StrategyUnit

Introduction to the US Dollars/Oil Bourse Conspiracy

Iran is scheduled in March to launch an oil exchange with the currency used for transaction being Euros as opposed to US dollars, such as in the two main oil bourse, International Petroleum Exchange (IPE) in London and the NYTMEX in New York.

This has fueled (no pun intended) speculation of the real cause of the Iranian crisis. The Iraq War has been criticized as a “War for Oil”. And now, as a second act, there are folks from Daily Kos to Asia Times saying the same of the Iran Crisis. The most aggressive promoter of this view appears to be from Krassimir Petrov:

The economic essence of this [post Bretton Woods] arrangement was that the dollar was now backed by oil. As long as that was the case, the world had to accumulate increasing amounts of dollars, because they needed those dollars to buy oil. As long as the dollar was the only acceptable payment for oil, its dominance in the world was assured, and the American Empire could continue to tax the rest of the world. If, for any reason, the dollar lost its oil backing, the American Empire would cease to exist. Thus, Imperial survival dictated that oil be sold only for dollars.
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The Iranian government has finally developed the ultimate “nuclear” weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006.

Prior to the Iraq War, Saddam Hussein switched the currency of choice for oil transaction from US dollars to Euros. Many saw the Iraq War as a conspiracy to stop and discourage the currency switch as the motivation for the Iraq War and are now predicting the same for Iran nuclear crisis. Indeed, a quick Google search will present a whole list of sites supporting this view.

Economists Rebuttal

Both economists Tyler Cowen and James Hamilton, in their respective blogs, counter such claims of a US collapse as simplistic view of economics.
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