Tuesday is the vernal equinox, which in Iran is celebrated as the new year. The Iranian government was hoping to kick the year off with the opening of a new oil bourse, or market.
Currently, there are two oil markets in the world, the New York Mercantile Exchange and the ICE Futures Exchange in London. Both trade in U.S. dollars. The Iranians want an oil bourse that trades in Euros. Iran has been trading in euros with some European and Asian partners since 2003. Oil producer Venezuela, to no one’s surprise, supports Iran’s planned bourse and the notion of trading oil in euros.
An Iranian-based oil market, trading in euros, may be a bigger threat to the Bush administration than an Iranian nuclear program, but Mr. Bush is safe for now at least. It looks as though the Iranians will not be able to pull off the launch next week; sources there say they hope to have the bourse up and running by the middle of the year. These things don’t happen overnight, once the bourse does get going, it will probably trade in both dollars and euros for the first few years and it will take those same few years – even under favorable circumstances – for trade to commence in all aspects of the oil business.
Meanwhile, the dollar will remain the globe’s reserve currency for the near future; no other currency has the stability or the volume to displace the dollar – for now. Still, there are reasons to dislike the dollar, not just because George Bush is a bully, but because the U.S. has a deficit of $8 trillion and a trade deficit of $600 billion. Someday these bills will come due and foreign banks don’t want to be holding too many dollars when they do, so they have reasons to cheer, if quietly, when the Iranians talk about moving oil commerce toward euros.
This is what post-peak oil looks like. Demand is, or will soon, outstrip supply, the market will turn increasingly savage and warfare, both economic and the shooting kind, will be more frequent than it already is. Today’s news says U.S. crude oil supplies are up, which will keep the cost from pushing past $63 per barrel, but the price is not expected to drop below $60.
Here are some energy updates from my corner of America. I’m guessing things are not much different where you live:
– Last week, local natural gas supplier has asked state regulators to allow a 17 percent increase in rates, to commence in October. This, after rates were allowed to rise 14 percent last October. That’s a one-third increase in the course of a year, about $400 for the average household and at the end of one of the warmest winters on record. One can only wonder what we’d be paying if we had had our usual four weeks of sub-zero temperatures.
– A few days later, we learned the local electric company plans to raise its rates 23 percent. That’s another $100 a year per household.
– Vermont’s only nuclear reactor has been allowed to increase its power by an unprecedented 20 percent. When the power was boosted by five percent, parts of the 34-year-old reactor began to vibrate. Vermont Yankee did not reduce power after the vibrations set in, but operators didn’t continue to increase it, either.
– Friday, a state hearing officer recommended that a proposed wind farm be denied a permit because it would have an adverse aesthetic impact on nearby logging land.
– Our Republican governor and Democratic-controlled legislature continue to fight over the best way to fund highway programs, including a proposed beltway around the city of Burlington. Studies have shown this $230 million project will save seven seconds on the average commute.
– Gov. Jim Douglas (R) made a surprise visit to Vermont National Guard troops serving in Iraq, courtesy of the Department of Defense. He’s now moved on to Afghanistan.
Crunch Time
Tuesday is the vernal equinox, which in Iran is celebrated as the new year. The Iranian government was hoping to kick the year off with the opening of a new oil bourse, or market.
Currently, there are two oil markets in the world, the New York Mercantile Exchange and the ICE Futures Exchange in London. Both trade in U.S. dollars. The Iranians want an oil bourse that trades in Euros. Iran has been trading in euros with some European and Asian partners since 2003. Oil producer Venezuela, to no one’s surprise, supports Iran’s planned bourse and the notion of trading oil in euros.
An Iranian-based oil market, trading in euros, may be a bigger threat to the Bush administration than an Iranian nuclear program, but Mr. Bush is safe for now at least. It looks as though the Iranians will not be able to pull off the launch next week; sources there say they hope to have the bourse up and running by the middle of the year. These things don’t happen overnight, once the bourse does get going, it will probably trade in both dollars and euros for the first few years and it will take those same few years – even under favorable circumstances – for trade to commence in all aspects of the oil business.
Meanwhile, the dollar will remain the globe’s reserve currency for the near future; no other currency has the stability or the volume to displace the dollar – for now. Still, there are reasons to dislike the dollar, not just because George Bush is a bully, but because the U.S. has a deficit of $8 trillion and a trade deficit of $600 billion. Someday these bills will come due and foreign banks don’t want to be holding too many dollars when they do, so they have reasons to cheer, if quietly, when the Iranians talk about moving oil commerce toward euros.
This is what post-peak oil looks like. Demand is, or will soon, outstrip supply, the market will turn increasingly savage and warfare, both economic and the shooting kind, will be more frequent than it already is. Today’s news says U.S. crude oil supplies are up, which will keep the cost from pushing past $63 per barrel, but the price is not expected to drop below $60.
Here are some energy updates from my corner of America. I’m guessing things are not much different where you live:
– Last week, local natural gas supplier has asked state regulators to allow a 17 percent increase in rates, to commence in October. This, after rates were allowed to rise 14 percent last October. That’s a one-third increase in the course of a year, about $400 for the average household and at the end of one of the warmest winters on record. One can only wonder what we’d be paying if we had had our usual four weeks of sub-zero temperatures.
– A few days later, we learned the local electric company plans to raise its rates 23 percent. That’s another $100 a year per household.
– Vermont’s only nuclear reactor has been allowed to increase its power by an unprecedented 20 percent. When the power was boosted by five percent, parts of the 34-year-old reactor began to vibrate. Vermont Yankee did not reduce power after the vibrations set in, but operators didn’t continue to increase it, either.
– Friday, a state hearing officer recommended that a proposed wind farm be denied a permit because it would have an adverse aesthetic impact on nearby logging land.
– Our Republican governor and Democratic-controlled legislature continue to fight over the best way to fund highway programs, including a proposed beltway around the city of Burlington. Studies have shown this $230 million project will save seven seconds on the average commute.
– Gov. Jim Douglas (R) made a surprise visit to Vermont National Guard troops serving in Iraq, courtesy of the Department of Defense. He’s now moved on to Afghanistan.
© Mark Floegel, 2006