Dollar Rejection is Why America Ramped Up Oil and Gas Production – Rob Kirby

By Greg Hunter’s USAWatchdog.com (Early Sunday Release)

Macroeconomic analyst Rob Kirby thinks the dollar shortage and liquidity crisis has something to do with the booming oil and natural gas industry. Kirby points out, “America is producing an awful lot of energy, but they are not making money doing it. What is it that would make them want to do that? That’s when I started thinking about the rest of the world or the rest of the story. The rest of the story goes something like this: Venezuela used to sell all of its oil in dollars. Russia used to sell all of its oil in dollars. Iran used to sell all of its oil in dollars. Iraq used to sell all of its oil in dollars, and up until very recently, Saudi Arabia used to sell all of its crude oil in dollars, but I believe they are now selling some of their oil in currency other than dollars. So, we have many millions of barrels of oil that were formerly transacted in dollars, and these barrels of oil are now being priced in other currencies.  The dollars that used to buy that oil are now looking for a home, and they didn’t have a home. So, America had to create a home for those dollars, which is why America has ramped up their crude oil production. In the 2004 time period, America’s oil production bottomed out at 4 million barrels a day, and now it is producing 12 1/2 million barrels a day making it the world’s largest producer of crude oil. These barrels America is producing are all being sold for dollars. They needed a place or a home for those dollars. Let’s just say the dollars that were left over when Venezuela, Iran and Russia stopped selling their oil for dollars created a spill on the floor, and they needed a sponge to soak them up. That’s why American crude oil has gone up dramatically, and that’s why American oil production is forecasted to grow even though they are taking losses on every barrel they are producing.

Kirby goes on to say, “Global dollar rejection is why America had to ramp up American oil production to begin with and global dollar rejection is accelerating. This is not going to stop. So, America is going to need to produce more and more dollars to soak more oil priced in dollars that America will produce at a loss. . . . Creating all this extra oil and pricing it in dollars makes the dollar look strong. Nobody producing these incremental barrels are making a penny. They are all hemorrhaging cash. The fact that all these dollars that are going into something that is hemorrhaging cash and losing money is the real reason why there has been no inflation. All these unwanted dollars are financing money losing operations. If these dollars were going into things that made money, the returns would be invested and would be causing observable inflation. The opposite is occurring, and the dollars are disappearing.”

Kirby predicts, “There will come a day when foreigners will collectively say no more dollars in trade. The day is coming.”

In closing, Kirby also says that President Trump is surrounded by people who do not tell him the truth. Kirby contends, “I don’t believe President Trump is informed. I do not believe the people around him would dare inform him with the truth because they would be afraid of what he might do in reaction. So, information is being withheld from the President, and he has a bunch of treasonous dirt bags basically surrounding him. . . . America is not in a good spot right now nor is the world by extension. . . . I don’t see many bright lights on the horizon, and I think where we are headed is a pretty dark place.”

Join Greg Hunter as he goes One-on-One with Rob Kirby, founder of KirbyAnalytics.com.

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After the Interview:

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Comments
  1. Joe Avg

    I think Rob is generally right regarding the Oil problems … the drone assault on the Saudi oil facilities have barely moved the oil prices … this tells me the global economy is very very weak … and oil prices may soon be headed lower.

    • uncommon sense

      I suppose Stan has gone long oil, specifically shale oil lol.

      • paul ...

        Actually Stan might do better going long oil then going short gold … because so much “smart money” is currently short gold … right now the “smart money” commercials are short 345,145 gold futures, which means that they are short 34.5 million ounces of gold … at today’s price of gold the notional value of these “short” futures contracts is about $51 Billion dollars [$51,000,000,000 dollars is a lot of money that Stan and others will need to cover if Trump succeeds in getting the US dollar down to help the oil shale industry get the higher price for oil they need to survive and keep the US energy independent]!!

        • paul ...

          What Stan does not realize is that weak oil … https://www.zerohedge.com/s3/files/inline-images/2019-10-01_12-31-06_0.jpg?itok=5o6-phCQ … is a “National Security Issue” … and the fact that it continues to be so weak indicates the world economy is not doing as well as Stan is trying to tell us it is … since we don’t have a strong economy … a dollar devaluation is needed to raise the price of oil (so the US shale industry does not shut down … which will threaten US National Security) … with other Nations “printing fiat like crazy” the US would have to “go Zimbabwe” to make the dollar weaker … but there is another option … Trump could do a worldwide deal whereby the US dollar is re-set 50% lower … the consequences of which “will easily double the price of gold” (i.e Jim Rickard’s says a re-set will likely drive gold 5 times higher)!!

    • K.Wayne

      In the not-so-distant past OPEC conspired to lower the price of OIL to ensure the American frackers hemorrhaged. The implicit consequence was destruction of Oil producing competition as well as Bankruptcy … not only of the Frackers but also the Bankers who funded the Industry with untold Billions $. Fast forward to 2019 and we see the FED conducting REPO on an unlimited basis. Whilst we haven’t exactly witnessed a Bankruptcy with the associated defaults, systemic blockage and market turmoil, what we have (without it being known to anyone but the insiders) is a financial failure somewhere in the system. Whether that is Manufacturing, Oil/Gas, Domestic or International…. it is entirely covert. What is clear although is that there is a cash shortage/credit issue. That cash shortage has been the result of building stockpiles that cant be cleared to replenish the cash. Most at risk are the Banksters and the financial system in which they breed and spread their virus. Their collective exposures to the sub prime Debt/Junk Bonds in many industries (including Oil/Gas) combined with the OTC Derivatives leads one to conclude that a default/collapse of Biblical proportions has /is being avoided. For how long……??

      Fear gripping the market at this point would send the Globe into a downward spiral from which there would be no escape (the new FED rule of keeping the narrative consistent is categorically employed). Nothing could prevent the Next Great Depression. No amount of REPO (aka QE) will save the Markets or US !!
      I sincerely hope that we are spared this catastrophe.
      But I sense that the incompetent fools in charge will not be able to avert this disaster.

      The Dollar rejection has been a work in progress, initially resulting in a stronger Dollar. In the goodness of time it will be the undoing of the American economy and our standard of living will deteriorate dramatically. Our false economy (built on Debt expansion) will be exposed as a fraud (not unlike many global major players who use fiat as a currency and money). Our Dollar will become worth…less. I would argue that it already has achieved the status of having Zero value. It is a promissory note … offering payment of some value in the future. We have been conned by those who have control of the printing press.
      We are indeed headed to a very dark place and it may come sooner than most anticipate.

      • paul ...

        K … the world economy is so weak that even bombing Saudi oil infrastructure can not increased demand for oil sufficiently to keep the oil price up … the only solution I see is what Trump sees we need … “to crash the US dollar” … as Eric has noted “cut the dollar in half and the price of oil doubles” … so … what the “smart money” shorting gold to the tune of $51 Billion dollars are not considering is that when the US dollar is cut in half … “the price of gold will double”!!!

        • paul ...

          Rob Kirby confirms for us that “global dollar rejection is accelerating … and that it is not going to slow down or stop” … until what? … most likely until the US dollar gets cut in half (and the price of gold doubles)!!

          • K.Wayne

            The Petro-Dollar rejection was talked about several years ago and as I said has been a work in progress ever since. Kirby hasn’t made any startling observation there except he has made a connection with the REPO and US Frackers/Oil.
            Next Cab off the rank … US Bonds will go sub-prime. Its inevitable when you consider the meaning of de-dollarization.

    • Rob

      Dutch bank ING’s chief economist has said “fully fledged” digital currencies will be developed by central banks in just two to three years:

      https://www.coindesk.com/ings-chief-economist-predicts-central-bank-digital-currencies-in-2-3-years

      This is a very big step toward the necessary requirements to take place during the first three and a half years of the 7 year tribulation:

      https://sumofthyword.com/2016/10/04/the-rapture-of-the-church-is-after-the-tribulation/

    • paul ...

      If Kirby is right … and US oil companies are now producing 12 1/2 million barrels a day making the US the world’s largest producer of crude oil … why are oil prices being kept so low??? … US shale oil companies are currently on the verge of bankruptcy … and these Shale oil companies are in big debt borrowing trillions from the banksters (who are now on the hook for all these loans to shale oil producers) … so the Oil and Bankster Neocon Cabal “need more attacks” on the oil facilities in the Middle East to get the oil price up (pulling Bldg 7 on 9-11 helped this Cabal a little … but these oil and banking interests are having trouble getting “the big war” in the Middle East “they really need” out of an independent thinking Trump) … so I think they have had enough … and have now given the order to Pelosi to start impeachment proceedings against Trump … I believe Trump in response to this new attack on him by the Oil, Bankster Neocon Cabal has ordered the Saudi’s to make peace with Yemen … and he is now suggesting he will remove all oil sanctions from Iran … I think Trump knows “This is All Out War” and he needs to put both the Oil and Bankster Cabal into bankruptcy (Trump knows a lot about bankruptcy) … if Trump can force the Oil and Bankster Cabal into bankruptcy … he can then “Nationalize both the Oil Companies and the Banks” … “then” … any money earned from oil and banking can be used “to directly balance the US budget deficit” and make America Great Once Again!! … and likely the real reason the Oil and Bankster Cabal has ordered Pelosi to “Pull It” and begin impeachment proceedings against Trump (which is as phony as Bldg 7 collapsing in it’s own footprint because of fire that is not hot enough to weaken steel)!!!

      • Chip

        Nationalize oil and banks? No thank you comrade… Chip

      • Stan

        Hey Paul: How is the Gold Pullback going?

        • paul ...

          Stan: How is the worldwide US dollar rejection going??

        • uncommon sense

          Good to see you are giving Jerry a rest.

    • Beverly

      Mr. Kirby,
      Thank you for discussing such an upsetting subject. Thank you for making these truths known to the world. The collapse will have to happen. Unfortunately, you are right when it comes to war. I think the powers know that they will have nothing left if they use nuclear. They won’t have a planet and they won’t have any people to rule over either. These people have got to be stopped, because they are destroying everything on the planet, literally.

    • linda Thomas

      This guy is just wrong about the oil industry here in the USA. You do not just “turn hundreds of thousands of existing wells off or on” it doesn’t work like that. I challenge you to list a number of companies selling petrochemicals for a loss.
      the IEA just put out their long range projection, read it, they project a 50% increase in petrochemical demand into 2050.
      Oh and btw when you plug an electric car in where do you think the energy to charge it comes from? Overwhelmingly from energy produced by NATURAL GAS.
      Look out your window, I’ll bet there is a NATURAL GAS line running down the middle of the street in front of you.

  2. Anthony Australia

    Always some excuse by the oil cartel, I remember when they said we would run out in the 80’s, one excuse after another.
    $1.75AUD a litre here today.

    • Hockey Puck

      Hi Anthony. IMO the whole issue of Peak Oil was NEVER about a shortage in supply. NEVER! That narrative was simply propaganda to keep us confused and stupid. The issue of Peak Oil was always about the COST OF EXTRACTION. And Kirby just validated that point again. It doesn’t matter how much oil there is in the ground. What matters is how much it costs to get out of the ground. If I have a billion dollars of oil under my house but it takes 3 billion to get out, what good is it? Am I going to spend $3 to get $1.

      The simple fact is that the oil industry needs higher prices to justify the cost of exploration. That’s a FACT! If I told you there’s a great job opportunity in Thailand and you could work for a wage that’s below the poverty line ($1.90/day), would you take that job? Of course not! You’ve got better things to pursue. Well, it’s no different for oil companies or any company. If they cannot see a reasonable profit, they’re not going to risk billions of dollars chasing a fantasy. It’s not about greed. It’s about Business 101.

      That’s why Mr. Kirby’s argument