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Petro-Dollars: Why the U.S. Must Keep the World Hooked on Oil

By James Wilson

Our reason for being in Syria has nothing to do with “humanitarian” efforts, or Russian “aggression”, or spreading the shining light of democracy throughout the world. It’s the usual suspect; OIL.

deffcts-01In 1971, Nixon detached the dollar from the gold standard, and in order to keep the dollar from collapsing, they effectively attached it to the sale of oil (mainly from Saudi Arabia). Large purchases of oil by countries are required to use the dollar as currency (hence the name, “petro-dollar”). This provided and continues to provide a high demand for the dollar, so it’s value remains high and stable.

China and Russia are challenging that association. They want to establish a supply of oil based on an alternate currency. This would erode the value of the dollar, and the U.S.’s geo-political influence world wide.  Ultimately, such devaluation could lead to the de-crowning of the U.S. dollar as the world’s reserve currency.

Additionally, many analysts point to an additional reason for our involvement in Syria.  It is also related to our seemingly eternal quest for fossil fuel hegemony.   With a Russian and Syrian partnership, an oil pipeline can be run from Russia, the second largest oil producing country in the world, through Iran, Iraq, and Syria, to a shipping port on the Mediterranean Sea.  This would allow oil to be shipped directly and economically to Europe through countries that are not in the control of the U.S. and U.S. allies.  It would compete directly with oil delivered to Europe through U.S. friendly countries, such as Saudi Arabia.  The reader can get more detailed information about these competing pipelines at these links:  LINK 1,  LINK 2.

QatarTurkeyGasLine_01

Note the purple line which traces the proposed Qatar-Turkey natural gas pipeline and note that all of the countries highlighted in red are part of a new coalition hastily put together after Turkey finally (in exchange for NATO’s acquiescence on Erdogan’s politically-motivated war with the PKK) agreed to allow the US to fly combat missions against ISIS targets from Incirlik. Now note which country along the purple line is not highlighted in red. That’s because Bashar al-Assad didn’t support the pipeline and now we’re seeing what happens when you’re a Mid-East strongman and you decide not to support something the US and Saudi Arabia want to get done. (Map: ZeroHedge.com)

 

Syria has become the stage where this drama is playing out. If Russia dominates, they will gain major influence in the region, and with it the associated oil supply and potential pipeline through Syria.   The U.S. is determined to preserve its present military profile in the region, and to do so is working hard to overthrow Assad by destabilizing the country with the U.S. supported (and some say instigated) “civil war”.

We are also very busy these days ginning up a reason to confront Russia directly by implementing a “no fly zone” over Syria skies.  As General Joseph Dunford stated during a congressional hearing, implementing a no-fly zone in Syria would lead directly to war with Russia and Syria.

saudi

The ground floor of our economic house-of-cards is based on the ever dwindling and environmentally lethal “black gold”. Nixon’s decision probably made sense back in 1971, when oil was widely considered to have infinite supply and infinite demand. However, that is no longer the case. That single deal with the devil could easily spell disaster for us and the the rest of the world.

At this point, the United States cannot reduce their and the world’s dependency on fossil fuels without simultaneously undermining the dollar and hence their own economy!  

U.S. has had Syria in it's sites for quite awhile. This is a memo released by Wikileaks.

U.S. has had Syria in it’s sites for quite awhile. This is a memo released by Wikileaks.

Their exists a strong inverse correlation between the value of the dollar and the price of oil.  As oil prices increase, the value of the dollar decreases.  Therefore, to keep the value of the dollar high, the U.S. must keep oil prices as low as possible.  To do this, the U.S. must insure that their is a sufficient supply of oil (to keep prices low), and a sufficient demand for oil (to keep the petro-dollar linkage in place).  Also, since the U.S. has made a deal with the devil (read “Saudia Arabia”), they must also insure that a competing pipeline is not built through territories under Russian influence such as Syria and Iran.

In short, the U.S. must continue to exert it’s military and geo-political influence on oil producing nations so as to keep the delicate balance between the supply and demand of oil adventurous to it’s economy, which, includes, keeping the dollar strong in relation to other currencies, and producing as much fossil fuel domestically as possible.  These two elements in tandem allow the U.S. to better control the energy marketplace.

Below is a historical chart showing the strong inverse correlation between the dollar and the price of oil.

The U.S. dollar and the various commodities have an inverse correlation. The chart above shows the correlation between crude and the U.S. dollar index for the past 12 years.

The U.S. dollar and the various commodities have an inverse correlation. The chart above shows the correlation between crude and the U.S. dollar index for the past 12 years.

If the U.S. makes a serious effort to switch to sustainable alternative energy sources, they will be indirectly undermining the current power of the dollar.  Perhaps this is why our government is dragging it’s feet on climate, and lacks aggressiveness in addressing or mitigating the growing crisis of anthropogenic climate change.

 

 

This article written by:  James Wilson, jimdubyah@gmail.com

Bio

JAMES WILSON: Vice-President at Synergetics Inc., an Information Technology company headquartered in Colorado [retired].  Inventor, author and researcher in the field of behavioral and neuro-science. BMI registered composer with compositions aired on TV, in film, and live productions world wide. Blog author and administrator. Financial Markets Analyst and Researcher.  Progressive political-activist.

After living in Los Angeles for many years, James and his family recently moved to Minneapolis, MN to better weather the weather.

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  1. Pat Mitchell | Apr 5, 2017 | Reply

    Awesome article – the best I’ve seen yet on the subject of Syrian conflict. Thank you!

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