Posted on 06/17/2024 5:56:50 AM PDT by Heartlander
The petrodollar agreement with Saudi Arabia began in 1974, two years into Joe Biden’s first term as a United States senator. It ended this week, a half-century later, during Biden’s first term as U.S. president.
Among all the news stories that matter, few rank higher than this. It’s bigger than President Trump and Hunter Biden’s convictions, bigger than jobs reports and inflation numbers, and perhaps even bigger than the southern border crisis. The end of the petrodollar is the end of the United States as the world’s lone superpower.
Yet it is barely mentioned.
Until last week, the petrodollar was America’s dominance of the global economy. It solidified the oil industry as a thoroughly American industry in which other nations merely partook. In the way Henry Ford didn’t invent the car but rather invented the automobile industry, which brought cars to the masses, American titans like Charles Pratt and Henry Flagler and the great John D. Rockefeller didn’t invent oil refining. They invented the oil industry, which brought petrochemical products to the masses. The oil industry is American, and as much as it exists around the world in places like Venezuela and the Middle East, it is because Americans led the way.
Oil, as a global commodity, is American, thoroughly utterly American, and as such is traded globally in U.S. dollars, as it should be. Until now.
Here’s an analogy to understand the currency of oil trades: You are on vacation in a foreign country and want to purchase something. The seller tells you in English, because everyone seems to speak English, it costs NNN pesos, euro, Canadian, etc. But if you have $20 cash, it’s a deal. It saves you a monetary conversion. It is even a better deal. It is a win for you and for the seller. In a small way, it is a “win” for America as the American dollar replaces the local currency. In that tiny, $20 transaction, buying a trinket for mom from a street vendor, America won.
That happened in the tens of billions of dollars with oil every day.
Although the number has declined in the past 20 years, still more than half of the world’s reserve currency is in U.S. dollars. The petrodollar has been a stabilizing currency for the world since the entire world needs oil. Every nation has had to convert its currency to the U.S. dollar, making it the de facto global currency.
Thanks to Joe Biden, it’s all gone.
Our national debt stands at $35 trillion, $9 trillion of which was added in the past three years. Inflation is cumulatively 19 percent higher than when Biden took office. The entire Biden administration has made punishing the oil industry a priority. If America, the world’s largest oil producer is actively trying to end the oil industry, then why would other oil-producing nations use our dollars?
It is logical Saudi Arabia, the world’s second-largest oil producer, looks at the American dollar with increasing doubt. It is obvious Saudi Arabia looks at the American president with increasing disdain. While campaigning in 2020, Biden called Saudi Crown Prince Bin Salman “a pariah” and demanded accountability for the death of journalist Jamal Khashoggi in 2018. Two years later, with oil pushing $120 a barrel and U.S. inflation at 9 percent, Biden went groveling to Saudi Arabia, fist-bumping an unsmiling Prince Bin Salman, asking the kingdom to increase oil production. He refused.
Saudi Arabia has every intention of surpassing the United States in the global oil market and has the reserves and the domestic policy to do so. The kingdom will now trade its oil in its own currency. India and China, two of the world’s largest oil importers, will now convert their domestic currency into Saudi riyals, leaving America out of the transaction.
The debacle mirrors Biden’s disastrous Afghanistan withdrawal: decades of work undone and dismantled in one brief instant because of incompetence and stupidity with nothing to show for the investment, work, and toil. Gone.
Wall Street investors have an acronym to describe stock market growth despite a weak economy: TINA. There is no alternative. Investors have to put their money somewhere, so they might as well buy stocks, and that action, despite not having any pro-stock market intentions, did in fact boost pro-market. The same can be said of the petrodollar. There is no alternative. If you wanted oil, and everyone needs oil, you bought the dollar, and that action, despite not having any pro-dollar intentions, did in fact boost the dollar.
The petrodollar forced countries to deal with America and thus deal with American values of free markets and rule of law. The petrodollar eliminated outright bribery and theft on the international scale, something that happens routinely with other commodities. Retailers label coffee as “fair trade” and diamonds as “ethical” to indicate their production did not violate human rights. No one had to label oil as such because oil was traded in U.S. dollars.
Eighty dollars of oil is not the same as 540 Chinese yuan oil or 7,217 Russian ruble oil or 300 Saudi riyal oil. And neither is the dollar as a global commodity.
What will replace the petrodollar as a global, commodities-based currency? Likely the Chinese yuan. The Biden administration’s radical push to “go green” has only strengthened China, as my organization, Power The Future, documented in a congressional report. I testified before the House Ways and Means Committee on this very issue, but rather than discuss it, House Democrats chose to call me names. I can guarantee you Rep. Bill Pascrell, D-N.J., an 87-year-old bitter partisan who wagged his finger at me over “mean tweets” rather than discuss his trillions in spending to buy Chinese wind and solar, has no idea the petrodollar ended. I can guarantee you the useless staffers in his office have no comment on the matter.
Biden wants to forgo the oil industry and replace it with the Chinese green industry for something climate change existential crisis … as he himself would say “you know, the thing.” It is only a matter of time until America is hooked on Chinese green the way Americans are poisoned by Chinese fentanyl, and then China asks us to convert our currency to theirs for ongoing purchases. As America built the Saudi and Russian oil industries, we are now building the Chinese green industry.
This from the same people who will tell us “America First” is a form of hate speech.
The collapse of the petrodollar should not come as a surprise to anyone who has watched the past three-plus years of Joe Biden at the helm. America’s sovereignty is compromised at the southern border. American values are polluted with pro-Hamas, rabid antisemitism on college campuses and our streets. American rule of law is bastardized by a politicized DOJ and FBI. The American dollar is diluted. The end of the petrodollar is another domino to fall.
Some things are reversible. A Trump victory in November can reverse many, if not all, Joe Biden’s disastrous policies on fossil fuel development. A GOP House can stop the transfer of trillions to Communist China for expensive, inefficient, intermittent wind and solar. But the petrodollar is gone forever, and with it, America’s role in the world is diminished. Saudi dominance with Saudi values will begin to rise, making the world a little bit worse.
NotSoFast!!! What other currency can replace the dollar? The wannabe tyrants want to hurt the USA more than help the world economy. But can they pull it off? We may end up with a underground petro-dollar. The dollar has been horribly mismanaged (on purpose?) by Biden administration, but what other nation’s currency has the world confidence to replace the USD?
It’s easier to destroy then to build and that’s what OBiden has been doing these past four years. The ultimate goal of his administration is to tear the United States down and put it on an equal footing with other nations. But the truth is, the vacuum will be filled by either Russia or China.
On one hand this seems significant but on the other hand, why do markets seem unaffected by it?
“The End Of The Petrodollar Is The End Of America’s Global Dominance”
So what, we took out a few thousand Russians in the process. Isn’t that all that matters?
The other side of the Petrodollar agreement is the USA would defend Saudi Arabia from the other terrorists. This is why there were U.S. bases on Saudi land for the first Iraq war. The Saudis saw the Afghan Debacle and figured they would have better defensive allies elsewhere. Now of course, if Trump wins the Saudis might want to work with Trump to renew the Petrodollar status.
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This will all change once the USA starts exporting oil again.
Russia is terrified of $50 oil. Their world would collapse.
American dominance doesn’t depend on petrodollars, but on the ideals that made America great. Things like free enterprise capitalism; a productive, can-do spirit; good moral behavior; and a willingness to discard evils like slavery and abuse of women.
Don’t have to replace it.
Just not use the dollar.
Pop quiz:
Which country is the world’s largest producer of oil?
OPEC is outdated.
A high dollar hurts American manufacturing. The end of the PetroDollar helps American manufacturing.
“Russia is terrified of $50 oil. Their world would collapse.”
Russians generally live in tiny apartments that have no place to store Chinese-made chattels hauled home from weekend SUV forays.
The Russian blocks of flats still stand.
Most of the cars still run.
The electricity flows.
The meat and bread come from Russia without regard to sanctions.
The ordinary Russian never saw a dollar or Euro from exported oil.
Not if Donald Trump is re-elected with a Republican majority in the House of Representatives and supermajority in the Senate.
>>>if Trump wins the Saudis might want to work with Trump to renew the Petrodollar status.
Agreed! The Saudis saw diaper Biden weak on the world stage.
Let’s not forget Biden’s desire to destroy fossil fuels for the internal combustion engine and promote EV’s.
“The end of the PetroDollar helps American manufacturing.”
Don’t worry Obama/Biden and the Democrats will make sure that increased taxes and regulations will wipe out any advantage that brings.
In the mean time, the value of our savings will be destroyed.
1 Barrel **** Saudi Reserve Note **** 1 Barrel
This instrument is good for one barrel of oil and its loading at points designated by Saudi Arabian law.
“Due to the discovery of silver in the American West, and surplus of that metal, in 1878, Congress authorized silver dollars as backing for U.S. paper currency. Known as Silver Certificates, these notes were backed by an equivalent dollar amount of silver deposited into the U.S. Treasury, and was payable to the bearer on demand for the note’s face value in the precious metal.”
https://uspapermoney.org/silver_certificate.php
Account #21214 didn’t roll over...
There might be a loading minimum of 5,000 barrel.
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