The petrodollar agreement with Saudi Arabia, which began in 1974 during Joe Biden’s first term as a U.S. senator, ended this week, during his first term as U.S. president. This event is more significant than many other current news stories, including Trump’s and Hunter Biden’s convictions, jobs reports, inflation, and even the southern border crisis. The end of the petrodollar signals the end of the United States as the world’s lone superpower, yet it has received little attention.
Until last week, the petrodollar exemplified America’s dominance in the global economy, solidifying the oil industry as an American-led sector. American industrialists like Charles Pratt, Henry Flagler, and John D. Rockefeller didn’t invent oil refining but created the oil industry, making petrochemical products accessible worldwide. As a result, oil, traded globally in U.S. dollars, has been a stabilizing currency because the world needs oil.
However, this changed under Biden’s administration. With national debt at $35 trillion and $9 trillion added in the past three years, coupled with a 19 percent rise in inflation, the Biden administration’s efforts to punish the oil industry have led other oil-producing nations to doubt the U.S. dollar. Saudi Arabia, the world’s second-largest oil producer, now plans to trade its oil in its own currency. Countries like India and China, two of the world’s largest oil importers, will convert their domestic currencies into Saudi riyals, excluding the U.S. dollar from transactions.
This mirrors Biden’s Afghanistan withdrawal, where decades of effort were undone in an instant. Wall Street’s acronym TINA (There Is No Alternative) used to apply to the petrodollar: countries had to buy U.S. dollars to purchase oil, indirectly boosting the dollar. The petrodollar also forced countries to engage with American values of free markets and the rule of law, reducing bribery and theft on an international scale.
Now, the Chinese yuan may replace the petrodollar. Biden’s push to “go green” has bolstered China, as documented in a congressional report by my organization, Power The Future. Despite the significance, House Democrats have ignored the issue, focusing instead on petty grievances.
Biden aims to replace the oil industry with the Chinese green industry, making America dependent on Chinese green technology. Eventually, China could require the U.S. to convert its currency for purchases. As America built the Saudi and Russian oil industries, it is now building the Chinese green industry.
The collapse of the petrodollar should not surprise those who have watched Biden’s administration. America’s sovereignty is compromised at the southern border, its values are tarnished by antisemitism, its rule of law is politicized, and its dollar is weakened. The end of the petrodollar is another domino to fall.
While some policies can be reversed with a Trump victory or a GOP House stopping the transfer of funds to China for green energy, the petrodollar is gone forever. With its end, America’s global role is diminished, and Saudi dominance with Saudi values will rise, making the world a little bit worse.
