Ding, ding, prices are going up

After I wrote ‘A symphony in only two parts?’ (At https://lawlordtobe.com/2022/03/16/a-symphony-in-only-two-parts/) two articles appeared (might have been more, but these two lighted up). The first one is from a place called oilprice dot com. The article (at https://oilprice.com/Energy/Energy-General/Saudi-Arabia-Considers-Ditching-The-Dollar-For-Chinese-Oil-Sales.html) gives us ‘Saudi Arabia Considers Ditching The Dollar For Chinese Oil Sales’ with the added “According to the report, the talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom.” OK, that is fine, but I reckon the way Crown prince Mohammed bin Salman Al Saud has been treated by some will not have helped. Moreover if China sets the barricades of pushing forward and aiding SAMI in getting the internal growth desired these pushes might come to fruition. We are also given “China buys more than 25% of the oil that Saudi Arabia exports, and if priced in yuan, those sales would boost the standing of China’s currency, and set the Chinese currency on a path to becoming a global petroyuan reserve currency.” I feel uncertain to answer that part, but consider that there is a limit to oil, consider that China will request not the 25% they get now, but 30%, with an overcapacity of amount X, now consider that Saudi Arabia (ARAMCO) does that and therefor the US (and west) will now receive 5% minus X less. Prices will skyrocket. More importantly in the last hours we saw ‘Boris Johnson Visits U.A.E., Saudi Arabia, Seeking More Oil’ and here too we see the British PM go home without any commitments, CNN even gives us ‘Biden demands faster drop in gas prices as oil tumbles’, so where is he going to demand that from? Russia? Venezuela? UAE? Saudi Arabia? The man who was desperately outspoken about making Crown prince Mohammed bin Salman Al Saud a pariah is now telling that same person to drop prices? Man does karma suck and then some? We see the stage of painful karma in article one, but why article two? That is seen as we contemplate the title ‘Saudi Arabia’s Oil-For-Yuan Bid Won’t Threaten the Dollar’ (at https://www.bloomberg.com/opinion/articles/2022-03-16/saudi-arabia-s-oil-for-yuan-proposal-won-t-threaten-the-dollar) it is a good and decent piece, but an opinion piece none the less. There we get “Is there a situation more absurd than two of the world’s most dollar-dependent economies promising to free themselves from the exorbitant burden of the dollar?” I believe that a few gaps are there. This is no longer a ‘too big too fail’ market. The US has a debt surpassing $30,000,000,000,000 and that debt is growing by billions a day. In addition in this economy that is picking itself up fuel prices could (could being the operative word) go up by 20% before October and then winter comes. You all watched the income of dreaded winter in Game of Thrones, now you get to see it in your neighbourhood (if you are north enough to see it for yourself). So the quote “it’s inevitable that the perennial chatter about the yuan challenging the dollar’s status as the world’s reserve currency should be revived. Such talk has always been fanciful — but it’s even more unlikely right now.” The man is not incorrect, but these talks have been going on for 6 years and in that time the largest one has surpassed a point of no return point in debts, and number two and three (EU and Japan) are not that far behind, they will take extensive damage if the dollar topples. Yes, we all here that noise “It will never happen” but really? How much debt will that take and when it happens, the Kingdom of Saudi Arabia will have to do whatever is best for the Kingdom of Saudi Arabia. The writer then gives us “The yuan punches far below its weight in terms of foreign exchange transactions, and the dollar punches above its weight” which to some degree gives us that Saudi Arabia might consider it and when the oil shortages start adding up, that move of Saudi Arabia solidifying longer and stronger walls with China the stage is partially set. Life in the US and EU will become unbearably hard. Even now Japan is trying to set up new stimulus packages and we saw how great that was for the EU, trillions in added debt and no restarted economy. Ad there is a direct link in support between the US, EU and Japan. So when these support structures collapse we see a sort of house of cards impact and that affects the global economy, no matter how you want to present that picture. Consider the simple stage of California. In Los Angeles fuel costs $5.876, now consider adding 20% to that, all whilst life in Los Angeles (all over California) is as expensive as it ever was. With the shortage of drivers and deliveries that market will sure to set a few more stages. In 11 districts in California fuel prices are (presently) the highest ever, so add 20% to that? You think it is impossible? Think again. The Middle East has given NO guarantees that there will be more fuel, it basically has no interest to do that, or to lower prices and around the corner is China enjoying the commercial stage the US (EU too) pushed themselves in and they get to direct the fallout of that setting. 

Now, there needs the be a clear message. “I could be wrong” an educated guess remains a guess, yet what I found is coming from decent sources and because the writers do not want to look into the dark corner does not mean that dark corner goes away, it merely means that whatever comes from there will come less expected and hits the people squarely on the jaw. And the setting that we see now has been growing month after month for about 2-3 years. So the people in that corner WANT this to happen. Like myself they are hoping for that fat bonus and some of them have received guarantees (I did not) So the people pushing this have an interest to push this. I do not care that much unless the 3.75% bonus comes my way. At that point I would state ‘Push all you want’ because that too is the result of a commerce based world and now the inhumane setting of that becomes clear. The US never cared when they got to call the shots, but that is now no longer the case is it? So when we see a president giving CNN ‘Biden demands faster drop in gas prices as oil tumbles’, they seemingly forget that oil prices were dropping when there was still supply at a higher price and there is a decent chance that these prices will go back up before those reserves are completely gone. And when they are gone oil volatility will hit American households all over (EU too). The dream of every family it own car will be to live in a stage of perpetual work at home because the people cannot afford to go to the office and then reality comes calling double quick. So perhaps yes, I do hope I get my bonus, if only to retire with a will to live and I am not alone in that setting. There are millions like me all over the world.