Uncle Sam and Oil! Interesting facts - PETRODOLLAR

Discussion in 'Current Affairs, News and Analysis' started by Rod924, Jan 11, 2006.

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  1. Rod924

    Rod924 LE Reviewer

    On Sky last pm - Iraq Conspiracy

    Pre 70's the US produced more oil than any other on the planet. Oil was bought and sold in Dollars only. This was a rather good move, as the 'funds' would eventaully sit in the US Fedreal Reserve.

    Then the Middle East found the black stuff and formed OPEC. Saudi was debating what currency to trade in, until Uncle Sam, said 'hey stick with the yankee dollar and we will sell you a shit load of arms and provide protection etc etc'

    So again, the US benefits from this, as the accounts are held in the US, effectively, a major slush fund for the US. Whilst Saddam was pissing the US about with his WMD, or lack of, the one thing that he really was annoying them with was selling Oil in Euros! All major contracts went to Russia, german and french contractors, to start work after the sanctions were lifted.

    Now we all know what happened, but, and this could be the scarey bit. The ****ing nutters in charge of IRAN, not only have said '**** you' to the free world by breaking the UN Nuclear agreement, they are looking at starting a new trading organisation in the ME, but trading in Euros.

    The US can no way afford to lose this revenue from OPEC, their economy would be really fcuked, therefore, it could spell the start of something horrid, if it has not already started. Tin Hats On?
     
  2. Saw the programme and it made interesting viewing, although I did take it with the proverbial pinch of salt (notably when the British fellow based in Washington claimed that America solely armed Saddam, which is factually incorrect whatever side of the argument one comes down on).

    The unfortunate fact is that without oil the Western world will quite literally bleed to death.
     
  3. Yup. Scary. I also picked up the other day that China is thinking of dumping some of its dollar (cash) reserves in favour of something else - the euro perhaps? If so, then it would appear that another thread is beginning to unravel slightly.
     
  4. Rod924

    Rod924 LE Reviewer

    Point noted, but that is why i have referred only to the Petrodollar. As with all these programmes, there are folk with their own agendas, but I do think that what I have selected seem quite factual.
     
  5. So, where in all this does Elvis fit in?

    Could be true. Sounds true but you're "nothing but a hound dog" if you think that oil wasn't a factor in the decision to go to war in Iraq. Shit, if rice or cloth caps were a major international commodity, then Uncle Sam would have invaded North Korea by now.

    However, Canada has tons of oil sands and its economically viable to mine it. Clinton last year went on the record in a visit to Calgary in October stating that he would prefer to import oil from Canada rather than the Middle East, so the Sky story might be a load of hot air.

    Who knows.
     
  6. Apparently - and I stand to be corrected - the United States actually acquires the majority of its oil supplies from non-Middle Eastern sources.
     
  7. Where the US gets its oil from is not the main problems though.
    It is the thought that the ca 2.4 trillion dollars sitting in foreign bank accounts, which are used at the moment to buy oil with, all being returned to the US at once.

    The US would go bankrupt in a very short period.

    Imagine if the US dollar was actually traded at the price it is worth if you remove the oil from the equation.
    The dollar would be worth about 50% of its present value. Not an idea the US pols like.
     
  8. The People’s Republic of China owns about $1 trillion of the USA’s foreign debt, a little over 40% of the total. This helps America’s internal economy as it allows the US Federal reserve to keep interest rates low, which sustains high levels of consumer spending and gives businesses access to cheaper investment capital.

    The downside is that it potentially gives the PRC power over the US economy. If they decided to sell off that debt cheaply to third parties, it would produce a crisis of confidence in the world financial markets. People would ask “If the debt is worth $1 trillion, why are the Chinese selling it for half that price?” The obvious conclusion would be that the Chinese no longer had confidence that the US would pay up, and a bad credit rating is as harmful to nations as it is to individuals.

    It’s also worth noting that the value of the US Dollar has been falling in relation to other major currencies such as Sterling, the Euro, Yen and Yuan. That actually benefits the US government and corporations when they pay their debts in those currencies rather than in US Dollars.
     
  9. I pass on the linked story as a matter of interest within this topic. I don't necessarily fully believe it.

    From the Associated Press.

    An official of the Bank of China recently asserted that China does not intend to sell off dollar denominated assets.

    "China Denies It Will Sell Dollars From Reserves" 10 January 2006
    http://www.msnbc.msn.com/id/10786898/from/RSS/

    I can accept that that is true for a limited period of time. I'm pretty sure that the Chinese government won't be e-mailing me to let me know when they've changed their minds. I don't believe that they intend to sit idly by in perpetuity while their biggest single reserve asset, the world's second largest portfolio of US Treasury securities, depreciates in market value.

    Also, the US Treasury needs continuous net Chinese purchases of Treasury securities to avert a decline in prices and the rise in interest rates that falling bond prices logically implies.

    It's not enough that they just hang on to what they've got. Washington needs them to continue buying more.
     
  10. Your guess is as good as mine.

    From Tehran Petro-Information Network:

    "Launching the oil bourse is not only a legal obligation, but also enjoys economic and trade logic. The oil bourse will reveal weaknesses of bank, insurance, customs, financial and administrative systems of the country and will made (sic) them correct those shortcomings.
    When monopolies imposed by institutions and companies are broken up, all people will be able to compare prices especially given the fact that entering oil bourse is, in fact, entering intense international competition on (sic) production and supply of oil, gas and petrochemical products at the lowest cost price. Domestic companies will have to improve their production processes and trim down extra costs in order to survive competition with other companies on the oil bourse. This will prepare oil industry directors before joining the globalized markets.
    The oil and energy course will be a full-size picture of oil trade in Iran. At present, a 500-page feasibility report on Iran oil bourse has been offered to minister of petroleum. As soon as the Bourse Council issues legal permits, the oil bourse will immediately start to work in Kish. Preparatory steps for launching the oil bourse have were taken since last year including preliminary studies, locating the bourse hall, purchasing software and other instances. The oil bourse is not on the verge of being launched."

    "Oil Bourse Helps Market Transparency" 16 July 2005
    http://www.petroenergyinfo.net/NewsView.aspx?GroupId=4&MnuId=5&NewsId=21858&Page=3

    I'm guessing that the word "not" appearing in the last quoted sentence is a typographical error and that the author intended to say "now."
     
  11. Newsweek on the production economics of the Alberta tar sands. It appears to me that their time has come:

    "Today's prices only make the investment easier to sell—crude futures recently topped $49 a barrel, more than four times the price in 1998. That kind of price jump makes all the difference in places like Alberta, where the cost of extraction is 10 times as high as in some Middle Eastern countries. Although Alberta is on a par with Saudi Arabian oilfields in terms of the sheer amount of oil trapped in the ground, nature has made that oil much less accessible. Both sets of deposits were formed over millions of years, as organisms fell to the bottom of nutrient-rich seas and were buried, before they could decay, under a sheen of sediment. Then heat and pressure slowly baked the mass of energy-rich material into oil. But whereas rock formed a protective layer over the fields of the Persian Gulf and Texas, the Alberta oil leached out, mingling with sand, rock and other materials on the surface. Separating it out is difficult and expensive—in Kuwait, it costs a mere $2 to get a barrel of oil out of the ground. It costs Shell $15 to produce a barrel from the tar sands of Alberta—which is why the reserves sat largely untapped throughout the 1980s and 1990s. 'The prime driver of what's being extracted is the cost per barrel," says John Gibson, president and CEO of Halliburton's Energy Services Group.'"

    "Digging Deep" by Adam Piore. 13 September 2004
    http://www.energybulletin.net/2053.html

    One possible problem: they use NG to create the heat required to separate the oil from the grains of sand. Price of that commodity has gone up quite a bit since '04 with no relief in sight.
     
  12. Excellent thread.
    Oil it's all about Oil.
    The modern world cannot exsist in it's presant state without oil.
    Oil has a finite life and will eventually run out.
    Science will find alternative lubricants but to power Mr. Average an alternative must be found and the decision to make it work must be taken soon.
    For Major Electricity Production, Nuclear is the only practical alternative. Not nice I agree, but I am of the opinion that Modern Engineering can make it work.
    The USA took years to strangle the £, a couple of World Wars helped.
    Is Bush's Arabian Adventure the first step toward the end of dominace of the $.
    Oh that will happen.
    As I said many a post ago we are now watching the Decline and Eventual Fall of the American Empire.
    john