Petro-dollar and oil price

[kathaksung]

556. Petro-dollar, the cause of Iran war (7/4/08)

People think the nuclear ambition of Iran is the reason for Iran war. That is only right on Israel's part. For US part, it is petro-dollar.

Removed breach of Rule 4. Do not post large amounts of text that are available elsewhere online.

[IMST]

And this has apparently been posted in its entirety over 6,400 other times:
http://www.google.com/search?q=%22US+dollar+is+appointed+currency+in+oil +trading.+Because+the+oil+trade+is+a+huge+business ,+a+large+amount+of+dollar+is+locked+up+in+that+tr ade.+That+money+is+called+petro%22&hl=en&rls=com.microsoft:*:IE-SearchBox&rlz=1I7GGLL_en&filter=0
Reported.

[timhau]

556. Petro-dollar, the cause of Iran war (7/4/08)

In case you missed it, we're in 2010 now. Iran has been in peace since 1988.

[kathaksung]

US takes advantage on Petro-dollars - a long term loan without interest.

US printed some green paper notes, call it dollar. US buys toys, shoes... from other countries with dollars. Other countries then buy food, planes from US with the dollars they earned. That's normal trade. Petrol dollar is different because other countries use it as payment in oil trading. Since oil trading needs large amount of money, and dollar is apointed as trading money, huge amount of money are reserved in bank for oil trading. That is petro-dollar. That's how US turns a piece of paper into a long term non interest loan bill.

It is just like US bought a house from Japan for one million dollars. Japan keeps that money in bank as payment for oil. Normally, US has to pay monthly mortgage for that house. But with petro dollar, US enjoys a house almost free. All its cost is the printing of green paper. US doesn't have to pay a penny of interest, as long as the principle. How long is that long term loan? As long as the dollar is appointed oil trading currency.

But now Iran refuses to accept dollars in oil trading. Japan has to change it into other currency. Theoretically, US has to take it back by merchandise. But US can't. It has a trade dificit already. US also has no enough gold or foreign currency reserve to exchange the petro- dollar back. What it does is to push up the oil price - let other countries to absorb the petro-dollar Japan dumped in the market. For example, when France has $50 million in bank for oil trading, how much does it need when the oil price goes up double? $100 million. Then the $50 million Japan dumped in money market is absorbed by France. So the doller can maintain its price and won't be depreciated.

US is a rich country partly because it enjoys a long term non interest loan. Oil trading is a big business. A huge amount of money is locked in it. In another word, what a big debt US has had? Since US spent too much and hasn't save something, when others want it to pay the debt, a trick to avoid payment is to push up the oil price. And the next step, as we all see, is to justify an excuse to start a war on Iran.

[Puppycow]

US takes advantage on Petro-dollars - a long term loan without interest. Yes. (Not strictly speaking but I take your point.)

US printed some green paper notes, call it dollar. US buys toys, shoes... from other countries with dollars. Other countries then buy food, planes from US with the dollars they earned. That's normal trade. Petrol dollar is different because other countries use it as payment in oil trading. Since oil trading needs large amount of money, and dollar is apointed as trading money, huge amount of money are reserved in bank for oil trading. That is petro-dollar. That's how US turns a piece of paper into a long term non interest loan bill. Yes again. (ditto)

It is just like US bought a house from Japan for one million dollars. Japan keeps that money in bank as payment for oil. Normally, US has to pay monthly mortgage for that house.No. If the US already paid Japan, it does not need to make mortgage payments.

But with petro dollar, US enjoys a house almost free. All its cost is the printing of green paper. US doesn't have to pay a penny of interest, as long as the principle. How long is that long term loan? As long as the dollar is appointed oil trading currency. Yeah, sort of.

But now Iran refuses to accept dollars in oil trading. Japan has to change it into other currency. Theoretically, US has to take it back by merchandise. But US can't. It has a trade dificit already.No. The US doesn't have to "take it back." Japan can just print yen like the US prints dollars. The trade deficit exists because Japan is not using its dollars to buy American products, it uses them to buy oil. Or saves them. Or buys other things from third countries.
The US would LOVE it if Japan and China would start using those dollars to buy American products. It would help create jobs.
US also has no enough gold or foreign currency reserve to exchange the petro- dollar back.The US doesn't have to give gold or foreign currency to holders of dollars. They can buy only what we're selling.

What it does is to push up the oil price - let other countries to absorb the petro-dollar Japan dumped in the market. For example, when France has $50 million in bank for oil trading, how much does it need when the oil price goes up double? $100 million. Then the $50 million Japan dumped in money market is absorbed by France. So the doller can maintain its price and won't be depreciated.

US is a rich country partly because it enjoys a long term non interest loan. Oil trading is a big business. A huge amount of money is locked in it. In another word, what a big debt US has had? Since US spent too much and hasn't save something, when others want it to pay the debt, a trick to avoid payment is to push up the oil price. And the next step, as we all see, is to justify an excuse to start a war on Iran.

The rest is all wrong. The price of oil is based on supply and demand. That's it! Other countries also use dollars because their own currencies are not stable. The dollar is more trusted.

BTW, says here that (http://www.cbsnews.com/stories/2008/04/30/business/main4057490.shtml) Iran stopped accepting dollars for oil in 2007. But if we go to war, that won't be the reason. It is because Iran wants to develop nuclear weapons and we don't want them to. That and other reasons we need not get into.

[Shrike]

Of course, the rest of the world is totally not dependent on oil. Fortunately.

[kathaksung]

The US would LOVE it if Japan and China would start using those dollars to buy American products. It would help create jobs.
The US doesn't have to give gold or foreign currency to holders of dollars. They can buy only what we're selling.

.

But US have not enough products to satisfy what Japan and China want, that's why it has a big trade deficit. Logically, the dollar is a debit note, US should exchange it with gold or foreign currency, but it has not that much reserve. That's why Nixon cancel the promise to change dollar with $32/oz gold in Nineteen seventies. And dollar devalued rapidly since then. Iran's action to abandon dollar in oil trading seriously hurt US. You can see from then the oil price generally keeps float around $70/barrel. The nuclear weapon is only an excuse. North Korea had nuclear test. It also threatens a war on US. Iran never does a nuclear test. It also says it has no intention to do so. Yet, North Korea got food aid from US and Iran gets a sanction.

Quote:
Obama keeps N. Korea off terror sponsor list

Feb. 3, 2010


President Barack Obama said Wednesday he had decided not to reinstate nuclear-armed North Korea to a list of countries that the United States considers state sponsors of terrorism.

Secretary of State Hillary Clinton last June had raised the possibility of returning North Korea to the list in reaction to recent nuclear and missile tests. Several Republican senators had been demanding such a move.

--------------

[kathaksung]

The price fluctuation of the oil is not supply and demand. It's US manipulating the oil price by oil reserve and future contract.

(1) "The former Fed chief also detailed how investors, rather than users of oil, have come to set the price of oil through purchasing futures contracts." Though Greespan use "investors" instead of "speculators".

(2) From supply side:

08-03-05. OPEC to maintain current production; blames US for economic 抦ismanagement?
Published: Wednesday, March 5, 2008 | 3:03 PM ET
Canadian Press: William Kole, THE ASSOCIATED PRESS
OPEC President Chakib Khelil told reporters the global market is being affected by what he called "the mismanagement of the U.S. economy," and that America's problems were a key factor in the cartel's decision to hold off on any action."

If the prices are high, definitely they are not due to a lack of crude. They are due to what's happening in the U.S.," Khelil said. "There is sufficient supply. There's plenty of oil there."
Though Khelil uses "US economy" instead of "speculators".

(3) From demand side:
Quote, "Shell CEO says record oil not due to shortage
Thu May 22, 2008 5:24pm BST


(4) What US Senate Committee found:

"The real reason why oil prices are rising

June 02, 2008
...........
The finding of US Senate Committee in 2006
In June 2006, when the oil price in the futures markets was about $60 a barrel, a Senate Committee in the US probed the role of market speculation in oil and gas prices. The report points out that large purchase of crude oil futures contracts by speculators has, in effect, created additional demand for oil and in the process driven up the future prices of oil.......
The report further estimated that speculative purchases of oil futures had added as much as $20-25 per barrel to the then prevailing price of $60 per barrel. In today's prices of approximately $130 per barrel, this means that approximately $100 per barrel could be attributed to speculation!...

*What is interesting to note is that the US strategic oil reserves were at approximately 350 million barrels for a decade till 2006. However, for the past year and a half these reserves have doubled to more than 700 million barrels. Naturally, this build-up of strategic oil reserves by the US (of 350 million barrels) is adding enormous pressure on the oil demand and consequently its prices.

[kathaksung]

Oil price rose when Iran abandoned Dollar as its oil trade currency. Time table:

(1) (Intention period)

In the end of 2006 and early 2007, the oil price was about $60/barrel. When Iran expressed its intention to use the euro for foreign transactions.
It was about $70/barrel in early July/07. In six months, it rose 10 dollars per barrel.

06-12-18. Iran scraps Dollar, takes on Euro
Mon. 18 Dec 2006
Iran Focus

Tehran, Iran, Dec. 18 - Iran's central bank will begin to use the euro for foreign transactions, replacing the long-established dollar system, government spokesman Gholam-Hossein Elham told reporters during his weekly press conference on Monday.

http://www.iranfocus.com/modules/news/article.php?storyid=9533(2)

Practising period.

From early July 2007 to the end of January 2008, in seven months, oil price rose from $60/barrel to $95/barrel. In this period, Iran completed its oil trading from dollar to foreign currency.
Quote, " Iran wants yen

July 13/2007 (Bloomberg) -- Iran asked Japanese refiners to switch to the yen to pay for all crude oil purchases, after Iran's central bank said it is reducing holdings of the U.S. dollar."

(3) Expand to future deal.

Early February 2008 to 7/4/2008, oil price was pushed up from $95 to $147 a barrel. That's a $50 dollars inflation in five months. Why I start this period from Februry 2008? Because Iran's Bourse inaugurated on Feb.17. When the oil customers of Iran have to buy the future contract by reserving more foreign currency in the bank, US has to push up the price, let other OPEC customers absorb the Petro-dollars dumped by Iran customers.

Quote, "Iran Oil Bourse to deal blow to dollar
Fri, 04 Jan 2008

The long-awaited Iranian Oil Bourse, a place for trading oil, petrochemicals and gas in various non-dollar currencies, will soon open.

Iran's Finance Minister Davoud Danesh-Jafari told reporters the bourse will be inaugurated during the anniversary of the Islamic Revolution (February 1-11) at the latest.

Some expert opinions hold inauguration of the bourse cold significantly devalue the greenback.

http://www.presstv.com/detail.aspx?id=37468&sectionid=351020103

08-03-01. Iran shifts oil sales away from dollar
Sat, 01 Mar 2008

Deputy head of the National Iranian Oil Company for international affairs says Iran has completely dropped dollar in its oil sales.
In an interview with The Financial Times, Hojjatollah Ghanimifard said that over the past three months, Iran has received 75 percent of the proceeds from its oil sales in euros and the remaining 25 percent in the Japanese currency, yen.

http://www.presstv.ir/detail.aspx?id=45397&sectionid=351020102

[The Don]

Is there some kind of timewarp here ?

You do realise it's 2010 and the sky hasn't fallen in. It's 30 months later and the oil price hasn't been subject to wild fluctuations.

In other words, what's your point ?

[timhau]

Is there some kind of timewarp here ?


Yes. Time does seem to bend in the proximity of very dense BS.

[kathaksung]

Is there some kind of timewarp here ?

You do realise it's 2010 and the sky hasn't fallen in. It's 30 months later and the oil price hasn't been subject to wild fluctuations.

In other words, what's your point ?

The attempt to have a war on Iran starts years ago. So far it failed to go through. Since the war effort is still on going, I describe it from the begining.

In last comment I talked about Iran intended to turn the oil trading from dollar into euro in December 2006. Did Iran deliberately do that? Read the following information in comment "468. Follow up to #467, #461 and #462 (2/20/07)"

On 1/15 and 1/20, I wrote #461 and #462, alleged that US had set up a Euro trap for Iran: If the December plot started, Euro would collapse due to the collapse of WANTA fund and the shortage of oil supply to the Europe. Iran not only would be bombed, but also suffered a huge loss in finance. On 2/1, an article proved the correctness of my analysis.

Re: "The War on Iran
Thursday, 01 February 2007
By Stephen Gowans

In Paulson's view, Iran is still a major player globally, and needs to suffer the same pariah treatment. (New York Times, September 17, 2006) In October, US Treasury Department officials banned US banks from facilitating transactions involving Iran抯 state-owned Bank Saderat. In January, the ban was widened to include another Iranian bank, Bank Sepah.

When Iran sells oil to a customer in Germany, the German customer asks a European bank to deposit US dollars into an Iranian bank account. The European bank then arranges for the transfer of US dollars from a US bank to an Iranian bank account in Europe. Paulson抯 ban prohibits US banks from transferring funds if Bank Saderat and Bank Sepah are involved. (New York Times, October 16, 2006) With oil sales denominated in US dollars, the aim is to impede Iran抯 ability to sell oil. The way around the US manoeuvre is to sell oil in Euros, something Iran has already begun to do. (New York Times, January 10, 2007)

This would seem to be a simple enough way of beating the US at its own game. It also raises questions about the prudence of compelling Iran to switch to Euros, since a change to Euros, if adopted by a number of oil-exporting countries, would push down the value of the US greenback. US investment banker John Hermann, a comptroller of currency in the Carter administration, wonders whether the US is shooting itself in the foot. (New York Times, October 16, 2006)

http://www.ichblog.eu/content/view/261/52/

In October 2006, US blocked the financial transaction between US banks and major Iran bank which forced Iran to turn on to Euro instead of Dollar in oil trading. Two months later, if the December plot succeeded, Iran would suffer a big loss in finance. The US investment banker John Hermann wonders whether the US is shooting itself in the foot then. He wouldn't have that puzzle if he reads my messages."

No others but US himself who forced Iran to turn on Euro. In December 2006 they set up a Euro trap. But the plot went soured. Since the process is irreversible, and the Feds is unwilling to raise the interest, to save the dollar, they have to push up the oil price. We the people have to eat the bad fruit planted by the Feds.

Government inside group created a situation to make war on Iran.

[The Central Scrutinizer]

Oh look! A new toy for me to play with! :)