Summer’s here and the time is right for tourin’ but with gas creeping up near $3.00 a gallon in much of the United States, we’ll all be feeling the pinch when we gas up and prepare to charge off in search of music and merriment. But if my reading of the geopolitical tea leaves is at all accurate, we may not just be looking at a temporary squeeze at the pump, and may instead be facing a phenomenon known as Peak Oil, which will translate to most US citizens as a global war on terror that will last our lifetime (or the lifetime of our “empire”) and have as much (or more) to do with defending the security of our currency as it does with the security of our citizens.
In the wake of the Bush regime’s invasion of Iraq, more than a few people have taken to asking, “but, uh, wait, shouldn’t we at least be getting cheap oil as a result of the war?” After all, when the neoconservatives concocted their scheme to invade Iraq in 2003, many protesters were quick to claim, “It’s about the oil.” The Bush administration, of course, denied that they had their sites on the large Iraqi oil reserves and, instead, claimed that the United States and the rest of the feebly named Coalition of the Willing, were invading Iraq because the country had ties to Al Qaeda operatives who attacked the World Trade Center and because Iraq was harboring Weapons of Mass Destruction. In the years since 2003, both of those claims have been proven false and such documents as the Downing Street Memo even indicate that architects of the invasion of Iraq knew these claims were false prior to launching the war.
In the years since the invasion, I’ve come to believe that the claim, “It’s about the oil!” only tells part of the story. I believe that a more accurate explanation would state “It’s about the Petrodollars.”
From the end of World War Two until the present, the United States dollar has been considered the World Reserve Currency. The United States has had a staggeringly robust economy and has been at the center of early efforts by the World Bank to rebuild war ravaged Europe. Through the years, the United States Dollar (usd) was backed by gold and was the world standard for buying and selling many goods.
In the early 1970s, Richard Nixon unhitched the United States dollar from the gold standard, making the dollar a floating currency with no fixed exchange rate. Not long after, Nixon, working with Kissinger, worked out a deal with opec stating, basically, that the United States would lend its military muscle to defending opec nations if opec agreed to sell oil exclusively through US dollars. This agreement had many far reaching effects, but for the purpose of this article, the main effect I would like to focus on is that the US Dollar has been the sole method for purchasing oil. If non oil producing nations around the world want to purchase oil, they first have to secure US Dollars and then use those dollars to purchase oil. This has kept US Dollars in strong demand, in spite of having no gold to back them.
In the year 2000, a new currency emerged which challenged the US monopoly on petrodollars. The Euro emerged as a major world currency and opec nations that were dissatisfied with US politics began to consider selling oil on the Euro instead of the dollar. The first nation to announce that it would sell oil on the Euro instead of the dollar was Iraq.
Other nations to consider selling oil on the Euro include Venezuela under Hugo Chavez and, most recently, Iran.
In Iran, it was announced that there would be an “oil bourse” (or oil stock market) that would open in March of 2006, and Iranian oil would be made available to the planet for Euros instead of US Dollars. Predictably enough, the Bush administration began beating the drums of war and charging that Iran is the next major threat in the global War On Terror (or, as I prefer to think of it, War On Terra, the Earth.)
When the United States Army seized Baghdad and took control of the nation’s oil refineries, the first thing it did was declare the oil would be sold exclusively for US Dollars.
Only time will tell whether the Bush Administration will invade Iran in an attempt to prevent the nation from selling its vast oil reserves for Euros. What does seem certain is that if a major opec nation begins to sell oil on a currency other than US Dollars, the value of the US Dollar will be greatly undermined and the effects on the global economy will be far reaching.
In spite of rhetoric that the United States is a “liberator and not an occupier”, the reputation of the United States around the globe is that of a nation that will assert military strength in order to insure its economic future. This translates to leveraging its military might to secure the resources of the rest of the planet.
Should the US Dollar be undermined by one or more opec nations, the result will almost certainly mean a reduction in the value of the dollar and the potential of a huge international currency panic. The worst possible scenario of such a panic is China selling off its US Treasury Bonds and investing in Euros, but the ensuing economic chaos is great enough that a mass sell-off of bonds, while possible, is not likely as the upheaval is not likely to be to China’s benefit.
Many around the globe conclude that this chaos could be the necessary evil they need to embrace to curb the imperial ambitions of United States powerbrokers.
And in the meantime, oil industries continue to make record profits and we all continue to take a beating at the pump.
Perhaps this is all too academic sounding, but please consider for a second as you gas up your vehicle that $3.00 / gallon may not be the only way in which we are “paying too much” for oil. We are also paying with the blood of countless innocents on our hands.
As the world enters into a period of declining availability of inexpensive petro, we should also be cautious about the mechinations that our government will contrive to secure our standard of living. I, for one, don’t want to be the target of millions around the world simply because my government saw fit to assert military strength to take control of the world’s oil supplies.
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