Has the Petro-Dollar Had It's Day?
The main reason why the US dollar is the 'reserve currency' of the world is that oil has always been quoted in dollars, a trend that OPEC started in the early 1970s, thereby creating a permanent demand for dollars.
However, since 2003, Iran has required payment in euros for exports to Asia and Europe. In 2006, Putin announced a plan to start selling gas and oil to Europe in petro-rubles - as he said, selling oil to Europe in dollars makes as much sense as the US selling oil to Canada and demanding rubles! Venezuela and Norway are also threatening to move away from the US dollar for their oil exports.
So how much longer will the dollar be the reserve currency? What effect will a move away from the petro-dollar have on the US economy? What can or will the US do about it? And would such a shift be good or bad for the world in general?
Best Answer
546 points
warren answered one year ago …
Very good, that is the key issue to holding the dollar up. They are fighting a war, that will continue. Have you heard of the north american union yet? It's actually well on its way but kept very quiet. Can, US mex, as one. I don't like it and will not support it.
For the world it would be great to have a fair oil market, but not so for the states. Beleive me they will do everything in their power to hold this status but I don't belive they can.
Do you watch the TIC report? The only reason it's still slightly positive is to not rock the boat. Once, over time, oil is more readily accepted for other currencies countries will have no need for the US dollar. Have you read it is being rejected at tourist locations in India and Asia in general, they know the true value of it and are less accpeting of it these days.
The case study is the weimar republic even just through wikepedia, replace the war reparations with OTC derivatives and you may have history rhyming!
