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Oil producers shun dollar
Haig Simonian, Javier Blas and Carola Hoyos, Financial Times
Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.
The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.
…The BIS, the central bank for the developed world’s central banks, is customarily cautious in its language. However, it noted: “While the data are not comprehensive, they do appear to indicate a modest shift over the quarter in the US dollar share of reporting banks’ liabilities to oil exporting countries.”
The review shows that Qatar and Iran, whose foreign exchange policy has sparked widespread market speculation, cut their dollar holdings by $2.4bn and $4bn respectively.
Such shifts may be modest compared with the total assets held, but they provide a crucial indication on future thinking.
(10 Dec 2006)
Iran replaces dollar with euro in most oil dealings
Iran has started replacing dollar with euro in majority of its crude oil exchanges in the last several months, an informed source with Iran’s Oil Ministry said here on Tuesday.
Oil Ministry has taken the policy to substitute dollar with euro, and begun to implement it for most of its oil dealings, the source who spoke on the condition of anonymity told the Mehr News Agency.
“This can maintain the real value of Iranian oil,” he added.
The majority of Iran crude’s customers are Asian and European states, the source noted.
(5 Dec 2006)
Who’ll be the heretic-turned-hero for our economic age?
Graham Searjeant, Times Online
Fame lasts longer in economics than in showbusiness, but it can be just as fickle. Few economists have been as famous as J. K. Galbraith and Milton Friedman, great communicators who died in their mid-nineties this year.
In the 1960s and 1970s Galbraith was the darling of students and liberal intellectuals. From the days of Roosevelt’s New Deal he was the witty, elegant exponent of the laws of Maynard Keynes, heir to Thorstein Veblen, who saw conspicuous consumption as unsustainable. By his death, Galbraith’s critiques of the US economic system were ignored outside domestic politics, though they probably go down well in Peshawar.
Milton Friedman’s reputation went the other way. Until the mid-1970s his campaigning for monetary control and the free markets of classical economics led to him being pilloried by mainstream progressives as a dangerous, right-wing radical. Away from his Chicago base, and especially in this land of Keynes, he was reviled for reviving the quantity theory of money, for restoring the “cross of gold” in a new form.
…As soon as old problems are solved, however, new ones arise. Suppose, for instance, that Sir Nicholas Stern’s “greatest market failure in history” was destined to destroy the planet. Perhaps an heir of Galbraith would be the new star.
(23 Nov 2006)
My nomination: Richard Douthwaite