Petrodollar - vs - Currency Basket (So let's not kid ourselves about what this is about)

[Xicano]

Oil producing nations have been considering dumping the U.S. dollar as the currency for buying oil on the market. If that happens I don't have to tell you how bad that would be for our economy since the petrodollar system significantly artificially inflates the value of the U.S. dollar.

Therefor these events are just as likely happening (due to behind the scenes manipulation) as a way to secure the status quo as they are being just a mere coincidence.

Here's just a couple of news articles to consider.

The demise of the dollar

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

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The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.


http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

OPEC may tie oil to basket of currencies

JOHN DIMSDALE: The global price of oil is set in U.S. dollars. But when the dollar's value is low -- as it is now -- oil producers have to jack up their prices to earn the same profit.

When the dollar fell dramatically two years ago, the spike in oil prices made more costly alternative fuels more competitive, says oil analyst Stephen Schork.

STEPHEN SCHORK: So not only was OPEC not receiving the full bang for its buck, but they were also seeing the potential for their market share erode.

So OPEC ministers are resurrecting an old idea -- tying oil to a basket of currencies, including the euro, instead.

Houston oil industry consultant Larry Carl says the dollar is losing its dominance.

LARRY CARL: When we look at the way the rest of the economies around the globe are recovering and we're falling behind, we have to start getting used to the fact that we're not going to lead right here, right now.


http://marketplace.publicradio.org/display/web/2010/10/14/am-opec-may-tie-oil-to-basket-of-currencies