The end of the petrodollar is the end of America’s global dominance

The petrodollar agreement with Saudi Arabia began in 1974, two years into Joe Biden’s first term as a United States senator. It ended, a half-century later, during Biden’s first term as U.S. president, writes ‘The Federalist’.

Among all the news stories that matter, few rank higher than this. It’s bigger than President Trump and Hunter Biden’s convictions, bigger than jobs reports and inflation numbers, and perhaps even bigger than the southern border crisis. The end of the petrodollar is the end of the United States as the world’s lone superpower.

Yet it is barely mentioned.

Until last month, the petrodollar was America’s dominance of the global economy. It solidified the oil industry as a thoroughly American industry in which other nations merely partook. In the way Henry Ford didn’t invent the car but rather invented the automobile industry, which brought cars to the masses, American titans like Charles Pratt and Henry Flagler and the great John D. Rockefeller didn’t invent oil refining. They invented the oil industry, which brought petrochemical products to the masses. The oil industry is American, and as much as it exists around the world in places like Venezuela and the Middle East, it is because Americans led the way.

Oil, as a global commodity, is American, thoroughly utterly American, and as such is traded globally in U.S. dollars, as it should be. Until now.

Here’s an analogy to understand the currency of oil trades: You are on vacation in a foreign country and want to purchase something. The seller tells you in English, because everyone seems to speak English, it costs NNN pesos, euro, Canadian, etc. But if you have $20 cash, it’s a deal. It saves you a monetary conversion. It is even a better deal. It is a win for you and for the seller. In a small way, it is a “win” for America as the American dollar replaces the local currency. In that tiny, $20 transaction, buying a trinket for mom from a street vendor, America won.

That happened in the tens of billions of dollars with oil every day.

Although the number has declined in the past 20 years, still more than half of the world’s reserve currency is in U.S. dollars. The petrodollar has been a stabilizing currency for the world since the entire world needs oil. Every nation has had to convert its currency to the U.S. dollar, making it the de facto global currency.

Thanks to Joe Biden, it’s all gone.

Our national debt stands at $35 trillion, $9 trillion of which was added in the past three years. Inflation is cumulatively 19 percent higher than when Biden took office. The entire Biden administration has made punishing the oil industry a priority. If America, the world’s largest oil producer is actively trying to end the oil industry, then why would other oil-producing nations use our dollars?

It is logical Saudi Arabia, the world’s second-largest oil producer, looks at the American dollar with increasing doubt. It is obvious Saudi Arabia looks at the American president with increasing disdain. While campaigning in 2020, Biden called Saudi Crown Prince Bin Salman “a pariah”. Two years later, with oil pushing $120 a barrel and U.S. inflation at 9 percent, Biden went groveling to Saudi Arabia, fist-bumping an unsmiling Prince Bin Salman, asking the kingdom to increase oil production. He refused.

Saudi Arabia has every intention of surpassing the United States in the global oil market and has the reserves and the domestic policy to do so. The kingdom will now trade its oil in its own currency. India and China, two of the world’s largest oil importers, will now convert their domestic currency into Saudi riyals, leaving America out of the transaction.

The debacle mirrors Biden’s disastrous Afghanistan withdrawal: decades of work undone and dismantled in one brief instant because of incompetence and stupidity with nothing to show for the investment, work, and toil. Gone.

What will replace the petrodollar as a global, commodities-based currency? Likely the Chinese yuan. The Biden administration’s radical push to “go green” has only strengthened China, as my organization, Power The Future, documented in a congressional report.

The collapse of the petrodollar should not come as a surprise to anyone who has watched the past three-plus years of Joe Biden at the helm. America’s sovereignty is compromised at the southern border. American values are polluted with pro-Hamas, rabid antisemitism on college campuses and our streets. American rule of law is bastardized by a politicized DOJ and FBI. The American dollar is diluted. The end of the petrodollar is another domino to fall.

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