Challenging Believers to Think and Thinkers to Believe

Peak Oil and the Doomed Petrodollar System

There is nothing we know of now that carries so much energy per unit volume or per unit weight, as oil. Oil has become largely irreplaceable in today’s exploding global economy.

Yet, as the global economy continues to grow, credible sources are telling us that global oil supplies have peaked. The truth is, we have entered an era where global oil demand will consistently outstrip the global oil supply. This means one thing for oil prices: They will continue climbing higher.

In 1971, a deal was struck between OPEC and the U.S. in which every barrel of oil purchased in the global marketplace would be purchased in U.S. dollars. Therefore, any country desiring to purchase oil must first exchange their national currency into U.S. dollars. This ‘petrodollar’ system has created an artificial demand for U.S. dollars as global oil demand has increased. Today, several countries are moving, or already have moved, their oil sales or purchases into other currencies in spite of the dollar. When OPEC decides to denominate its oil sales in another currency than the dollar, the artificial demand for the dollar will decrease rapidly leading to massive inflationary pressures on the U.S. economy.

Insatiable demand from emerging markets coupled with uncertain oil supplies will lead to higher prices in the near future. Add to this the growing instability in Middle Eastern countries who dominate the majority of the oil supply sold to emerging countries and the lack of strong investment in long-term non-oil energy solutions and oil prices could reach jaw-dropping prices over the long term.



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"Christians and the Collapsing Dollar"
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