Many countries do not like that system. Those who have discussed alternative systems have been invaded (Libya), or sanctioned (Iran). Despite that, other countries are still creating alternative systems. Of note is the recent creation of alternatives to the SWIFT settlement system, the AIIB (Asian Infrastructure Investment Bank), the inclusion of the Yuan in the SDR, and the massive increase in Yuan settlement facilities in other countries across the globe.

The official explanation for the drop in energy prices is a lack of real demand. However, remember this is a commodity that is priced in dollars. The USD is another variable in the price. Please note that there are many other commodities which are priced in dollars (Bakken Dry Index, for instance) which have shown unusual behavior over the past few years.

As written on this blog before, do not follow the hand the magician wants you to see. An alternative explanation is that the amount of transactions involving dollars for oil has decreased. Russia and China have agreed to massive energy, infrastructure, and monetary agreements that do not involve dollars whatsoever. Iran is selling it’s energy in Euros. As the price of energy drops relative to USD, countries no longer have to hold much USD in reserve for their energy needs.

There has been a massive unloading of hundreds of billions in US bonds (recall China’s use of a Belgian intermediary to do so) within the past few years. The US bonds which are purchased are of increasingly shorter maturity. The yield on the USD has not risen, as would be expected in such a scenario. I have heard a compelling argument that the excess bonds are being soaked up by the Fed through the ESF (Exchange Stability Fund) to suppress the effective debt yield.

For further discussion, I’d check out the following links:
https://www.rooshvforum.com/thread-53166-post-1201257.html#pid1201257
https://www.rooshvforum.com/thread-53234-post-1201263.html#pid1201263

Cheap oil more so.

And natural gas is an imperfect substitute.

The higher the price goes, the more it’s worthwhile investing in tech making the imperfect substitutes work better or making recovering more expensive oil economically viable. The better those substitutes work and the more viable recovery of expensive oil becomes, the cheaper oil gets.

We could have had this debate about any critical resource in any civilization at any point in time. See: Ehrlich’s lost bet. People are always 20 or 50 years away from running out of water or arable land or coal or whales…economically viable with today’s tech.

Oil is an absolutely wonderful energy source that was laid down millions of years ago by decaying vegetable matter, during conditions on earth that are *widely* different than they are today, we have far far far too little CO2 in the atmosphere to lay down organic material today that will become oil in millions of years.

It is not like bauxite or iron ore or sulfur or “rare” earths, it is not an element, and elements are not mined and refined as an energy source, they are a dead loss when you try… you get less energy back out of burning aluminium than you put in creating it.

Natural gas reserves worldwide are indeed huge, and you can indeed modify an internal combustion engine to run on LPG, but you cannot just pump it into tanks where it will happily stay via gravity for several months, and you cannot *just* modify the carburretor, you also have to have a high pressure tank, it’s twice the volume of a petrol tank for the same range, and there are many other drawbacks too.

Back in WW2 many people ran their vehicles on various gases and other compounds, so *none* of this is new, otto diesel started on coal dust and peanut oil, oil won because it is so much *better* than anything else, and that’s the rub…

Try to build a plane that runs on LPG for example.

I do take your point about climate change zealots and agree with you, but you are comparing apples to oranges.

Not all oil fields contain the same crude, not all oil fields have the same cost of extraction per barrel over time, and all the cheaper ones are gone, but even so, all the *cheapest* are still controlled by the saudis, and they can vary the price at will anywhere between gouging everyone else to death (70’s oil crisis) to undercutting everyone else (today) and making shale and argentinian oil “uneconomical”

This is an essential point, there is a difference between the economic factors of getting 50,000 barrels per day out of a given well, refining shipping and selling it, and the physical factors, and the economic factors will always always always depend on the physical factors.

“Peak oil” is about the physical factors tightening up.

Economics is simply about space tourism, you personally simply cannot afford to go into orbit, or drive 100 miles a day, or eat…

There is no *physical* reason tesla motors cannot sell cars to syria, in fact the physics make a lot of sense, solar cell body panels, long straight roads with little elevation change, the beat goes on.

They do not because there is no economic viability in it.

There is no innate differece between myself and Abdul in Al Jeineh, but I can go out and buy a selection of harleys at either one of the two local dealerships within an hour of my home…. or a soldering iron, bench power supply, quarter of a ton of potatoes, etc etc

Exploration and extraction tech has gotten a lot better over the last decade.

There are also hydrocarbon substitutes which become viable as oil price rises, causing a negative feedback loop in price.

Here in Israel we have found massive offshore natural gas fields (Tamar and Leviathan) which will provide for our needs for many decades. That’s in the 25% of our territorial waters we’ve bothered to explore. We are not pumping gas because of legal arguments about profits. If oil goes back up to $50, those arguments will get worked out real quick.

It takes about $1500 to drop a conversion kit into a gasoline car. That’s before those kits become cheaper through economies of scale.

I also notice that the peak oil crowd says “see? Told you so!” When oil goes to $100, but are taken by surprise when it goes to $20. Much like global warming-when it hits 35 on a May day in New York, that’s proof that global warming exists. When a global warming summit gets snowed out, or a global warming polar expedition gets stuck in unseasonal ice, err, duh, weather isn’t climate, look at this sad polar bear picture.

To beat my personal dead horse a bit more.. 😉