What really might happen if all countries stopped using dollars for oil?

Question

And instead decided to use the euro or some other currency?

Answer 1

That's a big question there. Most of what the other posters said is a part of the total answer. OPEC takes dollars for oil for two reasons. The first, we kind of force them to. As a matter of fact, you can say that the war in Iraq is because some years ago, Saddam said he would take Euros for oil over dollars. That also explains why the Europeans are angry with us. The second reason is because they rely on the dependability of the US dollar. It's the most stable currency in the world. Not even the Euro has reached its level of dependability. If OPEC started taking other forms of currency then the demand for the US dollar would decline as the money supply shifted in favor of another currency, and the dollar would depreciate in value, which would send a ripple effect throughout our economy driving prices up for goods and services. The result would be a contraction of our economy and a massive recession. Would we collapse, not really, that's because the things that kept the dollar dependable all of these years, the American people who drive the economy, would help to stabilize the transition. We would go into a recession slightly worse than the Bush Sr. recession, then we would adjust to our place in the world and slowly expand.

Answer 2

Rahn'L has some good points, but I'd like to offer a few more:

China, alone, holds more than $800 billion. Japan holds even more. South Korea holds more than $65 billion. All of the Asian countries hold huge amounts of dollars that are just sitting there, waiting to be used to buy oil and other commodities that are sold in a US-dollar-denominated market.

If everyone stopped using dollars to buy oil and other commodities, all of those dollars that are sitting overseas (currently more than $13,000 for every man, woman, and child in the US) would come flooding into the American economy. The reason for this is that the United States would be the only place left, where dollars could be exchanged for goods and services. So anyone with dollars would come to the USA to buy stuff that they could carry away. Timber. Food. Minerals, like coal and anything else that we mine, in the USA.

With all of this money flowing into the USA, prices for everything under the sun would rise exponentially. Prices would double. Triple. Maybe more. People in the USA wouldn't be able to afford to buy ANYTHING. The situation would be something like what Argentina went through, in 2001, when hyper-inflation hit that country. Only in our case, it might even be worse. And remember, in Argentina, there was rioting in the streets!

Answer 3

There has been quite a lot of talk about this in the Middle East. Many members of OPEC support this move including Venezuela and Iran. Iran will probably be the first to move away from the dollar.

The result will be a strong global devaluation of the dollar and strengthening of the Euro. We would quickly see $5/gallon gasoline.

Answer 4

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Answer 5

We'd better have some food in storage.
And have supplies to barter. A CB and or shortwave radio may help. The dollar would be worthless. Nice avatar.

Answer 6

you are wrong yupchagee, OPEC only accepts the US dollar for oil, they will not take any other currency

interesting article here about what would happen if the dollar were no longer the lingua franca for oil purchases: http://www.feasta.org/documents/papers/oil1.htm

Answer 7

I'm not sure what you are asking. Not pay for oil? Pay with another curence?

The world economy needs oil. Nobody is giving it away, so buying it is necessary.

COuntries use their curencies to buy. You always hear the price in $'s but that is because you are hearing it in the US.

Answer 8

bullets for oil ,what you think dollars is all,no ,one day bullets and blood will ,be as if in repentance..

Answer 9

the world economy would fall apart. their would be mass hysteria. and wars all over the world.

Answer 10

the middle-east wopuld lose virtually all their power.