This is major news. Lately with U.S. politics in full swing, I have not found too much worthy news for posting. Now the summer is coming to a close, more interesting information is pouring out. It has been covered here before about different non-dollar trading blocks being created. This will be one of the final nails in the Dollar long-term.
The single most important aspect that has allow us to deficit spend over the decades is the fact that we have (had) the world reserve currency and most important was the Oil was traded almost exclusively in the good old greenback. It looks like that is now changing and it is changing with the most important player in this arena other that Saudia Arabia…. CHINA.
What is so crucial is that China produces goods for basically the entire world on a massive scale. That means there is DEMAND for Yuan, just like there is demand for Dollars. People need to pay Chinese suppliers with Yuan and if they can do it without exchanging them for Dollars first, this can significantly decease the demand for the currency and serious strengthen the demand for Dollar.
Another serious thought for any Geo-political guys / gals that read my blog, there are far fewer options for trying to enforce compliance with the Dollar regime that exists in D.C., Langley and New York. I believe this is China’s non-military way to force our hand to stop this massive spending spree we have undertaken since the crisis of 2007 to current. Time will tell if China are completely serious and has the resolves to stick to this. I thought you would find this interesting. Please post your comments below on this.
Examiner - On Sept. 11, Pastor Lindsey Williams, former minister to the global oil companies during the building of the Alaskan pipeline, announced the most significant event to affect the U.S. dollar since its inception as a currency. For the first time since the 1970′s, when Henry Kissinger forged a trade agreement with the Royal house of Saud to sell oil using only U.S. dollars, China announced its intention to bypass the dollar for global oil customers and began selling the commodity using their own currency.
This was insightful commentary with a serious conversation about the ratio of gold / dollar and oil prices. With large amount of debt issuance ahead to cover current budgets and long-term liabilities, it is almost “in the bag” that we will see higher prices ahead. We will see some major corrections along the way the will allows commodity prices to fall across the board then we will be talking about the doom of deflation (I actually think this will be needed to bring incomes and cost of living back in-line) then the bulls will come out again to pump it back up. Its a cycle but in the end, the trend is certain, higher prices for things you “need”, lower prices for “wants” (better production but not enough demand) and steady or falling wages and they will translate into the fore mentioned scenario.
We have too much debt in our system and not enough money to pay it off. Our track record on letting things default and fail not good, so the assumed course of action will be more support and debt to try and keep things smooth. This will not work because of the debt issue and the scarcity of money we have created with issue money as a debt instrument in society. This will be the defining issue we will tackle in the next 25-50 years and it will shape our society beyond that.
Forbes - Panic is in the air as gasoline prices move above $4.00 per gallon. Politicians and pundits are rounding up the usual suspects, looking for someone or something to blame for this latest outrage to middle class family budgets. In a rare display of bipartisanship, President Obama and Speaker of the House John Boehner are both wringing their hands over the prospect of seeing their newly extended Social Security tax cut gobbled up by rising gasoline costs.
Well here we go again, Oil prices are on their way up on more violence in Nigeria and fire at Sunoco (U.S. NE Refinery). On NPR this morning, they reported that an estimate came out that gas prices would rise 15% in 2010 alone.
With the economy still in recession or depression, depending on who you ask. Many projects where pulled offline as the oil prices dropped because they are operating at a loss at those low prices. It takes time to get those project back online so the time between getting them running and getting that product to the refiner. That can be a formula for getting increases on prices as there is more demand on the supply side of this energy equation.
News (CNN Money):
Oil prices rose almost 5% Monday after a fire at a major American refinery and violence in Nigeria renewed supply concerns going into the summer driving season.
If these numbers are correct, this is an impressive addition to reserves and this should be reflected positively on their stock. The only statement that was troubling, was that as the release reads, 1.1 billion barrels was from an oil sands project. What that tells me, is that the oil price will need to increase to make mining and processes oil sands a profitable activity.
Exxon Mobil Corp said on Monday that it added 1.5 billion barrels of oil equivalent in 2008, or 103 percent of its production for the year.
The largest U.S. oil company said that excluding the impact of asset sales, reserves additions replaced 110 percent of production in the year. It said these additions assume a long-term pricing basis, rather than single-day, year-end pricing.
I am not sure the benefit on probable and possible reserves, hopefully it will spur more investment in the sector but with that said, some investors might get duped by investing on numbers that are not the reality of what the energy company will really produce. The average price rule will give an improved outlook on revenue. If someone has a strong opinion for or against this, I would love to read what you have to say.
U.S. securities regulators adopted rules giving investors a more complete picture of the oil and natural gas reserves that a company holds, the Securities and Exchange Commission said on Monday.
Under the new SEC rules that are supported by the energy industry, oil and gas companies will be allowed to disclose their probable and possible reserves to investors. Current rules require disclosure of only proved reserves, but many companies provide all three.