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It's not about the oil itself (US has plenty and can import from Canada) but the control of the price and that oil is traded in USD. The US has started multipl

It's not about the oil itself (US has plenty and can import from Canada) but the control of the price and that oil is traded in USD. The US has started multiple wars to prevent the oil price from being traded in another currency.

analognoise 8y ago
Wait, what? Which wars were those?
- menzoic 8y ago
  The oil wars: How America's energy obsession wrecked the Middle East - https://www.youtube.com/watch?v=JH9zjozwNF8 https://www.youtube.com/watch?v=JH9zjozwNF8
  - nl 8y ago
    That's not what the claim was: specifically that the wars were to force oil to be traded only in US dollars.
pjc50 8y ago
I'm not sure this makes any sense - there's no benefit to using USD for the pricing if the contract is settled outside the US, and there are RMB-denominated oil futures available. Ironically as a result of sanctions on Iran, which isn't allowed to trade oil through any institution connected to the US. https://www.cnbc.com/2018/05/16/iran-oil-trumps-sanctions-create-crude-trading-boom-in-china.html https://www.cnbc.com/2018/05/16/iran-oil-trumps-sanctions-cr...
- sonnyblarney 8y ago
  There is a seignorage advantage, in that people need access to USD. It's definitely a big advantage, and it provides a nice base of support for USD. But the US is definitely not starting wars over it.
nl 8y ago
This isn't really true. Historically there have been a number of attempt to develop markets for oil in non USD currencies. The USD remains the biggest because - basically - of network effects. Ironically, the new US sanctions on Iran look set to break that pattern because China is very happy to have a yuan denominated soil market: https://www.reuters.com/article/uk-iran-nuclear-china-oil/iran-oil-sanctions-could-advance-chinas-petro-yuan-idUSKBN1IB32H https://www.reuters.com/article/uk-iran-nuclear-china-oil/ir...
sonnyblarney 8y ago
"The US has started multiple wars to prevent the oil price from being traded in another currency." Oh please not this on HN.
- rorykoehler 8y ago
  Well it's true so why wouldn't it be on here?
  - sonnyblarney 8y ago
    It's utterly not true and keep this off HN.
    - rorykoehler 8y ago
      So if it wasn't to maintain the status of the USD as the reserve currency which other reasons did the US have to invade? Apart from wanting to construct an oil pipeline through Iraq I'm not aware of any other reasons?
      - nl 8y ago
        Because the stupid stupid neocons wanted to “finish what they started” in Gulf war 1, and reshape the Middle East. Edit, appears this isn’t as well known anymore. It was literally the taking point during 2002/03 but here’s a good starting point: https://en.m.wikipedia.org/wiki/A_Clean_Break:_A_New_Strategy_for_Securing_the_Realm#Influence https://en.m.wikipedia.org/wiki/A_Clean_Break:_A_New_Strateg... Or https://www.historycommons.org/timeline.jsp?timeline=neoconinfluence&neoconinfluence_us_policy_areas=neoconinfluence_general_middle_east_policy https://www.historycommons.org/timeline.jsp?timeline=neoconi... The good thing is that no one can argue this is a conspiracy: the neocons were very open about it and you can find their writing everywhere.
        rorykoehler 8y ago
        Clean break is a symptom not a cause.
friedman23 8y ago
Given that you seem so confident in your theory you should be able to clearly explain why it's so important for the US that oil be traded in USD?
- wolco 8y ago
  Having the dollar serve as the world’s reserve currency has been a major subsidy to both the U.S. government and to Americans. Foreign governments and central banks are more likely to buy U.S. government debt, which allows the U.S. government to spend more money and run up deficits with a lower interest rate. The two biggest foreign buyers of U.S. government debt come from the governments of Japan and China. This has also been a major subsidy to Americans. In addition to foreign governments using dollars and buying up U.S. government debt, many immigrants in the U.S. will take dollars in the form of cash and send the currency to relatives in other countries. This actually serves as a deflationary effect, as it makes consumer prices cheaper for Americans in the U.S.
  - friedman23 8y ago
    > Foreign governments and central banks are more likely to buy U.S. government debt, which allows the U.S. government to spend more money and run up deficits with a lower interest rate. Foreign government hold US debt because it's a safe store of value. America can access cheap debt because it has good credit. If oil was traded in another currency for some reason those countries would still buy US debt. > This actually serves as a deflationary effect, as it makes consumer prices cheaper for Americans in the U.S. Deflation isn't desirable firstly. Secondly, the federal reserve controls the money supply so more demand doesn't matter as the federal reserve will just decrease interest rates to maintain 2% inflation. It's amazing how prevalent conspiracy theorists are among people on this website. Also fyi, the amount of demand the Saudis have for the USD is a small percent (maybe a fraction of a percent) of global demand for USD. So Saudi Arabia deciding to trade oil in a different currency would have 0 effect on the US.
    - devdas 8y ago
      > Foreign government hold US debt because it's a safe store of value. US debt is a safe store of value, because cheap energy can only be obtained by paying in US dollars. If you remove that motivation, the USD is just another fiat currency.
onemoresoop 8y ago
If the US is the largest producer, no matter the currency, wouldn't the US rake in the most cash?? It could be in other currencies which would have to be converted anyway...

analognoise 8y ago

Wait, what? Which wars were those?

menzoic 8y ago
The oil wars: How America's energy obsession wrecked the Middle East - https://www.youtube.com/watch?v=JH9zjozwNF8 https://www.youtube.com/watch?v=JH9zjozwNF8
- nl 8y ago
  That's not what the claim was: specifically that the wars were to force oil to be traded only in US dollars.

pjc50 8y ago

I'm not sure this makes any sense - there's no benefit to using USD for the pricing if the contract is settled outside the US, and there are RMB-denominated oil futures available. Ironically as a result of sanctions on Iran, which isn't allowed to trade oil through any institution connected to the US. https://www.cnbc.com/2018/05/16/iran-oil-trumps-sanctions-create-crude-trading-boom-in-china.html https://www.cnbc.com/2018/05/16/iran-oil-trumps-sanctions-cr...

sonnyblarney 8y ago
There is a seignorage advantage, in that people need access to USD. It's definitely a big advantage, and it provides a nice base of support for USD. But the US is definitely not starting wars over it.

nl 8y ago

This isn't really true. Historically there have been a number of attempt to develop markets for oil in non USD currencies. The USD remains the biggest because - basically - of network effects. Ironically, the new US sanctions on Iran look set to break that pattern because China is very happy to have a yuan denominated soil market: https://www.reuters.com/article/uk-iran-nuclear-china-oil/iran-oil-sanctions-could-advance-chinas-petro-yuan-idUSKBN1IB32H https://www.reuters.com/article/uk-iran-nuclear-china-oil/ir...

sonnyblarney 8y ago

"The US has started multiple wars to prevent the oil price from being traded in another currency." Oh please not this on HN.

rorykoehler 8y ago
Well it's true so why wouldn't it be on here?
- sonnyblarney 8y ago
  It's utterly not true and keep this off HN.
  - rorykoehler 8y ago
    So if it wasn't to maintain the status of the USD as the reserve currency which other reasons did the US have to invade? Apart from wanting to construct an oil pipeline through Iraq I'm not aware of any other reasons?
    - nl 8y ago
      Because the stupid stupid neocons wanted to “finish what they started” in Gulf war 1, and reshape the Middle East. Edit, appears this isn’t as well known anymore. It was literally the taking point during 2002/03 but here’s a good starting point: https://en.m.wikipedia.org/wiki/A_Clean_Break:_A_New_Strategy_for_Securing_the_Realm#Influence https://en.m.wikipedia.org/wiki/A_Clean_Break:_A_New_Strateg... Or https://www.historycommons.org/timeline.jsp?timeline=neoconinfluence&neoconinfluence_us_policy_areas=neoconinfluence_general_middle_east_policy https://www.historycommons.org/timeline.jsp?timeline=neoconi... The good thing is that no one can argue this is a conspiracy: the neocons were very open about it and you can find their writing everywhere.
      - rorykoehler 8y ago
        Clean break is a symptom not a cause.

friedman23 8y ago

Given that you seem so confident in your theory you should be able to clearly explain why it's so important for the US that oil be traded in USD?

wolco 8y ago
Having the dollar serve as the world’s reserve currency has been a major subsidy to both the U.S. government and to Americans. Foreign governments and central banks are more likely to buy U.S. government debt, which allows the U.S. government to spend more money and run up deficits with a lower interest rate. The two biggest foreign buyers of U.S. government debt come from the governments of Japan and China. This has also been a major subsidy to Americans. In addition to foreign governments using dollars and buying up U.S. government debt, many immigrants in the U.S. will take dollars in the form of cash and send the currency to relatives in other countries. This actually serves as a deflationary effect, as it makes consumer prices cheaper for Americans in the U.S.
- friedman23 8y ago
  > Foreign governments and central banks are more likely to buy U.S. government debt, which allows the U.S. government to spend more money and run up deficits with a lower interest rate. Foreign government hold US debt because it's a safe store of value. America can access cheap debt because it has good credit. If oil was traded in another currency for some reason those countries would still buy US debt. > This actually serves as a deflationary effect, as it makes consumer prices cheaper for Americans in the U.S. Deflation isn't desirable firstly. Secondly, the federal reserve controls the money supply so more demand doesn't matter as the federal reserve will just decrease interest rates to maintain 2% inflation. It's amazing how prevalent conspiracy theorists are among people on this website. Also fyi, the amount of demand the Saudis have for the USD is a small percent (maybe a fraction of a percent) of global demand for USD. So Saudi Arabia deciding to trade oil in a different currency would have 0 effect on the US.
  - devdas 8y ago
    > Foreign government hold US debt because it's a safe store of value. US debt is a safe store of value, because cheap energy can only be obtained by paying in US dollars. If you remove that motivation, the USD is just another fiat currency.

onemoresoop 8y ago

If the US is the largest producer, no matter the currency, wouldn't the US rake in the most cash?? It could be in other currencies which would have to be converted anyway...