Why is it unlikely the world economy will move away from Oil?

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Welcome to Finance and Fury, The Say What Wednesday edition, where we answer your questions.

Today we have a question from Nick - Watching the Leonardo Di Caprio documentary about global warming, which touched on how the large oil corporations used bribes to corrupt politicians into slamming down new legislation to move towards a greener earth.

My question is: Have Politicians been holding off implementing renewable energy in the fear that it would stagnate the economy by interrupting the multi-billion dollar industry? And if we moved completely from Oil to Renewable Energy, what sort of effects would take place on the economy? Would it be smooth sailing and all good?

We will cover this in a 3 part series, but may not be back to back.

  1. Today will focus on oil and why it is unlikely we will move away from it anytime soon
  2. Then the climate change debate, and come back to Leo and Al Gore
  3. The final episode, look at the solutions at work and how they work

Today:

  • What happens if they do?
  • I think the reluctance to move to renewable energies, away from oil, is 5 fold
  1. What oil is used in
  2. The technology for renewables
  3. Political donations
  4. Can’t tax renewable emissions
  5. The petrodollar

History lesson: “there is nothing new in the world, except for the history you do not know”

  1. In 1944 global leaders got together and created a new world economic order after the world wars
  2. The US was now the world’s leading economic power
  3. Why would 44 countries allow the value of their currencies to be dependent upon the US dollar?
  4. By the 1960s the US hadn’t lived within their means
  5. By 1971 the trade deficits increased and domestic spending increased
  6. Growing demand for countries’ gold back
  7. What could they do?

President Richard Nixon Shocked the Global Economy, August 15, 1971

  1. The gold standard was abandoned, now a FIAT system
  2. Now the currency is a floating currency, based on market forces
  3. The federal reserve now is maintaining the currency
  4. They have never been audited either
  5. Federal income tax goes towards paying back the federal reserve
  6. Kennedy tried to change this, execute order 11110
  7. Reagan tried to bring in his election promised tax cuts, and there was an attempt on his life
  8. Henry Kissinger and the Petro Dollar
  9. The OPEC nations agreed to price oil in USD
  10. Artificial demand for USD
  11. The Axis of evil?
  12. There are problems for countries when they try and move away from the Petro Dollar

As more countries move away from the Petro Dollar, the US will experience inflationary pressures:

  • What happens if this system ends?
  • What actions can they take to avoid collapse?
  • How would the world be affected?

Summary:

  • Backing the currency to provide demand to allow increased supply
  • The forces of the oil market, and the result of a big government
  • Renewable energy, climate change, and greenhouse emissions is a different topic for another episode

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