Oil Now Makes Our Dollar-Based Global Economy Inflammable

BY: Alex Gloy

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.

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Crude oil is one of the cheapest liquids, priced at $1.90 per gallon, while other liquids like Coca-Cola cost $2 per liter.

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Oil price increases damage economic growth and lead to inflation, as evidenced by the aftermath of the Russian invasion of Ukraine.

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Global oil market dominates all other raw materials; with oil price at $80/barrel, demand amounts to $8 billion daily.

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Global oil consumption creates a $2.6 trillion per year demand for US dollars, with the US consuming 20mbpd and producing 12.5mbpd.

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Oil exporting nations can't easily sell dollars received for local currency due to the threat of breaking currency pegs.

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Oil-exporting countries' dollar proceeds are foreign exchange reserves, viewed positively by them, but worrying for the US.

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US exports debt until it resolves trade deficit, forcing trade partners to buy treasury securities instead of goods.

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