Posted on 11/22/2007 9:14:37 AM PST by PRePublic
Will OPEC Dump the Dollar?
BusinessWeek
Iran is pushing OPEC to shift away from pricing oil in dollars and instead to a basket of currencies that could include the euro. ...
http://www.businessweek.com/globalbiz/content/nov2007/gb20071120_087338.htm?chan=globalbiz_europe+index+page_companies
(Excerpt) Read more at businessweek.com ...
Ain’t gonna happen.
What makes you think they'll want a currency that is going over Niagara Falls in value?
You also forget that the economies of France and Germany are not on the most stable footing, either. That right there threatens the Euro, since the economies of these two countries more or less props up the currency.
Actually currency is only a medium of exchange and is converted into other entities right away. Nobody but Scrooge McDuck keeps currency around beyond walking around money.
That is a mistake. Oil fields are not magic holes that flow forever. An oil company that wants to maintain their level of production must keep drilling. And rates for rigs, equipment and material are skyrocketing.
That is part of what got us in trouble in the first place. Exploration and Production was scaled way back from the late 90's when oil prices dropped so low. Very little was done to provide the oil we need today. The surplus production capacity fell very low and made the market more susceptible to upsets and speculation.
For the last few years, oil companies have been doing major exploration and expansions of facilities. But it takes a while to catch up, especially with a continued growing demand.
Currencies, all throughout history, have run in cycles. This will repeat itself yet once more in the next decade or so. Also note that USD tends strongly to firm up under a 'Rat administration and to soften up when a Pubbie is in office.
The subprime ''crisis'' will be done with by this time next year, if not sooner. Banks **always** shoot themselves in the foot, about once a decade. Sovereign loans in the 1970s, S&L fiasco-cum-fraud in the 1980s, hugely overcapitalising the 'Asian Tigers' in the 1990s, the list goes on.
no oil will not be traded in euros soon. simple because the EU has no interesst in a financial doomed USA.
This is probably way off but by crashing the US dollar’s value won’t that help to garner broader support to develop a North American Union with one currency. A Larger picture Ploy?
Ain’t gonna happen.
Correct. Too damned bad...
Some already has.
Iran acts on non-dollar oil transactions
http://www.presstv.ir/detail.aspx?id=31812§ionid=351020102
On the macroeconomic level, close to all of our oil transactions are being conducted in non-dollar currencies, the official said, adding, "Less than 20% of the transactions is being done in the Japanese currency, yen, while the payments for the rest are being made in the EU currency, euro."
In further clarification of the subject, Ghanimifard pointed out that currently the National Iranian Oil Company (NIOC) was receiving more than 80% of the payments for its oil exports in non-dollar currencies.
And meanwhile, Congress wants to block drilling practically anywhere and everywhere.
Yep, we don’t have a lack of resources, we have a lack of will to use them.
“oil will not be traded in euros soon. simple because the EU has no interesst in a financial doomed USA.”
I would not write the obituary for the U.S. economy just yet. Neither EU, nor any other country, is in any position to get into the driver’s seat.
Wrong, the price of oil is determined by the futures traders. That started in 1983 and is the bane of the oil industry. OPEC can influence it by adjusting production up or down, depending where they want the price to settle.
There is an estimated $10-15 premium now on pricing as a result of political unrest world wide. So oil would be about $80/barrel if Imanutjob and Chavez weren’t rattling their cages.
The oil companies would like nothing better than a 50-60 dollar stable price range on prices. They could make long range plans and stabilize their operations. Now it is feast or famine as it takes years to gear up once a bust hits and equipment is mothballed and people leave the industry. Hell, the last bust that hit the industry resulted in a lot of drilling equipment being sold for scrap. Chopped up and probably sent to China to be recycled.
It will not be immaterial when China, India, Japan, EU and US dump dollars to buy Euros.
Your dollar will look like the peso.
if ANWR were to come on line next week, we would still be importing OPEC Oil.
OPEC decides to stop drilling or lowers production, futures traders see this, get nervous and ... then what?
I would not write the obituary for the U.S. economy just yet. Neither EU, nor any other country, is in any position to get into the driver’s seat.
Some already has.
Iran acts on non-dollar oil transactions
http://www.presstv.ir/detail.aspx?id=31812§ionid=351020102
On the macroeconomic level, close to all of our oil transactions are being conducted in non-dollar currencies, the official said, adding, “Less than 20% of the transactions is being done in the Japanese currency, yen, while the payments for the rest are being made in the EU currency, euro.”
Their bidding for the futures contracts goes up.
In the U.S. the futures are traded at the NY Merchantile Exchange. A bunch of guys in the pit trying to bid on what they think the future price of oil will be based on many theories. Of course, almost all of them never take physical possession of the oil they are bidding on. They just sell their contract and whattaya know, they make a profit. It is a scam placed upon the American consumer by the big money houses on Wall Street.
There are two ways oil is placed on the market for sale. The futures traders and the contract buyers. Let’s say you got an oil well out in Texas and you wanna sell your oil. You can either place it on the futures market and take you chances or you can sign a contract with a local “collector”. The contract price generally runs anywhere from 2 to 6 bucks less than the futures price. You might not make as much per barrel but it is guaranteed price and they will take it every day, week, month, etc. The contract methond is what most producers use as it is safer and you don’t have to worry from day to day or month to month how you are going to get rid of your oil.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.