What happens to the US dollar as the new exchanges become operational and begin to be successful? The exit from the dollar as the international currency will have begun in earnest. But that exit will not be to one currency, but simultaneously to the several currencies that are the denomination currencies of all the successful new oil and gas market exchanges.The assumption, of course, is that the US and Europe have no choice but to suck at the oil teat till it dries, then starve.
The dollar will begin to weaken as its international support and devotion wanes, or even sinks. As the dollar weakens, the price in dollars for everything the US imports will skyrocket, adding a powerful inflationary hit to the US economy. Along with the impending US recession, that will further weaken the dollar and likely its decline, or outright collapse, will feed on itself.
As the dollar weakens and energy price volatility increases on the New York-London exchanges, producers will have further powerful incentive to switch their product offering to the non-dollar-denominated exchanges, where there will be greater stability and where they will not be forced to take payment for their products in the increasingly undesirable weakened dollar.
The profound risks to the West as respects its ability then to secure access to sufficient energy resources should be self-evident. Left with a severely shrunken dollar-denominated pool of oil and gas, a pool that virtually only the West draws from, the viability of a potential targeted embargo will have increased exponentially.
But it is possible to wean oneself from oil, right now, at least to a certain extent. (There is, after all, still oil in the US.) Many readers of this journal are already doing their part: riding electric subways, bicycling, using efficient lighting, employing the so-called "alternative" energies--which are simply the prevalent energies of the world: sun, wind, falling water, and food. They are available almost everywhere, and are often free. After all, we need to breathe and move to live; why not breathe a little deeper and move our legs a wee bit harder on a bike? No oil rigs, no leaking tankers, no despotic monarchs need apply.
Why not ponds and waterwheels on every stream, windmills and solar panels on every roof? It may not be good for General Motors, but it will certainly be good for the rest of us, and for our posterity. A million small companies, instead of a dozen megacorporate oligarchies--neighbors working for neighbors, power not only to, but from, the people
We have to look not just "Beyond Petroleum" (as BP pretends to), but beyond corporate gigantism and the concept of energy as a commodity.
Energy is something we can make for ourselves. It is all around us, it is in us. Shareholder return means nothing in a dreary polluted world torn by war in its name. The billions we've spent trying to rob Iraq of its oil could have been applied to research in photovoltaics, or to funding micro-hydro projects and local bicycle factories instead.
We must turn our backs on oil dependency and begin living with less oil today. A complete bicycle weighs less than a single wheel for a small car, and can carry you fifty miles in three easy hours, on a bowl of rice and beans. The average US car owner drives 12,000 miles a year--or 32 miles a day. Mostly short trips of less than five miles.
We can be free--if we want to be.