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Well, I agree that we should transition to other energy sources, but that's not really topical to the article. It doesn't matter much whether we use oil or not
by Perceval 17y ago
Well, I agree that we should transition to other energy sources, but that's not really topical to the article. It doesn't matter much whether we use oil or not domestically. It's whether or not major chunks of international trade will remain denominated in dollars. Oil just happens to be a major, internationally traded commodity, and oil markets are mostly denominated in dollars because the dollar is seen as the most stable/reliable currency (as opposed to the domestic currencies of oil-producing countries say).
The threat of oil-producing countries shifting their exchanges from dollar denomination to a non-dollar basket of currencies is that all of a sudden the demand for this vast amount of dollars in circulation outside of the United States will drop, and there's very little that the U.S. could do about that immediately. If the demand for dollars drops, its value relative to other currencies drops, and the United States will face massive inflation in imported manufactures, commodities, and raw materials.
Producing green technology at home may wean our dependence on oil, but doesn't do much to prevent our currency from collapsing due to a sudden drop in demand for it abroad.
- jeromec 17y agoSorry for the late reply; I didn't see your response. The reason I say a transition away from oil is needed is precisely topical, and I disagree. It does matter whether or not we are dependent on oil domestically. Currently oil runs through our economy like woven thread. You raise oil prices and that causes immediate inflation because production and delivery of products depends on oil. With an economy that is 2/3 dependent on consumer spending you don't want steep price inflation. That's why it would be a benefit to not be as reliant on oil domestically. The value of the dollar could fall, yet domestic product prices wouldn't reflect it (as significantly) and as a consequence choke our economy.