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OPEC Mulls Move To Euro For Pricing Crude Oil

OPEC is considering a move away from using the U.S. dollar and to the euro to set its price targets for crude oil, the highest-profile manifestation of the debilitating effect of depreciation on the greenback's standing as the currency of international commerce.

Several members of the Organization of Petroleum Exporting Countries are seeking formal talks on using the euro, as well as the U.S. dollar, when determining price targets for crude, a senior oil minister within the cartel said Monday. "There are countries that are proposing this," Venezuela's Oil Minister Rafael Ramirez said in Caracas. "It's out there, under discussion."

Mr. Ramirez did not specify which OPEC members are pushing the proposal, but much of the impetus is believed to come from Persian Gulf producers.

They have seen their purchasing power in Europe pinched as the U.S. dollar loses ground against the euro including touching a record low Monday.

"On a symbolic level, I think it's huge, not only for what it says about the U.S. dollar, but also the implied change to the nature of energy trading worldwide in the future," said Wilf Gobert, vice-chairman of Peters & Co. Ltd.
BREAKING NEWS UPDATED AT 9:04 PM EST Monday, Jan. 12, 2004

OPEC mulls move to euro for pricing crude oil

By PATRICK BRETHOUR
Globe and Mail Update

Calgary OPEC is considering a move away from using the U.S. dollar and to the euro to set its price targets for crude oil, the highest-profile manifestation of the debilitating effect of depreciation on the greenback's standing as the currency of international commerce.

Several members of the Organization of Petroleum Exporting Countries are seeking formal talks on using the euro, as well as the U.S. dollar, when determining price targets for crude, a senior oil minister within the cartel said Monday. "There are countries that are proposing this," Venezuela's Oil Minister Rafael Ramirez said in Caracas. "It's out there, under discussion."

Mr. Ramirez did not specify which OPEC members are pushing the proposal, but much of the impetus is believed to come from Persian Gulf producers.

They have seen their purchasing power in Europe pinched as the U.S. dollar loses ground against the euro including touching a record low Monday.

Any move to water down the use of the U.S. dollar as the currency would have enormous symbolic impact, said one prominent Canadian energy analyst.

"On a symbolic level, I think it's huge, not only for what it says about the U.S. dollar, but also the implied change to the nature of energy trading worldwide in the future," said Wilf Gobert, vice-chairman of Peters & Co. Ltd.

Beyond the blow to the greenback's prestige, a move by OPEC to even partly price in euros would ensure that any further depreciation in the U.S. dollar boosts oil prices, Mr. Gobert said. And any country not just the United States using the U.S. dollar for pricing would see the cost of the commodity rise as that currency fell.

Indeed, while OPEC has yet to make any formal break with the U.S. dollar, its refusal to boost output has already offloaded much of the cost of the dollar's depreciation on to the American economy. Mr. Gobert said oil prices at the end of last month, about $32 (U.S.) a barrel, would have been much lower if not for the decline in the value of the U.S. dollar over the past 24 months. Using the exchange rates of the dollar versus the euro two years ago, crude would be selling for $22 a barrel instead, he said.

All of the oil prices used in OPEC's benchmark index, or basket, are currently denominated in U.S. dollars.

The cartel uses that index as the basis of its price-band policy, whose stated intent is to adjust output so the basket hovers within a $22-to-$28 range.

Oil prices have lingered well above that maximum for 26 consecutive trading sessions, which in theory means that OPEC should have increased its output by 500,000 barrels a day to lower prices. But the cartel has ruled out doing so before its regularly scheduled meeting on Feb. 10, arguing that it is the depreciation of the U.S. currency not a lack of supply that is fuelling the rally in crude prices. Monday, crude for February delivery rose 41 cents to $34.72 a barrel on the New York Mercantile Exchange, a 10-month high.

Mr. Gobert said he believes it is unlikely that OPEC will opt for a formal split with the dollar, although the cartel may very well accomplish the same effect by raising its price band, he added.

But he said that OPEC's musings about adopting the euro are part of the increased chatter about the rising value and influence of the five-year-old currency among commodity traders and analysts.

homepage: homepage: http://www.globeandmail.com/servlet/story/RTGAM.20040112.wopec0112/BNStory/Business/
address: address: Toronto Globe and Mail

Export Stimulation ? 14.Jan.2004 20:52

dude

possible outcomes

1. deflation (firesale) on US resources.
2. manufactured goods sales improve.
3. inflation of imported goods.
4. job market improves.
5. more vacationers to US
6. Investment into US properties and Equities

Bright side 14.Jan.2004 23:37

Fella

higher gas price->less fucking SUV greenhouse machines

the missing piece of the policy puzzle - peak oil 15.Jan.2004 02:18

emmanuel goldstein

the most important issue facing our country today is "peak oil" production. it is the missing piece of the policy puzzle. this is an issue that could even reach through the ignorance of the populace and the twisted rhetoric of the right wing. but it will tackle someone like you to bring this issue into the light of day.

in a nutshell, world oil production will peak, if it has not already, within the next few years. the implications are both hopeful and terrifying.

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 http://www.google.com/search?hl=en&ie=UTF-8&oe=UTF-8&q=%22peak+oil%22&btnG=Google+Search
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if properly understood, "peak oil" could help us overcome war AND work towards saving the environment. it could be the motivating force behind a new move to conserve energy. it would justify an immediate and drastic increase in spending on alternative energy, and force a decrease in government waste. and best of all, it makes the idea of global warming obsolete.

on the other hand, our ruling elite are already fighting over the scraps of what's left.

"peak oil" is the reason the only documents released from cheney's 2001 energy task force were maps of iraqi oil fields. Matthew Simmons - an investment banker and researcher in the field of oil depletion - was a key advisor to that task force.

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 http://www.fromthewilderness.com/free/ww3/061203_simmons.html
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the implications of "Peak Oil" are the reasons most of the cheney energy task force papers will never be released.

to put it simply we didn't just invade iraq for oil, we invaded iraq for "peak oil".

the implications of "peak oil" include a drastic reduction in the food supply. to maintain order it will be necessary to restrict the rights of the people. hence "peak oil" is also the motivating factor behind the usapatriot act and similar laws. "peak oil" is the reason they are preparing the "civilian inmate labor program"

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 http://www.google.com/search?hl=en&lr=&ie=UTF-8&oe=UTF-8&q=%22civilian+inmate+labor%22
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terrorism, as many suspect, is just a giant psyop. i suspect there will be another BOOM soon to protect bush from having to explain why he lied to start the war. if we do not act now to wake the people up, then we will live to see the end of democracy in our country.

we have enough supply 15.Jan.2004 04:50

sam

The resources here in the States has been closed off from the american consumer deliberately. Thousands of oil wells have been capped and natural gas has been siphoned back into the earth rather than allow cheap readily available energy to be competeing with the pricing schemes of big oil that controls the worldwide market. Despite all the press that we are running out of oil, the last time we heard that pronouncement, it really meant we were running out of cheap oil.

Enough supply? 15.Jan.2004 06:50

peakster

Tell that to Shell, whose boss the shareholders are threatening to fire, after their bombshell announcement of last month (20% drop in their reserves figure).

Likewise, the US-based companies like Exxon, Chevron texaco et al have been cooking their books for decades, reporting P90 reserves instead of P50 ones.

World oil production has been flat or declining for the last 4 years.

Anyway, extraordinary claims require extraordinary proofs. Show an URL (anything) for your claim that oil producers would do such a moronic thing as "re-injecting oil into oil fields" (oh my, oh my...).

<img src=" http://fromthewilderness.com/images/partys-over-cover-small.jpg">