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If Iran Goes to Euros...What Does It Mean?

RockinInCanadaRockinInCanada Posts: 2,016
edited August 2006 in A Moving Train
So I seen this mentioned in another thread...what would it mean exactly if Iran dropped the dollar for "pegging" oil and converted to the Euro?

For some reason I think Bush & Co. would be very pissed off...but its their country I guess they can do what they want with their oil....just curious what it would mean for us.
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    ladygooddivaladygooddiva Posts: 4,169
    that would be cool for europe:D
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    RockinInCanadaRockinInCanada Posts: 2,016
    ladygooddiva wrote:
    that would be cool for europe:D


    Okay...give me so some help...what would it mean....I would assume the price of oil in the West would sky-rocket but I am unsure....
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    surferdudesurferdude Posts: 2,057
    It means next to nothing. But it may prompt the US to make finding alternative energy options more advantageous via R&D tax breaks.

    The doomsayers crack me up. It's like they completely forget how good economies, especially the US economy, are at adapting.
    “One good thing about music,
    when it hits you, you feel to pain.
    So brutalize me with music.”
    ~ Bob Marley
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    enharmonicenharmonic Posts: 1,926
    surferdude wrote:
    It means next to nothing. But it may prompt the US to make finding alternative energy options more advantageous via R&D tax breaks.

    The doomsayers crack me up. It's like they completely forget how good economies, especially the US economy, are at adapting.

    Currently, 1 Euro = about $1.30 USD. It means that for every dollar a barrel of oil costs (currently about $72 per barrel) would translate to $1.30 for America. It could destabilize the dollar since so much of America's money is tied up in oil interests.

    If your national currency was suddenly worth 30% less for one of the most important commodities in the world, you'd be shiiting your pants. Where does that extra 30% come from? How do you make up the difference? You can't pass it onto the consumer...the American economy is teetering enough as it is...another 30% jump to gas would push the price of a gallon of regular to over $4 nationally. That would be a very bad thing.

    Iran has 137.5 billion barrels of proven crude in the ground. That's roughly 10% of the entire supply in the middle east. Our good friends in Saudi Arabia (who have 25% of the world's oil) have oil fields which have already peaked. That's why they were drilling into Iraqi oil fields...which is why Saddam invaded them in the 90's. They were attempting to steal his oil.

    What this means is we need that 10% to offset the rapid decline of Saudi reserves. You and I will not see the Sauid reserves depleted in our lifetime, but our kids would see it depleted in theirs.
    new music: http://www.myspace.com/blackbirdsymphonique

    old music: http://www.myspace.com/slowloader
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    El_KabongEl_Kabong Posts: 4,141
    enharmonic wrote:
    Our good friends in Saudi Arabia (who have 25% of the world's oil) have oil fields which have already peaked. That's why they were drilling into Iraqi oil fields...which is why Saddam invaded them in the 90's. They were attempting to steal his oil.


    i thought that was kuwait?
    standin above the crowd
    he had a voice that was strong and loud and
    i swallowed his facade cos i'm so
    eager to identify with
    someone above the crowd
    someone who seemed to feel the same
    someone prepared to lead the way
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    surferdudesurferdude Posts: 2,057
    enharmonic wrote:
    Currently, 1 Euro = about $1.30 USD. It means that for every dollar a barrel of oil costs (currently about $72 per barrel) would translate to $1.30 for America. It could destabilize the dollar since so much of America's money is tied up in oil interests.

    If your national currency was suddenly worth 30% less for one of the most important commodities in the world, you'd be shiiting your pants. Where does that extra 30% come from? How do you make up the difference? You can't pass it onto the consumer...the American economy is teetering enough as it is...another 30% jump to gas would push the price of a gallon of regular to over $4 nationally. That would be a very bad thing.

    Iran has 137.5 billion barrels of proven crude in the ground. That's roughly 10% of the entire supply in the middle east. Our good friends in Saudi Arabia (who have 25% of the world's oil) have oil fields which have already peaked. That's why they were drilling into Iraqi oil fields...which is why Saddam invaded them in the 90's. They were attempting to steal his oil.

    What this means is we need that 10% to offset the rapid decline of Saudi reserves. You and I will not see the Sauid reserves depleted in our lifetime, but our kids would see it depleted in theirs.
    Switching to the Euro does not increase the cost of oil. If oil were $130 US per barrel, if and when the switch is made is would not switch to $130 Euro, it would switch to $100 Euro.

    It doesn't affect the US trade imbalance as this was dollars already leaving the country. It may cause a slight hick-up to the monetary trade balance, but it will be quickly corrected. Other countries rely so heavily on the US being their market it is in their best interest to make any transition as smooth as possible.
    “One good thing about music,
    when it hits you, you feel to pain.
    So brutalize me with music.”
    ~ Bob Marley
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    RockinInCanadaRockinInCanada Posts: 2,016
    surferdude wrote:
    Switching to the Euro does not increase the cost of oil. If oil were $130 US per barrel, if and when the switch is made is would not switch to $130 Euro, it would switch to $100 Euro.

    It doesn't affect the US trade imbalance as this was dollars already leaving the country. It may cause a slight hick-up to the monetary trade balance, but it will be quickly corrected. Other countries rely so heavily on the US being their market it is in their best interest to make any transition as smooth as possible.

    What would happen if a large amount of countries dropped the dollar for the Euro pegging...say China for example...purely hypothetical.....
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    enharmonicenharmonic Posts: 1,926
    surferdude wrote:
    Switching to the Euro does not increase the cost of oil. If oil were $130 US per barrel, if and when the switch is made is would not switch to $130 Euro, it would switch to $100 Euro.

    It doesn't affect the US trade imbalance as this was dollars already leaving the country. It may cause a slight hick-up to the monetary trade balance, but it will be quickly corrected. Other countries rely so heavily on the US being their market it is in their best interest to make any transition as smooth as possible.

    The value of that 10% would cause a significant disruption. I didn't mean to imply that oil would cost more...rather the difference in the value of the commodity would have an impact on the entire market. No one would lower their prices to offset the evil Iranians...ya know?
    new music: http://www.myspace.com/blackbirdsymphonique

    old music: http://www.myspace.com/slowloader
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    enharmonicenharmonic Posts: 1,926
    Rockin'InCanada wrote:
    What would happen if a large amount of countries dropped the dollar for the Euro pegging...say China for example...purely hypothetical.....

    Nothing would happen to those countries. America would be fucked though. The dollar is mortgaged to its breaking point. The Fed would have to cut interest rates to nothing, and that would drive inflation through the roof. By the time everything started to balance out, the dollar would be practically worthless, and then you'd have economic collapse.
    new music: http://www.myspace.com/blackbirdsymphonique

    old music: http://www.myspace.com/slowloader
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    ladygooddivaladygooddiva Posts: 4,169
    Rockin'InCanada wrote:
    Okay...give me so some help...what would it mean....I would assume the price of oil in the West would sky-rocket but I am unsure....

    as i see it it would just open the market for oilprice but i am not so sure...
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    surferdudesurferdude Posts: 2,057
    enharmonic wrote:
    Nothing would happen to those countries. America would be fucked though. The dollar is mortgaged to its breaking point. The Fed would have to cut interest rates to nothing, and that would drive inflation through the roof. By the time everything started to balance out, the dollar would be practically worthless, and then you'd have economic collapse.
    And that scenario would fuck over just about every country on the planet, including all the middle east. It's not going to happen, scenarios like this are just fear-mongering in my opinion.
    “One good thing about music,
    when it hits you, you feel to pain.
    So brutalize me with music.”
    ~ Bob Marley
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    enharmonicenharmonic Posts: 1,926
    surferdude wrote:
    And that scenario would fuck over just about every country on the planet, including all the middle east. It's not going to happen, scenarios like this are just fear-mongering in my opinion.

    This is why I am less worried about the traditional style of terrorism, and more concerned with techo-terror. It wouldn't take a lot to create a global economic collapse...a macro-depression, if you will.

    This is a huge subject that could easily balloon into a discussion of global GNP and GDP. It would be cool to educate the people on how somethinglike this could happen...even if it were only an intellectual exercise, and not very realistic. :)
    new music: http://www.myspace.com/blackbirdsymphonique

    old music: http://www.myspace.com/slowloader
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