BY: Alex Gloy
Oil Now Makes Our Dollar-Based Global Economy Inflammable
Oil and its products are crucial to the economy due to their energy density, a gallon of gasoline can move a car for 24.2 miles.
Crude oil is one of the cheapest liquids, priced at $1.90 per gallon, while other liquids like Coca-Cola cost $2 per liter.
Oil price increases damage economic growth and lead to inflation, as evidenced by the aftermath of the Russian invasion of Ukraine.
Global oil market dominates all other raw materials; with oil price at $80/barrel, demand amounts to $8 billion daily.
Global oil consumption creates a $2.6 trillion per year demand for US dollars, with the US consuming 20mbpd and producing 12.5mbpd.
Oil exporting nations can't easily sell dollars received for local currency due to the threat of breaking currency pegs.
Oil-exporting countries' dollar proceeds are foreign exchange reserves, viewed positively by them, but worrying for the US.
US exports debt until it resolves trade deficit, forcing trade partners to buy treasury securities instead of goods.
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