What’s Driving Energy Prices This Week?

Earlier this month, Saudi Arabia and OPEC+ oil producers announced they would cut oil output by more than one million barrels per day. Subsequently, energy prices spiked, with the current national gas average sitting at $3.65 per gallon. But oil and gas prices aren’t the only thing shifting right now…worldwide trade currency is for some countries, too.

“China is buying LNG and paying yuan, and they’re encouraging Brazil to begin transacting their international trade into yuan as well,” explained Tim Snyder, host of Gasonomics. China is also encouraging India to start trading in their national rupee currency instead of the USD. Why are these changes mean for the U.S.’s future economic position?

The dollar has been the world’s principal reserve currency since the end of WWII and is crude oil is exchanged in USD via the petrodollar system, serving as a symbol of its stance as a world leader. Countries look to hold reserves in currencies with large, open financial markets that are quickly accessible.

Snyder stated, “Every bit of this shows the United States has advocated its position as a world leader in not only world trade, but in energy trade as well. This could have consequences for not just the United States but the world as we move through the year.”

Will these oil currency changes cause inflation to ensue in the U.S. as we push farther into 2023? Tim Snyder, host of Gasonomics, provides input on how diminishing oil output, rising energy prices, and changes in oil trading currencies intersect and impact the economy.