[Dreamtwister]

$this->bbcode_second_pass_quote('mekrob', 'T')hankfully we still have SA under our control (but for how long can be debated).

[DantesPeak]

From http://www.energybulletin.net/16110.html

$this->bbcode_second_pass_quote('', 'C')ollapse of the Petrodollar Looming

The announcement by President Putin of a Russian bourse trading oil and gas in Roubles threatens the stability of the US Dollar far more than Iran's bourse alone would do, and continues the slide in relations between the old Cold War foes.

In his annual State of the Nation address to both houses of parliament on 10 May 2006, Novosti reports President Putin said that work on making the Rouble an internationally convertible currency would be completed by 1 July 2006, six months ahead of schedule. To promote the currency, he announced that an oil and gas stock exchange will be created in Russia, that would trade in Roubles.

[mekrob]

Does anyone have figures about what's the current daily circulation or demand for US dollars? How much damage would a loss of one billion dollars per day do the dollar? (I'd like that second question not answered in "A shitload", if you don't mind.) I seem to recall something about after Bush's addicted to oil, that we had a record amount and it was something like ~24 billion dollars in a day or week or something. Anybody? Thanks

[Brasso]

Russia is expanding massively in the energy market. In the UK alone:

- Kuzbassrazrezugol (Large Russian coal company) has bought up Hatfield colliery

- Kuzbassrazrezugol is also eyeing UK Coal for a takeover. Bear in mind Britain has the 7th largest reserves of coal in the world.

- Gasprom is eyeing Centrica for a takeover.

Instead of buying gold in the current price break, perhaps I should be buying roubles! And learning Russian ...

[ClassicSpiderman]

Russia is rising like a phoenix right out of the ashes. The economic collapse of the 1990s was tragic and deliberately engineered by insiders, but it tempered the general population and we're seeing it pay off today.

There's no question that Vladimir Putin is a patriot, that's why the neocons have such a hate-on for him. They loved that fat alcoholic Boris Yeltsin as he sold off state assets for pennies on the dollar.

[DantesPeak]

Lukoil bought 1200 Getty gasoline stations in the New York - New Jersey area, and now they are buying Exxon and Mobil stations. They are creating a kind of gasoline monopoly in my part of the country. Is that good? Maybe not, but they are replacing Mideast oil, so it sounds good.


$this->bbcode_second_pass_quote('', 'L')UKOIL has a total of 3,940 retail outlets of which 1,470 are in Russia, 1,370 are in the United States and approximately 1,100 are located in Europe.

[RdSnt]

$this->bbcode_second_pass_quote('mekrob', 'D')oes anyone have figures about what's the current daily circulation or demand for US dollars? How much damage would a loss of one billion dollars per day do the dollar? (I'd like that second question not answered in "A shitload", if you don't mind.) I seem to recall something about after Bush's addicted to oil, that we had a record amount and it was something like ~24 billion dollars in a day or week or something. Anybody? Thanks

[parsifal]

The Russians are strong, tough, resourceful, and my friends. I studied there three times. Ironically, in 1990 I met people in Russian Oil. But A Russian Oil Bourse is intriguing. The only problem is Russia has a declining population as you all know; HIV is the next time bomb there. I think there are going to be a number of Americans seeking to emigrate soon. I remember a debate at Oxofrd between the late Caspar Weinberger and a student, in which the student remarked America as 'just another nation in history." Peak Oil and "Peak Debt" (I encountered this term somewhere on the message board).

[gg3]

The great tragedy here is that the US, Europe, and Russia, all have more in common with each other culturally than any of them do with most of the countries in the Middle East. Not the least of which are separation of church & state, legal rights for women, and parliamentary or republican forms of government that actually function as such (the present one-party state in the US notwithstanding, and we'll fix that this year).

If the US, Europe, and Russia could hang tough together, we might all get over the worst of the effects of instability in the Middle East. But as with most ecosystems, competition is usually focused most sharply on those who are most-similar to oneself.

Likely scenario: Europe will side with Russia for obvious practical reasons, and the US will be stuck for a while, until it can demonstrate the capability to function in a real coalition with the rest of the Americas (not simply boss them around).

[dissident]

A Russian ruble oil bourse is useful for reducing the inflationary pressure on the ruble from oil revenues. Currently the CBR has to print rubles to absorb the oil/gas revenue inflow.

[perdition79]

$this->bbcode_second_pass_quote('', 'T')he US dollar is the defacto reserve currency that the world runs on.
It crashes, we all can look forward to the soup line.

[DantesPeak]

dissident and perdition79, well put. The US forces the rest of the world to pay for its inflationary policies.

The US worldwide dollar regime not only subsidizes an extravagant lifestyle in the US (government deficit spending plus the housing boom), but shifts the burden of US inflation to those countries with the greatest relative trade surpluses. In the recent case, this is Russia, China, and OPEC.

The US runs a current account deficit nearly $1 trillion a year, in no small part due to energy costs, but just merrily borrows this amount from foreigners. This money finances the US government budget deficit and the housing boom at the same time. Everyone in the US is happy; meanwhile the US outbids the rest of the world for remaining energy reserves and leaves them with less.

But that's not all. All those extra dollars have to be absorbed somehow. To prevent the value of their currencies from appreciating against the dollar, nations with trade surpluses must take actions. They have two basic choices - using domestic investment funds to buy dollars, or in the case of China and previously Japan, or they just issue new fiat money to buy the dollars. If they don’t want to commit to these disruptive policies the alternative is letting their currency appreciate.

So far, this ad-hoc, informal Bretton Woods II system has served the US well after a few rough years in the early 1970s. Thereafter the US subtly forced OPEC to accept dollars for all oil transactions in return for protection. Iraq didn't want to pay (by collecting oil income in dollars), and now Iran doesn't want to pay. Most interesting of all, if Russia drops out of the system, the days of a stable US dollar system may be doomed.

[MrBill]

$this->bbcode_second_pass_quote('dissident', 'A') Russian ruble oil bourse is useful for reducing the inflationary pressure on the ruble from oil revenues. Currently the CBR has to print rubles to absorb the oil/gas revenue inflow.

[MrBill]

In any case, here is the latest information I could find.
$this->bbcode_second_pass_quote('', '
')Russia RTS to launch Urals crude futures June 8

(Adds more quotes, contract specification)
By Dmitry Zhdannikov
MOSCOW, May 22 (Reuters) - One of Russia's leading exchanges, the RTS, said on Monday it will start trading futures in Urals export blend crude oil in June, potentially helping transform the big-volume grade into a global benchmark.
The RTS and oil pricing agency Platts <MHP.N> signed an agreement on the use of Platts' prices for futures and options contracts to be traded on the exchange.

From June 8, the RTS will start trading futures and options on contracts for Urals crude, as well as gas oil, fuel oil and jet kerosene, the RTS and Platts said in a joint statement.
"This will create a foundation for a full-fledged exchange-based commodity market in Russia," RTS President Oleg Safonov told a news conference.
With production of more than 9 million barrels per day (bpd) and exports of over 5 million bpd, Urals output dwarfs the sweet crudes that form the basis of European Brent futures <LCOc1> and U.S. light sweet crude <CLc1>.
Urals is a sour, relatively difficult to refine crude, priced at a discount to the European Brent benchmark.
"We feel that there is a need for sour crude benchmark and Urals meet many of the requirements," said Platts' global director for market reporting Jorge Montepeque.
A liquid futures market could improve transparency of price setting and could also generate speculative trade, which Russian authorities think could narrow the discount of Urals to Brent.
The project comes amid Russian authorities' comments that the discount of Urals, Russia's main crude oil export blend, to the global Brent benchmark is unfair.
President Vladimir Putin this month called on the government to speed up work to launch trading of Russian oil, products and commodities on local bourses in roubles.

TOUGH TASK
RTS officials say Urals futures could serve as a hedging or arbitrage instrument for many kinds of investors and traders.
"We primarily see it as a good and completely new financial instrument, but it could gradually help Russian crude become a benchmark," said RTS's chairman Jacques Der Megreditchian.
But many market players doubt it.
"RTS is looking for new instruments. As any other bourse it is looking to boost its turnover. I can't see how this product can help Urals become a benchmark," says a crude oil trader with a Western major in Moscow.
The contact has no physical delivery but only cash settlement in roubles at the end of the month against the Platts' price of Urals CIF ARA (Amsterdam-Rotterdam-Antwerp).
The volumes of the new contract will be 10 barrels for oil, one tonne for gas oil and two tonnes for fuel oil.
"This is a completely virtual financial instrument, which will only further peg Urals to Platts' Brent," said Alexei Kuzmichev, shareholder of Russian oil major TNK-BP <TNBPI.RTS>.
Kuzmichev and his Expertica firm have a rival project together with NYMEX and want to launch Urals futures on London's NYMEX Europe bourse also in June.
That contract will have a one-month option for physical delivery -- 730,000-barrel regular ex-Primorsk FOB cargo.
Montepeque agreed that physical delivery is key to keeping futures contracts in line with reality, but added that in the case of RTS it arises from Platts.
He also added that although increased liquidity can help Urals become a benchmark, it would not necessarily change the differential to Brent.
"The best thing you can do for a proper benchmark to exist is to let the pure free market process take over. If you try to influence the process than this process doesn't yield market price," he said.
This would mean reduce the influence of state pipeline monopoly Transneft on Russian exports -- a very unlikely move at a time when the Kremlin is seeking to boost control over the strategic energy sector.
"There is a way to narrow the discount of Urals to Brent -- it is first of all to improve the quality of oil," added Platts vice-president

[DantesPeak]

Thanks Mr. Bill.

Interesting how rapidly Russia has responded to Putin's speech requesting a workable oil trading system by July 1.

But like Mr. Bill says, will this system dominated by insiders really work? If so, US dollar demand will fall.

The trading in gold is also interesting, since this may not be insider controlled. Mideast and other investors worried that the US, acting to stop WMDs and terrorism, may try to sieze their European bank accounts - or at least block transactions with Euro banks. Russian rouble accounts look like an alternative to that.

[clueless]

It sounds to me that the end result in the USA will most likely be skyrocketing import prices ? And a falling dollar ?

In short more re-distribution of wealth to our suppliers. This will inevitably destroy demand in the USA, how will foreign producers/manufacturers balance this issue, who will be the next consumer on the block ?

What a tangled web we live in.

[dissident]

MrBill,

Just because the CBR got rid of the mandatory conversion of oil revenues from dollars to rubles doesn't imply that it has stopped printing rubles in response to those revenues. Russian real estate development is not denominated in dollars just as Russian workers who pay for that real estate are not paid in dollars.

You have not disproven the original point, that oil money drives up inflationary pressure in the Russian economy.

Also, you can't dismiss a Russian oil bourse with some handwaving about insider trading. After the bourse is in place Russia can kill off trading of its oil on foreign exchanges. Sure anyone can come up with some instrument but it will not be where the action is.

[MrBill]

$this->bbcode_second_pass_quote('dissident', 'M')rBill,

Just because the CBR got rid of the mandatory conversion of oil revenues from dollars to rubles doesn't imply that it has stopped printing rubles in response to those revenues. Russian real estate development is not denominated in dollars just as Russian workers who pay for that real estate are not paid in dollars.

You have not disproven the original point, that oil money drives up inflationary pressure in the Russian economy.

Also, you can't dismiss a Russian oil bourse with some handwaving about insider trading. After the bourse is in place Russia can kill off trading of its oil on foreign exchanges. Sure anyone can come up with some instrument but it will not be where the action is.

[MrBill]

$this->bbcode_second_pass_quote('DantesPeak', 'T')hanks Mr. Bill.

Interesting how rapidly Russia has responded to Putin's speech requesting a workable oil trading system by July 1.

But like Mr. Bill says, will this system dominated by insiders really work? If so, US dollar demand will fall.

The trading in gold is also interesting, since this may not be insider controlled. Mideast and other investors worried that the US, acting to stop WMDs and terrorism, may try to sieze their European bank accounts - or at least block transactions with Euro banks. Russian rouble accounts look like an alternative to that.

[MrBill]

$this->bbcode_second_pass_quote('', 'Y')ou have not disproven the original point, that oil money drives up inflationary pressure in the Russian economy.