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The Petrostate Hex: Visualizing How Plunging Oil Prices Affect Currencies

Tyler Durden's picture




 

Every day, the world consumes 93 million barrels of oil, which is worth $4.2 billion.

Oil is one of the world’s most basic necessities. At least for now, all modern countries rely on oil and its derivatives as the backbone of their economies. However, the price of oil can have significant swings. These changes in price can have profound implications depending on whether an economy is a net importer or net exporter of crude.

Net exporters, countries that sell more oil abroad than they bring in, feel the sting when prices plunge. Less revenue gets generated, and this can impact everything from balancing the budget to the value of their currency in the world market.

Net importers, on the other hand, benefit from lower prices as it decreases input costs for production. For example, a country like Japan only meets 15% of its energy needs domestically, and must import 3.5 million barrels of oil each day. A lower oil price significantly decreases these costs.

For many major net exporters of oil, changes in oil prices are highly correlated with their currencies. With oil prices crashing over the last year, currencies such as the Canadian dollar and Russian ruble have been highly impacted in terms of USD. But the impact of oil on currency depends on how central banks approach to policy.

 

Courtesy of: Visual Capitalist
 

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Sat, 09/05/2015 - 21:25 | 6514396 Haole
Haole's picture

Thank god for all those dead lizards and palm trees that made this possible, huh?  /s

Sat, 09/05/2015 - 22:34 | 6514494 cheka
cheka's picture

spot on haole.  anyone using the term 'fossil fuel' may as well stamp dumbfck on his forehead

"Every day, the world consumes 93 million barrels of oil"

how many dinos have been pumped out of the ground over the last 100 yrs?

Sat, 09/05/2015 - 22:51 | 6514518 MarketAnarchist
MarketAnarchist's picture

Correct Cheka.   See "Abiotic Oil" .... Hydrocarbons (so called "fossil fuels") are naturally occuring through chemical synthesis in the earths mantle and are present in comets.

 

 

Sun, 09/06/2015 - 03:47 | 6514743 Victor999
Victor999's picture

This has not been proven by any means.  Pure speculation at this point.  At this date, no known processes produce hydrocarbons whic have an organic base by definition.  It has been proven that oil comes from plant and animal life.  If you have proof otherwise, show it.  Otherwise you are showing your ignorance.

Sun, 09/06/2015 - 07:01 | 6514814 negative rates
negative rates's picture

Proof is subjective and interprative, the Earth used to be a ball of flaming butane called the sun, it was extunguished by water from a dying planet leaving the means for life once the elements calmed down. Then split apart so life could begin, so in theory, the hydrocarbons are limitless until they are not, and then the whole process starts again. They didn't teach you that in school? I wonder why, perhaps education is pure speculation today and nearly worthless.

Sun, 09/06/2015 - 10:47 | 6515147 clade7
clade7's picture

I'm gonna go with Hank Hill's expertise on this subject..

to him, butane is 'bastard gas'....Nice try Poindexter..

Sun, 09/06/2015 - 07:21 | 6514825 indygo55
indygo55's picture

Here is a NASA link that may help you understand that hydrocarbons are everywhere in great volumes. The price of oil is created to contrlo the masses. It always has. Thats why alternatine energy sources have been surpressed for decades. It s all controlled. 

http://www.nasa.gov/mission_pages/cassini/media/cassini-20080213.html

 

Ask yourself why hasn't a thorium breeder reactor been developed? It because energy would become cheap and readily available to everyone and energy is the one thing we all need. Wake up man! We need to stop being so fucking controlled by inbred selfish sociopaths who believe they own the world and only they can control everything. They don't deserve and they certainly had their chance and have failed. IMHO.


Sun, 09/06/2015 - 08:08 | 6514852 negative rates
negative rates's picture

Japan failed with those things and then went into full bore denial about it, that's why you don't hear about it, the spent rod issue never gets resolved because there is always another SUCKER to pick up the dream and run with it. Cold fusion and consequences bitches!!

Sun, 09/06/2015 - 10:38 | 6514914 Haole
Haole's picture

"This has not been proven by any means."

This is summary bullshit and a blatant lie.

Tell that to the Russians who proved it in the 50s and have perfected deep drilling since. 

Why are there vast oceans of petroleum within the Earth's mantle, quite a few miles deeper than ANY organic matter has ever been sourced? Fact.

Prove how this happens, otherwise you're not only showing your ignorance but outright hypocricy.

 

 

 

Sun, 09/06/2015 - 09:33 | 6514951 DanDaley
DanDaley's picture

If abiotic oil is a fact, then why are oil fields around the world becoming depleted one after another?

 

The tooth-fairy produces oil, too, but she just never gives it out...same thing.

Sun, 09/06/2015 - 14:09 | 6515772 Ms No
Ms No's picture

Even if oil was abiotic there sure isn't a huge bounty of it otherwise China wouldn't be sitting there taking in the bum being dependent on others for their supply.  If you buy into the abiotic/abundant oil theory by necessity you almost have to believe that the entire planet, no countries excluded, are under control by a single group in agreement, we are getting pretty close but that hasn't happened yet. 

I'm not saying that TPTB wont make things appear scarce if it benefits them and they can get away with it but to contain and hide oil on a global scale when nuclear powers with enormous land masses are in need seems highly unlikely, at least for now.

Mon, 09/07/2015 - 06:31 | 6517758 CHX
CHX's picture

In my book abiotic oilers are right up there with the flat earthers.

Sun, 09/06/2015 - 09:48 | 6514983 bharat
bharat's picture

There is a possible mechanism by which abiotic oil can be formed. It is the mechanism of gravitons with perfectly inelastic collisions with atoms of the earth as proposed by Le Sage gravitation theory; this in turn creates quantum changes in mass of atoms in the earth over time, with some atomic by-products, including hydrogen, oxygen and carbon. The carbon and hydrogen combine in various proportions to form what is called oil. This mechanism of Le Sage gravitons also can explain the formation of water.

 

 

Sat, 09/05/2015 - 23:51 | 6514584 nosam
nosam's picture

And how did those dinos find their way miles below impervious rock?

Sun, 09/06/2015 - 09:03 | 6514910 Bunghole
Bunghole's picture

Sedimentation, subduction, volcanism, glaciation, alluvial processes.

Geology iz hard

Sun, 09/06/2015 - 00:37 | 6514618 Pliskin
Pliskin's picture

It's a good job 'God' put all that oil there...just to test our faith (...and to have us killing each other over it for years and years) He loves a good fuckin' fight does that 'God' fella, just as much as the next 'God'.

 

Sun, 09/06/2015 - 00:14 | 6514601 black dragon
black dragon's picture

alot of it is actually algae beds that froze in last ice age

Sun, 09/06/2015 - 14:18 | 6515800 Ms No
Ms No's picture

That and swamps too wasn't it.  If you ever ever seen a swamp in the fall there is quite a bit of organic debris piling up, just imagine the turnover in the everglades.  

I found what appeared to be a fossil of a seed pod or maybe even a turtle shell in a chunk of coal when I worked on an above ground coal mine and I still have it in a zip lock.

Sat, 09/05/2015 - 21:29 | 6514401 22winmag
22winmag's picture

Petroleum as we know it cannot continue within the financial system as we know it.

 

Very soon it will take one barrel of oil to extract and refine one barrel from the ground. Then it will take 2 barrels, then 3, then 4.

 

It's not necessarily game over for petroleum, but it damn sure is game over for modern sociaety as we know it unless the financial chains are broken quick!

Sun, 09/06/2015 - 05:03 | 6514770 Sudden Debt
Sudden Debt's picture

If you do the math, it comes down to 1 1/2 gallon of oil, per person on this planet per day.

I think that's a lot.

I use a lot more per day in py car, if I see the plastic in the garbage every week en all the energy we use, it mean there's a lot of people who have a lot less.

But allover the planet usage is growing.

 

This morning in the sunday papers, there was a article where people who are now starting to stock up on oil for the winter get to pay way higher premiums above legal maximum price because demand is way higher then supply.

Now... for over 1 year, investments are slowing and demand keeps growing.

Remember: demand NEVER went down. Only growth of demand stopped rising as fast as it did before.

I really don't buy that 15 dollar oil crap. Usage would explode like in then70's and we'd be out of oil in a decade.

And it's exactly what we're seeing now.

People only used to fill up half a tank for the winter, now they fill it up full because it's cheap and nobody discusses about a degree more or less in the house anymore.

 

Sun, 09/06/2015 - 10:05 | 6515023 CHX
CHX's picture

159 x 93m / 7B = ~ 2.1 L or ~ 0.55 Gallon.

Sun, 09/06/2015 - 09:36 | 6514958 DanDaley
DanDaley's picture

Modern societies (as we know and love them) need about a 9:1 production ratio to keep their heads above water...anything below that gets ugly really fast, as we shall see.

Sat, 09/05/2015 - 21:52 | 6514403 Yen Cross
Yen Cross's picture

 Well, lol... All I know, is that "go--go juice" is about  20% higher in the land of 'Fruits and Nuts".

 I realize refiners take for-ever to reformulate the fracking. {sarc}

 How oil affects currencies? I was a bit "off topic".

 I'm stuck in this Biffeyport-o-potty without any toilet tissue in the middle of Caracas<>

Sat, 09/05/2015 - 22:49 | 6514515 roddy6667
roddy6667's picture

If it's your day to shop, get in line.
I have a friend who has been in Caracas since about 1976. Things are just not the same any more.

Sun, 09/06/2015 - 01:30 | 6514658 Tall Tom
Tall Tom's picture

You can actually see more clearly when you remove your head from Caracas.

Sun, 09/06/2015 - 07:25 | 6514828 indygo55
indygo55's picture

Build a Thorium reactor and change the world. If they don't kill you first and shut it down.

 

http://www.whatisnuclear.com/articles/thorium.html

 

Sun, 09/06/2015 - 00:54 | 6514636 Benjamin123
Benjamin123's picture

20%?

I can buy a bag of cheese curls in Caracas for only 500Bs a bag. These are new bolivars, and equivalent to 500.000 old bolivars, after they erased 3 zeros of the currency.

The same snack was selling for 0.5 bolivars when i was a kid. The price went up by a factor of one million.

Sat, 09/05/2015 - 21:45 | 6514427 adr
adr's picture

I don't believe the 93 million barrel figure. Like everything else I believe it to be vastly inflated from reality.

I do believe the financial system requires 93 million barrels to be transferred through its system to satisfy its version of reality.

The Chinese claim our economy is really 7 trillion dollars, not the near $18 trillion we claim. Funny how by my own estimation I came up with 5-6 trillion for our economy.

The world produces hundreds of billions of goods beyond what it needs, and even can possibly consume. These goods are never sold, never actually consumed. The overproduction is required by the stock market fantasy to keep the con game going. How much oil does this overproduction to satisfy the stock market require? Millions of barrels?

If a company trades at 30x earnings, or 16x sales, what does that say? It says the company must grow 30x its current size. An impossibility. Apple may claim they sell a few hundred million phones, reality is that most of them never reach consumer hands. A smartphone can last more than one year, nobody needs a new one every year especially since there is no advantage other than smug over the old device. I have had the same phone since 2012. It has a dual core processor, HD screen, 1gb of ram, and 16gb of storage. Amazingly it still works fine.

As the age of expanding credit ends, the need for foolishly wasting oil to satisfy the expansion ends as well. The future is drowning in commodities nobody cares to consume. The death of credit will make it impossible for people to consume more than they need because they won't be able to afford to.

Sun, 09/06/2015 - 07:37 | 6514835 Squid-puppets a...
Squid-puppets a-go-go's picture

eloquent stuff, good sir

Sun, 09/06/2015 - 10:02 | 6515012 CHX
CHX's picture

If you calculate this out to each human being, the 93M traslate to roughly 2 liters of oil (just a bit more than have a gallon). Fact or fiction ? Could be close (+- 10%) to fact IMHO.

Sat, 09/05/2015 - 22:04 | 6514451 Insurrexion
Insurrexion's picture

What the fuck is this?

A fucking ninth grade report on energy in the world economy?

I wanna see a fucking report on the net sales contribution of hookers, blow, guns, leather bustiers, porn, human trafficking, tatoos, heavy metal music, gambling, beastiality and L.A. psychoanalysts to the world GDP, correlated to the net annual growth rate of derivative sales from the venerable scum bags at Goldman Sachs, JP Morgan, BofA, Barclays, and Citigroup.

Give me lots of pretty graphs and more fucking Cowbells!   

For fuck's sake, Bitchez.

Sun, 09/06/2015 - 01:26 | 6514655 Yen Cross
Yen Cross's picture

Yeah. Just wait until the Sunday open.

 Name calling only gets you so far, Broom Hilda/

Sun, 09/06/2015 - 10:22 | 6515073 knukles
knukles's picture

He forgot pencil skirts and 6" red soled spiked pumps shown off by seamed stockings.   And lipstick.  Lots of blood red lipstick.
The modern woman in the kitchen look.

Sun, 09/06/2015 - 07:10 | 6514818 negative rates
negative rates's picture

Make some up yourself, call it official, get a majority to believe, and you are good to go.

Sun, 09/06/2015 - 10:37 | 6515121 Kaervek
Kaervek's picture

As if there were any "official" numbers on hookers & blow.

For a start I'd say there's a reason the service economy is still going strong, along with luxury good producers. The rich still need waiters and bartenders.

Sun, 09/06/2015 - 10:29 | 6515096 Spiritof42
Spiritof42's picture

I humbly offer a pretty avatar.

Sun, 09/06/2015 - 00:17 | 6514602 black dragon
black dragon's picture

so when and how do we engineer petrol OUT OF the transport, industrial and financial systems.  what replaces it. who controls and profits.  who consumes and pays

Sun, 09/06/2015 - 00:33 | 6514611 black dragon
black dragon's picture

bitcoin ASIC mining.  stuff to buy. stimulate the economy. https://www.youtube.com/watch?v=JqnbtFHlOsA

Sun, 09/06/2015 - 01:32 | 6514656 Yen Cross
Yen Cross's picture

 The Chinese are really desperate?

 The simple fact is that the PBoC has increased the GDP by 1500% in roughly 20 years.

  Pikers get called out eventually? The fed is going to soak those UST back in. QE~ bitchez

 SARC/

Sun, 09/06/2015 - 10:24 | 6515082 knukles
knukles's picture

That's their only choice; "The fed is going to soak those UST back in. QE~ bitchez" if they start selling enough.
Hah ha ha ha ha ha
Raise rates, my ass.  And if they do, we'll see one of the greatest Bull Falteners (long bonds rallying) maybe ever!

Sun, 09/06/2015 - 00:47 | 6514630 Benjamin123
Benjamin123's picture

Venezuela does not have a fixed exchange rate. It has at least 3 rates, 6 bolivars per dollar, if you have a permit to buy, 200 per dolar on the legal semi black market, approaching 1000 per dollar on the illegal black market. I think there might also be a second legal rate.

It would be easier for Venezuelas trade balance not to have to import even the products that used to be produced there and are now imported. Such as meat and milk. One third of Venezuela is grassland and raising cattle is far easier there than growing grains. The practice has now been banned in actual practice, through insane price controls and lawlessness.

Sun, 09/06/2015 - 01:43 | 6514668 Tall Tom
Tall Tom's picture

If those socialist politicians in Caracas would remove their heads frm the crack of their ass then they'd be able to wipe some of their shit clean off the board with some of their printed Toilet Paper which they use as a currency.

 

But somehow the socialists seem to enjoy the odor of the shit which they excrete.

 

So yeah...I must agree...Getting rid of the shit regulations, price controls, and criminality would be a start. They need to flush that crap...right down the toilet.

 

Fucking socialists!!!

Sun, 09/06/2015 - 06:53 | 6514807 Monetas
Monetas's picture

"Los Mexicanos, ni saben alejarse .... de su propria mierda !" .... uttered at Alfonso's sidewalk cafe and pizza parlor in Ensenada .... shortly after the sewers in Guadalajara exploded .... in the early nineties ?

Sun, 09/06/2015 - 04:11 | 6514756 enloe creek
enloe creek's picture

There needs to be a ministry of lies somewhere coordinating all the points that the media and banks and governments try to make people believe. These situations require a complex management to avoid collapse. I don't think anyone can point to data and say they know without doubt it to be true anymore. Peak oil . 9/11.  immigration  the war on terror for fucks sake none of these are remotely as they are presented.  Yet someone seems to think the destruction of the world's economy is somehow going to be a net benefit for themselves.  The only way that will turn out to be true is if it results in a vastly lower population and drasticly reduced lifestyles for everyone but a select few. OK that is really going to happen so just figure on standing at the door defending the last few moments of your liife cause once it tips forget the world you know now. 

Sun, 09/06/2015 - 06:46 | 6514801 Monetas
Monetas's picture

Come down from your pandemic, academic ivory tower .... speak to me .... 93 million barrels .... how many olympic swimming pools is that ?

Sun, 09/06/2015 - 09:55 | 6514999 CHX
CHX's picture

159 liters x 93 x 10^6 / (30 x 250 x500) = 3943.2 olympic swimming pools (50m x 25m x 3m)

Sun, 09/06/2015 - 07:00 | 6514811 Monetas
Monetas's picture

Socialist stimulus accounts for millions of wasted barrels of oil .... Alfuckingore !

Sun, 09/06/2015 - 08:31 | 6514874 dunderduck
dunderduck's picture

Indonesia is a net oil importer, not exporter.  Has been for at least 15 years and getting worse every year.

Sun, 09/06/2015 - 12:58 | 6515588 CHX
CHX's picture

93M barrels is ~4.2B U$ (@46$pB). Now if only 5% of oil producers were to exchange their proceeds into fizzical gold that would be 191k ounces per day (valued at 1120$ an ounce) or ~70M ounces a year (or 2170 metric tons of gold). At 10% precent... you get the drift. Will this play ever come to live, or is it already ??? 

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