After President Nixon’s unilateral abrogation of the 1944 Bretton Woods Treaty in 1971 as a measure to neutralize the treaty’s provision allowing US trading partners to demand Gold in exchange for their accumulated trade dollars, the globally circulating fiat dollars may have 25-folded. Over the same period the U$ value of Gold 35-folded as of today while consumer price indices averaged around 400% in Europe and the US. The Oil price shock in 1973 resulted in an oil price increase in an order of 400% within a few month, which in combination with the U$’s perpetuation as the single commodity trade currency forced everybody to buy dollars, making the “Black Gold” a new kind of backing for the U$ currency.
The current 7-year economic turbulence therefore may be closest related with the 2014 collapse of the world U$ price per barrel in an order of -70%. For hydrocarbon import countries this was a significant relief of trade balance, but quite a threat for those invested in hydrocarbon exploration. China in due caution of not directly consummating what could be a temporary windfall only, started to use the gains to buy up significant amounts of Gold within its own currency clearance reach. Which in return lent Russia a hand to start backing its oil slump hit currency increasingly with Gold from its domestic output even selling off US treasury bonds to pay for it, to provide for a financial cushion in face of the external uncertainties.
In the context of the New Silk Road Economy’s emergence it is also interesting to see Eurasian countries and Indonesia, involved in Gold exploration to have joined into what may be seen as a renaissance of Gold backed monetary systems. During the current European sanctions against Russia coinciding with the low oil prices to some at surprise the Russian Ruble steadily recovered allowing another interest rate cut in near term. And what Europe likes to conceal is that the first Western Country joining Shanghai Cooperation Organization in the fore field of constituting Asian Infrastructure Investment Bank was now exiting Britain.
In the meantime the oil and gas sector survives at low prices by at least scheduling out new explorations. With a global average of Finding and Development Cost [F&DC] for oil of > U$ 25/barrel equivalent [boe] and about 67% thereof for LNG current oil prices do not leave much room for new exploration. Whatever marginal operation cost may be in reality, a floor of U$ 20/boe might give an imagination why the IMF currently only supports projects based on > U$ 50/boe price assumptions. Natural Gas [NG] undertaken physical Carbon Capture for re-Use [CCU] prior to a Hydrogen Fuel Cell Utility generation enables Power-to-Gas Energy storage through Carbon Recycling allowing iteratively > 1.7 folding an original NG feedstock.
Therefore CCU would return > U$ 0.20/kg Carbon plus whatever the fossil price for Carbon may be, e.g. at U$ 34/boe additional U$ 0.32/kg, namely U$ 0.50/kg or U$ 52.5/boe. Who is scared of future hydrocarbon vulnerability could pick this up and implement it against worries about a return to liquid Black Gold U$ hegemony. Starting Carbotopia™ from industrial organic waste, over not to compost or recycle Municipal Waste Residues and NG-Power Generation the existing resources give a lot of room for Qualitative Growth and deceleration of Atmospheric Carbon Stock building by prevention of CO2 formation plus reducing fossil Carbon import needs which can all be financed by the saved F&DC plus operating exploration cost, paying back even at current crude oil price levels, too low for F&DC, and still secure supply alternatively.