BRICS nations, are doing more and more deals in other currencies and, most importantly, non aligned nations are rejecting use of the Dollar. As I mentioned in another thread, Indonesia now bans Dollar use for all internal transactions; including port fuel. They're saving about 7% on all deals because of this, and that'll spread as other governments look at the model.
Even American ally nations, India, Saudi and Japan come to mind, are trading with BRICS countries in non Dollar transactions.
Saudi is probably the most significant, as they were the first country to adopt the petro dollar.
The transactions cost a lot more if they use the dollar, so many countries stopping; that and America has pissed a lot of people off.
Even small drops in use, if enough countries follow suit, will accumulate.

This explains a little

This one number explains how China is taking over the world - The Washington Post

Now, consider this, china holds about $1 trillion in US bonds, Japan has about $800 billion. China could probably deliver a smashing blow to the US if it dumped its holdings, but it won't.
America is China's largest customer so it wouldn't want to smash its own market, but it can nibble away bit by bit so there's no massive shock to the world system, more a gradual change, and that's what it's doing.

The Dollar isn't dead yet, but it is coughing up blood, and that'll eventually mean big problems for the US.

 

[georgephillip]

I've heard prices in the US could rise by 25% if the dollar loses its reserve currency status; however, I don't understand Economics well enough to know if that's possible or not. I strongly suspect there is a reckoning (or two) in America's future after my government's recent bloodletting.

I'm far from an expert, but I read up on pieces by people who are and the gist seems to be:
America's national debt is far larger than its ability to pay it back.
That should mean the value of the Dollar in world markets should be far lower than it actually is.
The use of the Dollar for international trade keeps that value high.

If too many people stop using the Dollar, its value falls like a stone and the US economy is totally banjaxed.

BRICS, along with countries that trade with BRICS nations, are doing more and more deals in other currencies and, most importantly, non aligned nations are rejecting use of the Dollar. As I mentioned in another thread, Indonesia now bans Dollar use for all internal transactions; including port fuel. They're saving about 7% on all deals because of this, and that'll spread as other governments look at the model.
Even American ally nations, India, Saudi and Japan come to mind, are trading with BRICS countries in non Dollar transactions.
Saudi is probably the most significant, as they were the first country to adopt the petro dollar.
The transactions cost a lot more if they use the dollar, so many countries stopping; that and America has pissed a lot of people off.
Even small drops in use, if enough countries follow suit, will accumulate.

This explains a little

This one number explains how China is taking over the world - The Washington Post

Now, consider this, china holds about $1 trillion in US bonds, Japan has about $800 billion. China could probably deliver a smashing blow to the US if it dumped its holdings, but it won't.
America is China's largest customer so it wouldn't want to smash its own market, but it can nibble away bit by bit so there's no massive shock to the world system, more a gradual change, and that's what it's doing.

The Dollar isn't dead yet, but it is coughing up blood, and that'll eventually mean big problems for the US.

"An announcement Tuesday by the obscure-sounding Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, may not get much ink.

"China's currency, it reported, was used in 8.66 percent of global trade finance transactions in October, the group said.

"It's now the No. 2 most widely used currency for trade finance, supplanting the euro.

"But that is a lot more important than it might sound.

"It gives an important window into how the global economy is changing--and why America's long reign of economic dominance is at risk."

China seems to be gradually shifting from an export economy to one more concerned with creating a middle class capable of driving domestic consumption. I'm sure that will be a slow process; however, it doesn't bode well for long term dollar prospects.

This one number explains how China is taking over the world - The Washington Post

 

[whitehall]

Is that good news or bad news to the radical American left?

 

[westwall]

Were it to happen....and another progressive idiot get the POTUS chair, then George Phillip and his clowns will get very hungry, very fast and the good old revolution they've been having wet dreams about will start.

Then they will be among the first to get killed because they are basically useless...so no one will feed them.

 

[Indofred]

Is that good news or bad news to the radical American left?

Pretty bad for all Americans but, if it happens, you'll find a fight between the extreme right and left.
As in most countries where quality of life goes down the pan, extremists step in, promising a return to prosperity and all the usual lies.

 

[georgephillip]

Were it to happen....and another progressive idiot get the POTUS chair, then George Phillip and his clowns will get very hungry, very fast and the good old revolution they've been having wet dreams about will start.

Then they will be among the first to get killed because they are basically useless...so no one will feed them.

Anyone delusional enough to confuse Obama with a progressive probably couldn't feed himself without a car to navigate the local drive-thru. Maybe you should roll down to the border and CAP a few (more?) starving kids?

 

[georgephillip]

Is that good news or bad news to the radical American left?

I suppose we won't know until the dollar loses its reserve currency status.
Should such an event transpire, I'm sure the bankers and their political and military drones will have the next "New Pearl Harbor" waiting in will call. If prices spike 25% across the board in a short amount of time, who do you think will catch the blame?

 

[westwall]

Were it to happen....and another progressive idiot get the POTUS chair, then George Phillip and his clowns will get very hungry, very fast and the good old revolution they've been having wet dreams about will start.

Then they will be among the first to get killed because they are basically useless...so no one will feed them.

Anyone delusional enough to confuse Obama with a progressive probably couldn't feed himself without a car to navigate the local drive-thru. Maybe you should roll down to the border and CAP a few (more?) kids?

Obama is a progressives wet dream. He wants to disarm Americans, give their money away to illegals, control their health care, control their pay, control their school lunches, control what they can say, control who they can associate with, control, control, control....

That's the progressive's mantra....control, then murder in vast quantities...

 

[georgephillip]

Were it to happen....and another progressive idiot get the POTUS chair, then George Phillip and his clowns will get very hungry, very fast and the good old revolution they've been having wet dreams about will start.

Then they will be among the first to get killed because they are basically useless...so no one will feed them.

Anyone delusional enough to confuse Obama with a progressive probably couldn't feed himself without a car to navigate the local drive-thru. Maybe you should roll down to the border and CAP a few (more?) kids?

Obama is a progressives wet dream. He wants to disarm Americans, give their money away to illegals, control their health care, control their pay, control their school lunches, control what they can say, control who they can associate with, control, control, control....

That's the progressive's mantra....control, then murder in vast quantities...

Do you remember what Mark Twain said about the difference between the almost-right word and the right word? It's the difference between the lightening bug and the lightening; consider: Obama is Wall Street's boy as the bug, the lightening starts with "B" and rhymes with Rich.

 

[whitehall]

Is that good news or bad news to the radical American left?

I suppose we won't know until the dollar loses its reserve currency status.
Should such an event transpire, I'm sure the bankers and their political and military drones will have the next "New Pearl Harbor" waiting in will call. If prices spike 25% across the board in a short amount of time, who do you think will catch the blame?

So, the strategy is that stupid Americans are conned into believing in the faulty science of global warming and relying on freaking windmills and gigantic solar panels while destroying the coal industry. Meanwhile the stealthy Russians control the real power of fossil fuel and dictate the economic future for the US which has slipped to 3rd world status while we weren't looking.

 

[georgephillip]

Is that good news or bad news to the radical American left?

I suppose we won't know until the dollar loses its reserve currency status.
Should such an event transpire, I'm sure the bankers and their political and military drones will have the next "New Pearl Harbor" waiting in will call. If prices spike 25% across the board in a short amount of time, who do you think will catch the blame?

So, the strategy is that stupid Americans are conned into believing in the faulty science of global warming and relying on freaking windmills and gigantic solar panels while destroying the coal industry. Meanwhile the stealthy Russians control the real power of fossil fuel and dictate the economic future for the US which has slipped to 3rd world status while we weren't looking.

Do you honestly think coal will save the world or speed its demise?
According to figures I see regularly, 97% of scientists believe global warming is both real and caused by human activity.

 

[whitehall]

I suppose we won't know until the dollar loses its reserve currency status.
Should such an event transpire, I'm sure the bankers and their political and military drones will have the next "New Pearl Harbor" waiting in will call. If prices spike 25% across the board in a short amount of time, who do you think will catch the blame?

So, the strategy is that stupid Americans are conned into believing in the faulty science of global warming and relying on freaking windmills and gigantic solar panels while destroying the coal industry. Meanwhile the stealthy Russians control the real power of fossil fuel and dictate the economic future for the US which has slipped to 3rd world status while we weren't looking.

Do you honestly think coal will save the world or speed its demise?
According to figures I see regularly, 97% of scientists believe global warming is both real and caused by human activity.

Actually I don't think the US coal industry has an impact on the world one way or the other but it employs a lot of good people and supplies a hundred times more energy than all the bird killing windmills and lizard frying solar panels combined. The point is that even the radical left seems to admit that fossil fuel energy translates to economic power.

 

[georgephillip]

So, the strategy is that stupid Americans are conned into believing in the faulty science of global warming and relying on freaking windmills and gigantic solar panels while destroying the coal industry. Meanwhile the stealthy Russians control the real power of fossil fuel and dictate the economic future for the US which has slipped to 3rd world status while we weren't looking.

Do you honestly think coal will save the world or speed its demise?
According to figures I see regularly, 97% of scientists believe global warming is both real and caused by human activity.

Actually I don't think the US coal industry has an impact on the world one way or the other but it employs a lot of good people and supplies a hundred times more energy than all the bird killing windmills and lizard frying solar panels combined. The point is that even the radical left seems to admit that fossil fuel energy translates to economic power.

There's no doubt by anyone I know that fossil fuel has translated into historic levels of economic power over the past two hundred years, but is it reasonable to assume those levels have come with a price tag we are just beginning to see. As I understand it, human beings are going to have to limit their energy consumption in the coming century or nature will do it for us.

 

[whitehall]

What's the point? Russia signed a 50 year treaty to supply China with fossil fuel and it seems that fossil fuel governs the economic future of Europe. WTF are we doing with bird killing windmills?

 

[westwall]

Anyone delusional enough to confuse Obama with a progressive probably couldn't feed himself without a car to navigate the local drive-thru. Maybe you should roll down to the border and CAP a few (more?) kids?

Obama is a progressives wet dream. He wants to disarm Americans, give their money away to illegals, control their health care, control their pay, control their school lunches, control what they can say, control who they can associate with, control, control, control....

That's the progressive's mantra....control, then murder in vast quantities...

Do you remember what Mark Twain said about the difference between the almost-right word and the right word? It's the difference between the lightening bug and the lightening; consider: Obama is Wall Street's boy as the bug, the lightening starts with "B" and rhymes with Rich.

If you haven't figured it out yet....so are the progressives. Multinationals figured out a long time ago that they needed you brainless types to fight against them so they could get government to pass all sorts of onerous laws that infringe on peoples individual rights.

You are such a one dimensional thinker....Remember this? This is your occupied clowns being coopted by the bankers and they are so fucking clueless they didn't even realize it....



Occupy Wall Street Divided - The Daily Show - Video Clip | Comedy Central

 

[georgephillip]

What's the point? Russia signed a 50 year treaty to supply China with fossil fuel and it seems that fossil fuel governs the economic future of Europe. WTF are we doing with bird killing windmills?

I'm probably one of the least qualified posters on this board to try and address this topic, but, as I'm sure you've already noticed, that's not enough to stop me from trying.

The windmills and solar panels and ocean tides may serve to power a paradigm shift from fossil fuel to nano-fuels:

"Over the past few decades, the fields of science and engineering have been seeking to develop new and improved types of energy technologies that have the capability of improving life all over the world.

"In order to make the next leap forward from the current generation of technology, scientists and engineers have been developing energy applications of nanotechnology.

"Nanotechnology, a new field in science, is any technology that contains components smaller than 100 nanometers.

"For scale, a single virus particle is about 100 nanometers in width."

Energy applications of nanotechnology - Wikipedia, the free encyclopedia

Maybe it's possible to manufacture complex hydrocarbons like fossil fuel molecules from six basic elements in large, industrial sized labs?