"Fuzzy" idea- an oil based RV?

[FreckledFuzz]

My original post was super long, and I decided to K.I.S.S. it. My idea leave a lot to the imagination and open a lot of questions, but the basic rudimentary idea I present is plausible, and made my cup of coffee that much sweeter this morning.

I'm going to use the example of a 1:1$ RV for the public, and a $3.22 as a Government rate for buying oil. A few places have stated the idea of using Dinar to purchase oil. It's been said the Iraqis are a proud people, and why wouldn't they just exchange out dollars for dinars in a transaction if each had the same PPP? Personally, I'd use the dinar as it's much more colorful and artistic and the USD$, but that's just me

OK.... so what if the RV didn't have to be based on anyone's budget? What if the RV was a cleverly disguised loan of sorts-- to be paid off at the gas pumps by consumers?

When it's cashout time, and you get your country's currency, I propose those Dinars are going to be collected and shipped to the Government to use to buy oil at OPEC's former price before the crisis in the ME and OPEC lost control of pricing in 2005-- let's use this example:

$25/barrelX $3.22= $80.5

Where did I get this number? Why---it's in the news

http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Fwww.sotaliraq.com%2Fbusiness.php%3Fid%3D4394

What's to stop the US from printing *more* money to cover the public payout portion of it? It's minimal really, considering the latest of the FED audit of $16T loaned to banks. In essence, gathering all the Dinar in is going to create one gigantic Happenings book of coupons for oil, based on oil, with a $2.22 credit per dinar. The extra collected through the gas pump prices can facilitate growth in Iraq and increase production, and can support a public higher RV [or the government's rate of $3.22] in the future once the majority of the notes have been recalled/collected.

Oil per barrel out of the ME supposedly costs less than $10/barrel. Iraq has a lot of unchartered territory for oil and other resources, and oil production is on the rise.

Iraq is a wealthy country and every Iraqi a present value millionaire. Wealth in the world has shifted toward the owners of crude oil. Over the next two decades, total world energy consumption will almost double with serious alternatives to oil remain decades away. US oil consumption is expanding as production declines and imports climb. Oil prices and the energy share of national income will increase over the coming decades.

Monopoly resource profits will be going to the owners of oil and other energy resources. Oil extraction and refining are very competitive with profits slightly higher than the average industry but with high risk. The owners of the oil will enjoy the rising prices. Oil is owned primarily by governments around the world.

The price of a barrel of crude oil at the wellhead jumps around between $40 and $150 while extraction cost in the Middle East is under $10. The owners of the oil in the ground enjoy the profit. The Arab Gulf has 65% of the world’s proven oil reserves and Iraq has 12%. Oil in the ground is like money in the bank and that makes the government and perhaps Iraqis themselves wealthy. Iraq can produce 6 million barrels of oil a day, 2 billion barrels per year. At $50 per barrel, that oil would sell for $100 billion. The population of Iraq is 24 million and that oil income translates to $4000 per person.

http://www.auburn.edu/~thomph1/iraq.htm

I admittedly know absolutely nothing about oil prices per barrel outside it's based on supply and demand. However, even with inflation, how did the price more than triple since [about] 2003? Not even inflation can account for this, as I don't think oil production is a zero sum game. What happens to the extra money from a barrel of oil after it's processed? It appears the oil market is "rigged/fixed" as well, just like the stock market.

http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_chart.asp

http://www.wtrg.com/prices.htm

Throughout much of the twentieth century, the price of U.S. petroleum was heavily regulated through production or price controls. In the post World War II era, U.S. oil prices at the wellhead averaged $28.52 per barrel adjusted for inflation to 2010 dollars. In the absence of price controls, the U.S. price would have tracked the world price averaging near $30.54. Over the same post war period, the median for the domestic and the adjusted world price of crude oil was $20.53 in 2010 prices. Adjusted for inflation, from 1947 to 2010 oil prices only exceeded $20.53 per barrel 50 percent of the time.

Until March 28, 2000 when OPEC adopted the $22-$28 price band for the OPEC basket of crude, real oil prices only exceeded $30.00 per barrel in response to war or conflict in the Middle East. With limited spare production capacity, OPEC abandoned its price band in 2005 and was powerless to stem a surge in oil prices, which was reminiscent of the late 1970s.

More reading:

What determines oil prices?

http://www.investopedia.com/articles/economics/08/determining-oil-prices.asp#axzz1bhz2FKbO

Iraq Oil: Reserves, Production, and

Potential Revenues[2005 government document]

http://www.au.af.mil/au/awc/awcgate/crs/rs21626.pdf

Future of Iraq Project [2002- Government unclassified doc]

http://www.gwu.edu/%7Ensarchiv/NSAEBB/NSAEBB198/FOI%20Economy%20and%20Infrastructure.pdf

[FreckledFuzz]

I'm going to 'bump' this as it got buried so quick and, to be self- indulgent just once--- I spent a lot of time on this so I'd like for at least some people to read and comment on it

[S. Allman]

America has more oil than all the Arab nations combined, but will not use it because of a few whining liberal tree huggers. I believe they state over 5 trillion barrels.

Edited October 24, 2011 by S. Allman

[FreckledFuzz]

America has more oil than all the Arab nations combined, but will not use it because of a few whining liberal tree huggers I believe they state over 5 trillion barrels.

True...but I like this excerpt

Iraq Oil Reserves and Production History. With 115 billion barrels of proven

crude oil reserves, Iraq has the world’s second-largest endowment of oil, amounting to

11% of the global total. Only 17 of 80 oil fields have been developed; the most

significant are Kirkuk in the north and Rumaila in the south. There has been virtually no

exploration for many years, suggesting that Iraq may have much more oil than currently

estimated. Iraq also has significant proven natural gas reserves; virtually all are

undeveloped. As a point of reference, Saudi Arabia, at 260 billion barrels of proven oil

reserves, has the largest reserve base and can produce as much as 10.5 million barrels per day (mbd).

http://www.au.af.mil/au/awc/awcgate/crs/rs21626.pdf

Edited October 24, 2011 by FreckledFuzz

[zigmeister]

I am right with you on this one Fuzzy. It did not occur to me until I re-read the interview with Shabibi and Selah last August.

The producer of the show:

Dr. Sinan, one of the major duties for the CBI is to raise the value of the currency and make it a welcomed currency where ever we go with it, and also will the government set a time to sell amount of Iraqi Oil for Iraqi Dinars and remove it all from the outside and make the preparations for the process of changing the currency?

So if they oil for the dinar outside of it's borders, could it mean the countries pay for the cash in, and in the process they get oil contracts and make money. Iraq does not have to pay out of pocket? The other countries make money on the oil they sell. It kind of reminds me of a high powered bartering system.

[FreckledFuzz]

I am right with you on this one Fuzzy. It did not occur to me until I re-read the interview with Shabibi and Selah last August.

So if they oil for the dinar outside of it's borders, could it mean the countries pay for the cash in, and in the process they get oil contracts and make money. Iraq does not have to pay out of pocket? The other countries make money on the oil they sell. It kind of reminds me of a high powered bartering system.

Exactly Zig

Iraq would not pay out of pocket at all. Before 2005 OPEC has a price band on oil $22-28 USD per barrel--until it's [key words here] production reserves disappeared.

http://www.wtrg.com/prices.htm

I'm thinking with the cost to produce the oil coupled with people paying at the pump [iraq has already said it needs to maintain $80 PB] let's average that band to $25[barrel

$3.22 [25]= $80.5

1:1 RV for the public and a government oil rate of $3.22---the excess [$2.22] allows for not only future] cheaper prices, but for now facilitates the growing process /rebuilding/expansion in Iraq, and will have enough in a few years to have their currency [for the public] really be valued at $3.22. Until that time, it would be managed float of 1:$1.

So who's initially paying for the public cashout? IMO--more printed US$ [and or Euro---could be both] A nominal figure, really

To dedollarize---ok. rational thinking has it it *should* be more than the US to get dollars out. But--if it had the same purchase power [dinar] to what they are already using--[uSD$]--- if the Iraqi people are so proud as stated...why wouldn't they just swap it out? The incentive is it's their currency.

Who's funding this project? ---Everyone who buys and uses some sort of petrol.... *we* the gas and diesel consumers

[zigmeister]

Exactly Zig

Iraq would not pay out of pocket at all. Before 2005 OPEC has a price band on oil $22-28 USD per barrel--until it's [key words here] production reserves disappeared.

http://www.wtrg.com/prices.htm

I'm thinking with the cost to produce the oil coupled with people paying at the pump [iraq has already said it needs to maintain $80 PB] let's average that band to $25[barrel

$3.22 [25]= $80.5

1:1 RV for the public and a government oil rate of $3.22---the excess [$2.22] allows for not only future] cheaper prices, but for now facilitates the growing process /rebuilding/expansion in Iraq, and will have enough in a few years to have their currency [for the public] really be valued at $3.22. Until that time, it would be managed float of 1:$1.

So who's initially paying for the public cashout? IMO--more printed US$ [and or Euro---could be both] A nominal figure, really

To dedollarize---ok. rational thinking has it it *should* be more than the US to get dollars out. But--if it had the same purchase power [dinar] to what they are already using--[uSD$]--- if the Iraqi people are so proud as stated...why wouldn't they just swap it out? The incentive is it's their currency.

Who's funding this project? ---Everyone who buys and uses some sort of petrol.... *we* the gas and diesel consumers

One of the ways to fight dollarization was taxing the people who used it. This is what they said in the interview. Soooo.......that would hinder the dollar a bit.

[uncirculd]

ok, comment is, oil prices are rigged. YES! And it has a lot to do with inflation and deflation. It creates it's own demand. The extent of the world economy and monetary system is so out of hand. I wonder if it will ever recover. Really.

[429]

Great thread, Fuzz. I see where you're going with it and it makes sense.

I can't go with the 1:1 exchange, though. The USD, the Euro and the GBP are established and "valuable" (please note the quotation marks) currencies. I really think that when the US pulls out of Iraq and takes the continued supply of USD with them, the Euopean Union (oil contracts, service contracts, etc. are already in place), if given the chance, will place the Euro as the next default currency.

Also, there's a long time history of the Iraqis basing their currency on the GBP, first by using the Indian Rupee while India was part of the Empire and then by basing the dinar to the GBP when the original dinar was introduced, that there may be a possibility of them using the GBP. But the real need is to make the dinar more valuable than any of these western currencies.

I see the IQD coming out somewhere at least above the Euro and probably equal to or above the GBP. This would still fall within the parameters of your equation and while it wouldn't provide the $2.22 true profit for each barrel, there is still significant money that can be used to rebuild the infrastructure. And not even touch Iraq's monetary reserves.

Again, great thread! +1 for you and your research!

[Captjohn]

America has more oil than all the Arab nations combined, but will not use it because of a few whining liberal tree huggers. I believe they state over 5 trillion barrels.

That will change when we get a sane, pro-American in the WH.

[FreckledFuzz]

Great thread, Fuzz. I see where you're going with it and it makes sense.

I can't go with the 1:1 exchange, though. The USD, the Euro and the GBP are established and "valuable" (please note the quotation marks) currencies. I really think that when the US pulls out of Iraq and takes the continued supply of USD with them, the Euopean Union (oil contracts, service contracts, etc. are already in place), if given the chance, will place the Euro as the next default currency.

Also, there's a long time history of the Iraqis basing their currency on the GBP, first by using the Indian Rupee while India was part of the Empire and then by basing the dinar to the GBP when the original dinar was introduced, that there may be a possibility of them using the GBP. But the real need is to make the dinar more valuable than any of these western currencies.

I see the IQD coming out somewhere at least above the Euro and probably equal to or above the GBP. This would still fall within the parameters of your equation and while it wouldn't provide the $2.22 true profit for each barrel, there is still significant money that can be used to rebuild the infrastructure. And not even touch Iraq's monetary reserves.

Again, great thread! +1 for you and your research!

Thanks!

To me 1:1 just seems logical, however, I feel any rate between 1 and $2 would work (publicly) with the world governments turning in their 'dinar oil coupons' at $3.22 and make (basically) everyone in the game not only happy,but come out a winner.

[design interrupted]

Thanks, Freckled Fuzz, for your time and energy. Your research is greatly appreciated!

[zigmeister]

I have been thinking about the Iraqi dinar becoming a reserve currency. We know it is their goal, what if the Arab Nations finally get their one currency and peg it with the Iraqi dinar? Could be very powerful folks.

[fastarnie]

I like what your puttin down, and that it takes alot of numbers I don't really understand out of the equation. M2, budget, debt, inflation, and all the numbers we don't have blah blah blah... They could come out at whatever they wanted to and still make money hand over fist do to fractional banking. Good work and we'll see. Nobody really knows.

[Francie26]

America has more oil than all the Arab nations combined, but will not use it because of a few whining liberal tree huggers. I believe they state over 5 trillion barrels.

I wish someome would bring it up for a vote--a national referendum. I think enough very worried people would finally get over their squeemishness enough to allow us to mine our own black gold.

[billy goat]

True...but I like this excerpt

Iraq Oil Reserves and Production History. With 115 billion barrels of proven

crude oil reserves, Iraq has the world’s second-largest endowment of oil, amounting to

11% of the global total. Only 17 of 80 oil fields have been developed; the most

significant are Kirkuk in the north and Rumaila in the south. There has been virtually no

exploration for many years, suggesting that Iraq may have much more oil than currently

estimated. Iraq also has significant proven natural gas reserves; virtually all are

undeveloped. As a point of reference, Saudi Arabia, at 260 billion barrels of proven oil

reserves, has the largest reserve base and can produce as much as 10.5 million barrels per day (mbd).

http://www.au.af.mil/au/awc/awcgate/crs/rs21626.pdf

[AoK]

That's why we need to stay the course! This WILL happen at whatever rate and NO L%P... gotta get past the smoke & mirrors - this PSYOP campaign to get people to sell...the FUNDAMENTALS of this investment still hold true. Thanks for the post! +1

[billy goat]

Good info Fuzz. Saudi output is adjusted on demand primarily to garner favorable positioning in the global oil politik. Their production goals are exploitive and internally expensive but reflective of their fear of losing control. They flat out govern OPEC and work their influential status in the IMF to their benefit. This is the proverbial 'Hail Mary' situation for the Saudis. Faced with unsustainable production costs - they are milking their position for all it's worth and pulling out all stops in working their jihad.

[thatoneguy]

I like the thought process on this thread. Very sensible. Chao.