How dependent is the US Dollar on Saudi oil? If Saudis stated selling oil for other currency, how big of a hit would that be to the US economy?
Not being a finance guru so I might be wrong now. My understanding is the US currency is mainly based on the Petro- Dollar. The buying and selling of oil worldwide is made in US dollars. If you were to start up a seperate oil burse trading oil in a different currency this would have either a severe or minimal effect on the strength of the dollar depending on the size of trading. So basically you could effect the US economy by trading oil in a different currency. Iran wanted to start their own oil burse before the sudden interest in their nuclear development. Coincidence?
Once America stops depending on oil, can we do to Saudi Arabia what we did to Iraq and Libya?
I believe this question to be very poorly conceived, but I want to rebut some of its assumptions anyhow.the US is now one of the top three producers of petroleum in the world, with Saudi Arabia and Russia. As such, the US is essentially self sufficient for oil and gas. So America has already stopped depending on oil imports.What the US did in Libya was essentially backing up a British and French military adventure, when they wrote a ‘check’ which they had no ability to cash. That is to say, this military action was primarily promoted by the UK and France, but they lacked the military capability to do what they wanted to do there, and thus relied on the US. This is not to say that the US did not ‘owe’ them this support after they supported (to whatever extent they did) America’s disastrous foray into Iraq, but just that you state this operation as being equivalent to the operation in Iraq, which it most certainly was not.the reasons for the invasion of Iraq are not even remotely present in Saudi Arabia. KSA is difficult to have as an ally, no question there, but the US and KSA have been relatively close allies for many decades, and there is no benefit for any military invasion. Whatever you think of as the true impetus behind the invasion of Iraq, those things are just not there in the KSA.
What will happen to oil dependent economies such as Saudi Arabia when their oil reserves get depleted?
The oil Reserves of Saudi Arabia is around 265 Billion Barrels -being about 16% of worlds reserves (these are 2012 estimates). At current production rate of around 11 million barrels /day the reserves will last for about 63 years.But the most remarkable fact has been that most countries have been adding to their reserves by new discoveries from exploration and improvement in technologies. For eg. taking the Middle east as a whole, the estimated Reserves was 343 Billion in 1970, while it is about 800 Billion as per 2012 estimates. This trend is likely to continue as there is still plenty of exploration to be done and technology keeps improving continuously. Over and above the oil reserves, Saudi and ME has plenty of Gas to be tapped. All this means that it will be quite some time before the situation of 'running out of oil' is reached.Now coming to what is likely to happen to the economy, it depends on how the rulers of the country have been using the oil bonanza they have been enjoying- if it is used to build infrastructure and more important, to improve the skill and knowledge base of the population- then there is nothing to really worry about. Having oil is not a pre-requisite to high standard of living and development- Japan never had any oil, neither does it have other significant mineral resources- all the same it is one of the most advanced industrial powers.The most important challenge for ME countries will be how the rulers will manage their social and political system as it evolves. If it cannot be managed with vision and foresight, all the oil will be of no avail, let alone oil running out.Thanks for the A2A
The suburbanization of America ____ our dependence on oil imports?
increased our dependence on OIL substantially. Look at countries where urban centres are more densely populated than DC's suburbia. example.... most European cities.... even in Canada..... cities there are MORE dense than those typical US counterparts. Even poor countries.... like Mexico city... urban sprawl.... means urban consumption of OIL . my 2 cents
Eliminating Dependence on Fossil Fuels?
Pretty poor...and it's hard to blame corporations for it. I work in the energy futures business and something anyone in this line of work knows is that there just isn't a market for it. A market has two main components...supply and demand. Even though energy prices are high...they aren't high enough to create a real demand for alternative energy sources. I work on the floor of an exchange in Natural Gas futures...if you didn't know already...you have lights, air conditioning/heating and pretty much all your power thanks to Nat Gas. It's what the power plants use to turn the turbines to generate electricity. Even though I make my living off of the trade...i believe that everyone in the US should have Solar Energy. We have single solar cells that are capable of powering houses. And the technology continues to grow. The government provides tax breaks and environmental initiatives for you to install Solar Energy. I would hope that in the coming years enough people take up notice that Solar energy is an amazing source of energy. I would love to see government initiatives to see that apartment buildings and government housing are required to provide solar energy as an alternative. You know the really AWESOME thing about Solar energy is that you buy the solar cell...period. No monthly power bills. If you would like to take some initiative...invest some of your own money into scientists and companies that research or produce alternative fuels. The problem in america is that we wait for our government to do things for us.
If the Middle East stopped producing oil, how would the US economy be affected?
The United States actually gets very little oil from the Middle East, even today. Most Middle Eastern oil goes to Europe. But, if the Arabs turned off the gas, those European countries would be looking for alternative sources of supply, including ours. So, the price would rise significantly, and we probably would have to switch quickly to use more coal and natural gas. People often complain about our increasing dependence on foreign oil, but that's short-sighted. A policy of "buy Saudi" means they'll be drained before we will. And, when all that's left is under us, it will be our government telling everyone else to go find their own barrel. Which is fine with me.
What will happen to the American economy without the Saudi oil?
Hi Ranin, and thanks for the question I'm neither American nor do I work in the oil industry. So my guess carries little weight.I don't know if the Saudis are planning another embargo, such as the 1973 “oil shock” they instigated as a response to Nixon abandoning the gold standard but suppose they did. Then nothing much would happen. Middle East oil is of marginal importance to the US. currently 9% of consumption. Although that's nearly twice the volume of 1973 its a much lowere % of overall consumption.Oil prices would initially rise a little. There's enough oil in contango to supply the US, who buy to refine and re export, until other producers took up the slack. The as KSA tried to sell the 900.000 barrels, it had supplied to the US, elsewhere prices would fall back.Pipelines which are in difficulties could get objections dropped. LPG production facilities would ramp up, currently the US is on target to be number one producer, and an industry of suppliers and vehicle converters would emerge. Overall the shift to LPG would be an eventual economic boost to the US economy. Replacing imports with domestic production and using US labour.The Fracking industry might expand into the marginal fields. Technology would improve and prices would stabilize. The Americans do technology amazingly well! And overcome obstacles better than most.KSA would initially lose 10% of its revenue. And would need to discount the oil to sell elsewhere. A dollar of two a barrel would make no difference to the budget. Although it would be fractious at OPEC's next meeting.Losing American armaments, expertise would be problematic. No fighters could fly without spares. Spares the US never supplies in bulk but only drips them out to ‘Allies’ as needed. Ditto much else is similarly supplied. And the KSA army has so far proved singularly useless in its proxy war with Iran in Yemen. The Persians are the toughest kid on the block in the middle east.Its also likely the US would source Iranian oil. Leading to eventual reapproachment. And KSA without America's implicit security backing would be a Shia ruled vassal state in a decade or so.I think the American oil industry likes the status quo. It buys cheap KSA oil and sells it expensive. And I think the house of Saud likes the status quo. It skims billions from Saudi people. Ultimately its not a great system for ordinary people and the sooner it pops the better :-)