Russia looking at pricing oil sales in euros-source

[mhr]

http://biz.yahoo.com/rf/031008/energy_russia_euro_1.html

Russia looking at pricing oil sales in euros-source
Wednesday October 8, 2003

YEKATERINBURG, Russia, Oct 8 (Reuters) - Russia is increasingly looking at pricing oil sales in euros instead of dollars, reflecting the euro's growing role as a reserve currency, German government sources said on Wednesday.

"The question is taking on increasing significance," a person travelling with German Chancellor Gerhard Schroeder on an official visit to Russia said.

A switch into euros by Russia, the second biggest oil exporter behind Saudi Arabia with the world's largest natural gas reserves, would represent a major shift in the balance of currencies behind the world's most traded commodity.

Snip ......

[rooboy]

1. Maybe Bill O'Reilly was right...

we are in world war 3. And by the looks of things, the US is stuck in Stalingrad.

[La_Serpiente]

4. I'm so concerned right now

If this nation, which is already turned upside down, gets pummled into the ground, well...it's not my fault. We all warned the hell out of everyone about what was coming but NOOOOOO...nobody listened.

In yesterday's trading, the dollar plummeted and it still hasn't recovered.

How thick are the American people's head? It must be pretty thick to not realize what the FUCk is going on here.

[Minstrel Boy]

8. concerned, depressed, frustrated

"How thick are the American people's head?"

The problem is a report like this never reaches 90% of them, and most of the rest won't appreciate its implications, or know to connect this dot with X number of others. Most rely on broadcast media - dominated by the far right since the end of the fairness doctrine - to keep them informed. What we're seeing is the result of 20 years of conditioning.

For more than two years, I feel like I've been watching a horror movie play out, and been screaming at the naive victim-to-be "Don't open the door!" A lot of good it does.

They say knowledge is power? Sometimes, like this morning, it's nothing but agony.

[HereSince1628]

12. Ok, I'm one of the 10% that may not grasp all the implications.

I have read a 26 page article by W. Clark on the macroeconomic and geostrategic reasons for the Iraq war which include the forestalling
a switch to the euro as a reserve currency.

Consequencies suggested in that paper include the flight of investment dollars from the US (under the rational that no one would want investments that lose half their value. But isn't the international community trapped by their investments as much as Americans have been over the past year?) At any rate, such a pull out would produce a flood of stocks on the market, requiring dollars that may not be in banks' reserves (and hence may stimulate a "run" on the banking system) and this would cause a 40%-50% drop in value that everyone fears.

I understand that cutting our currencies value in half would double the cost of paying off debts outside our own currency system.

I understand the implications of a doubling of the prices of all imported goods, $5 gasoline would hurt and there aren't good alternatives. Consequently, virtually everything would cost much more.

But $300 sneakers and $70 blue jeans would simply be out of sight for America consumers. Since American consumption drives the cycle of production, doesn't that whack the rest of the world too?

Wouldn't a 50% drop in the cost of American products make them much more competitive? Might that not lead to investment in domestic production, and jobs in the US? Or would there be no investment money
because of the anticipated flight of foreign investment dollars?

I know I am not knowledeable on this subject, please don't beat me up for asking for a reasoned explanation of the impacts of the world switching to the euro.

[Minstrel Boy]

17. I'm no expert, but as I see it,

the US has been able to run up huge debts because its currency has been unchallenged as the international standard: ie, US dollars used as foreign reserves for payments between countries, including such things as oil transactions. These countries rush to buy Treasury bonds and invest their savings in the US. The inflow of international capital helps float the American debtor economy by maintaining the value of the dollar.

About half of US currency is held internationally. If the dollar is dumped for the Euro, its value will plummet. To stem that, interest rates would need to rise sharply, but that could crash the economy into a depression.

Iraq switched to the Euro a couple of years ago. Iran has followed. Venezuela intends to, and Russia's signalling the same. This is extremely grave news for the US dollar.

A good little book that explores how the fiscal picture is tied into US military policy is "Behind the Invasion of Iraq," by the Research Unit for Political Economy.

[ozone_man]

32. Another reason why we're destablizing Venezuela?

They are moving towards the Euro, just like Iraq. We can't beat up Russia, but we can pull a CIA type coup in Venezuela. I believe, the National Endowment for "Democracy" is involved there for that reason.

[ProfessorGAC]

25. Good Conclusions

Look, everything you said is spot on. However, the concern about the switch to the euro is a neocon canard. These guys look at details and miss the big picture.

The currency of international commerce was the pound, all the way until the 40's, and that did nothing to stall the juggernaut that was the U.S. macroeconomy. Even while grains and oil were being bought in pounds, the U.S. economy was still dominant.

There is simply no factual basis for the concerns of the neocons, other than hubris and ego. "If the world ain't payin' for oil in dollars, that makes us less important." It's emotion, not sound analysis that drives this conclusion.

The dominant economy is still the dominant economy and the principal currency could be called "Ralph" and it still wouldn't change.

As long as the U.S. focuses on per worker productivity and adopts fiscal policies that ensure a vibrant and sizeable middle class, this concern is unfounded. Productivity and buying power are ALL THAT REALLY MATTERS!
The Professor

[cprise]

30. Then what to the Russians stand to gain?

Are they neocons too?

Somehow I doubt it.

The artificially created demand for dollars has allowed the neocons and neoliberals to stave-off a middle class revolt. We can get stuff cheap, without producing anything useful here in return. Add to that the fact that resources are now at their limits, and that the more the American public spends the wider the wealth gap gets in this country, and I can't help but believe there are serious stakes and consequences as to which currency is used for oil.

[chiburb]

33. Maybe tinfoil hat, but...

Perhaps Putin IS in on the neocon plan. Is there anything he's done or doing thats different than Bushco? From his 'war on terror' to muzzling of dissident press, just how does his agenda differ from Shrub's?
Don't they all benefit from a redistribution of wealth FROM the US to other places? The only ones hurt will be those who still THINK they are middle class here...
The rich got theirs, the poor are invisible, the middle class is the next target...

(Maybe all wet, but trying to understand anything in 'rational' terms hurts my head too much. Look at California!)

[JNelson6563]

34. You make good points Professor

But I will admit to mild concern at this point. It seems to me that there are many factors in play at once here. Our foreign held debt, how hated we are around the world and the fact that Team Bush is working hard to do the opposite of adopting "fiscal policies that ensure a vibrant and sizeable middle class" are just some of the things that cause me to view this as less than welcome news.

Julie

[knowledgeispower]

37. Do you have a link for said W. Clark article?

I would be very interested to read it.

[screembloodymurder]

14. Love your analogy

This administration is like a horror flick.

[La_Serpiente]

5. What did Bill O'Reilly say?

What did Bill say?

[Zero Gravitas]

7. Who cares?

O'Reilly is a pompous self-promoting ass.

[goforit]

23. OUCH....that hurts!!!

What are we gonna do?

[loudnclear]

28. Put should be careful. This is the REAL reason we went after Saddam

This is the least reported information about Saddam's regime. He was contemplating going EURO. Same as Chavez is doing...now you know why those bombs are going off in Venezuela...and it's not Islamic terrorists doing...it's Christian and Jewish terrorists.

[UpInArms]

2. this could mean more bad news for the

dollar -

if euro becomes the instrument of choice for trade - the US will lose all those dollar accounts that give them interest free loans

the entities holding the dollars will cash out their accounts and go into the euro and the dollar will be "done" - you can stick a fork in it at that moment (jmho)

[MUAD_DIB]

3. When do we invade Russia?

Iran is thinking of changing to the Euro, and we are acting hostile to them.

Iraq had been thinking of switching to the Euro, and look what we did to them.


So when do we invade Russia?


BTW: Did Chimpy see this bit of news when he looked into Putie-Poot's soul when he visited the U.S. recently?

[hadrons]

9. actually Iraq had switched to the Euro ....

Saddam made a killing off of it and the U.S. had a killing spree because of it

[ozone_man]

18. I was going to make that point.

But I see that you beat me to it.

Before the war, there was alot of debate as to what was the reason for war. This was one of them, in my opinion, in addition to the oil, of course.

Greenspan is always saying not to worry about loss of manufacturiung jobs, etc., that the U.S. is the financial center of the world, we are the world's bankers. But if the Euro becomes the world currency, doesn't that spell doom for the U.S.?

[cprise]

31. The neocons are parachuting to low-dollar land...

Putin comes along on the 51st floor balcony and clips-on an anvil. "Enjoy the trip!"

No, wait! Too fast!

[Bruce McAuley]

6. The beginning of the end for the dollar as reserve currency..

It may actually turn out to be the best thing that could happen, in the long run anyway. The short term will be disastrous, but it might finally get us off our butts and work for REAL energy independence, and not have to worry about Petro-Dollars versus Petro-Euros.
The Paris-Berlin-Moscow axis is firming up, to the detriment of the US. One of our main reasons for going to war with Iraq was their shift to the Petro-Euro.

Bruce

[toska]

11. This is the issue that worries me

It's this issue probably more than the 2004 election that makes me really consider leaving this country for a while. Our economy could be devastated if the euro is used for oil and natural gas transactions. I haven't had time yet to research which countries would survive the fall of the dollar, speak English or have a significant % of English speakers, and need software developers. Any ideas?

[sam sarrha]

13. Follow the jobs....Callcuta has nice weather this time of year...

:shrug:

[Bruce McAuley]

15. Canada

No question in my mind. Best standard of living and health care available to english speakers.
I agree it's the time to buy Euros.

Bruce

[HereSince1628]

22. Only if you are under 40

and it helps a lot if you are from a "commonwealth" nation.

[Resistance Is Futile]

24. Not Canada

Something like 80% of Canada's economy depends on American trade. If the American economy crashes, Canada's economy goes down with it.

Europe and Asia (with the exception of Japan) would be better bets.

[Copperred]

29. Make that the Paris-Berlin-Arab-Moscow-Bejing Axis

[Bandit]

10. My advice is Buy Euros

If you have anything to invest do it in currency. Euros will go up and up, while the dollar will conmtinue to plummet unless we change our ways. Be a Capitalist and buy Euros.

[robcon]

16. This is a total non-story.

It's just an ego move for the Europeans. The oil companies couldn't care less which currency they pay in - they just care about how much they pay.

[reprobate]

20. Look a little deeper than the oil companies.

Look at the effect on our ECONOMY that this will have. Interest on our bonds will have to go way up to shore up our debt. And what happens if no one wants our bonds? That's too scary to think about. The idea of the US defaulting will put us into a third world status.

And the oil companies will just move offshore. Corporations are NOT nationalistic to any country. They are profit driven, not patriotic driven.

[Bandit]

27. "And the oil companies will just move offshore."

And what oil companies would that be? As far as I know all oil companies are already off-shore. None are considered American Companies.

[evworldeditor]

21. I wouldn't necessarily agree...

... that this is a "non-story". While I don't necessarily subscribe to all of the conclusions reached by the author of "The Euro Effect: The Real Reason for the War in Iraq", he does make a strong point that keeping the US dollar the world's reserve currency is vital to America's future and national security.

Here's the URL to Part One:

http://evworld.com/databases/storybuilder.cfm?storyid=490

[malachi]

19. Dollar hits 3-year low vs. yen

Don't worry! Chimpy and the boys are happy!
Trade-deficit worries were blamed. An analyst said the
administration was happy with a weaker dollar.
Associated Press

http://www.philly.com/mld/inquirer/business/6957383.htm

[Spazito]

26. The US dollar hit an 8 year low vs the Canadian dollar yesterday...

it looks like any currency but US dollars are moving up.

[section321]

35. Paul Krugman talked about this on his website back in march...

Here's the link:

http://www.wws.princeton.edu/~pkrugman/oildollar.html


He doesn't seem to think this will cause too much of a problem.

I see his point, but I do think this is affecting exchange rates which do have a big influence on what we can purchase.

One thing to understand is that Current Account adjustments frequently occur through changes in exchange rates. Since our Current Account is so far in deficit and foreigners are increasingly unwilling to supply the financial inflows that are necessary to finance that deficit, a weaker dollar helps to close the Current Account deficit.

It also makes our exports more competitive. A Current Account adjustment through a weaker dollar is something Steven Roach of Morgan Stanley has been advocating for quite some time.

[Nottingham]

36. Can we say Economic WWIII! SRV owners WHOAH

those petro bills are going to sky rocket and soon we won't be getting it by the gallon we will be getting it by the liter :tinfoilhat:

[IMayBeWrongBut]

38. Umm, I don't get one thing.

I keep seeing these stories about "country X is considering switching to selling oil in Euros." With the exception of Iraq no countries have ACUTALY made the change. What is stopping them from changing?

[Bruce McAuley]

39. There's never been a strong enough currency to move to.

With the advent of the Euro, now there is, and it's backed by MANY countries, not just one.

Bruce

[IMayBeWrongBut]

40. That tells me why they didn't switch before...

What's stopping them from switching right now instead of just talking about it?