Birdnow's Aviary

April 07, 2026

The International Oil Socialism

Timothy Birdnow

Alan Dershowitz pens a fine essay in which he asks why oil is tied to the global market and why the U.S. has to guarantee the Strait of Hormuz is reopened.

As he points out, there is no reason for oil to have it's price set by an international market when it is produced in many places (most especially the United States) and should be subject to competitive pressures. Professor Dershowitz asks:

There may be good reasons for such global price fixing, but they are not inherent in the nature of the product itself or in the nature of world markets in general. Most informed people with whom I have discussed this issue have no idea why the pricing of oil is not subject to the usual competition involving most other commodities. Even local gas stations compete with other over the retail price of a fill up, so why should the wholesale price of oil fixed by global conglomerates? An understandable explanation — more than just "that’s the way it’s always been” — is required.

Actually there are a number of reasons and they all stem from the post-war era.

Oil was the lifeblood of the Allied military machine and so it was agreed that we would "share and share alike" during the great struggle that was WWII. Then, with Europe being in ruins after the war, we continued that policy because cheap, reliable oil was necessary for rebuilding, as it was in the struggle against the Hegemony of the Union of Soviet Socialist Republics.

Couple that with the fact that oil was only to be had in certain key places and you had a situation ripe for a quasi-socialist system that Kept everyone intimately tied to a world order devised by the Internationalists who did the post-war planning.

Of course the discovery of large quantities of oil and gas in the Arab world, oil and gas that is easy to obtain (as opposed to many other places) and you had a recipe for the current system. OPEC was born out of the understanding that these primarily third world countries had real power because they had the one thing nobody dared interrupt - the lifeblood of modern civilization. OPEC flexed its muscle on a number of occasions and we saw some rather unpleasant results.

Then there was the end of the gold standard.

Money used to be backed by gold, then we went to a bimetallic standard, with gold and silver backing currency. But that was too limiting for governments, which wanted to spend more than they could back. What to do? While we today call it fiat currency the fact is our money IS backed, indirectly, by a commodity - oil. We have the petrodollar and it's worth is determined by how much oil it can purchase on the world market. But for this scheme to work there has to BE a world market with a set price; it wouldn't work if oil was priced on a competitive scale.

The end result was the American dollar became the world's fiat currency and it ultimately derived its international value based on oil.

Now every internationalist in the world loved this scheme because it tied us all together and that was what they long sought. The U.N. loved it. Big international corporations loved it. All the libera NGO's loved it. That is because they believed that by tying the world's economies into one uber-economy the political structures would follow, just as they did with the creation of the European Union. The E.U. started as a coal and steel entente' and morphed into the Common Market, then into a political entity that governed Europe with an iron hand. It couldn't have happened except for the economic Anschluss, the marriage between the German and French economies. This was a conscious, purposeful decision by the French to make it impossible for Germany to attack them again, to weld their economies together so Germany would be hurting themselves by attacking France. In the end this led to a new political entity.

That's been the model of the Left for a long time and we've seen less successful efforts at this, with the short-lived union of Egypt and Syria, for instance, or with the attempted creation of a North American Union (which started with NAFTA) that has thankfully failed. There is an African League, which is also an attempt to create a pan-Africa. And of course we have BRICKS now.

All of these towers of Babel have met with limited success, and even the E.U. is teetering now because the countries do not have enough in common.

But the point is there was a purposeful attempt to use oil to weld the world's economy together and they had some success in that. Certainly the "free trade" craze was as much about that as it was about making it easier to trade without government interference. That craze decimated both the United States' manufacturing and productive centers as well as the Europeans.

And of course now with the Climate Change scare pushing Europeans into not getting their own oil we witness the perfect storm; utter dependence on oil from enemy and rogue states on the Continent.

The problem is if we decouple the price of oil from the world market we run the risk of losing the petrodollar as the world's default currency, then the U.S. suffers economic catastrophe' as our debt becomes more than just theoretical. Now the whole world goes easy on us because if we fall the party is over for them. But decouple oil from the dollar and they are all going to start pulling out of the American economy over our ludicrous debt.

It's a real problem and while I think Trump understands it I can't be sure he does.

Dersh gives one possible solution to the Hormuz problem:

Israel has suggested yet another alternative: to reroute oil currently shipped through Hormuz in overland pipelines in nations that would not misuse their geographical power over international waterways as part of a military strategy. This would obviously take time and regional cooperation. Delinking the price of American produced oil from the price of oil produced by foreign countries could probably be done more quickly.

Actually there is an easy way to do this; just bypass the Strait in the Persian Gulf with large pipelines cutting across Qatar. Gulf tankers could ship to the Gulf shore of Qatar and the oil could be pumped across the peninsula that forms the Strait of Hormuz, to be loaded on another ship in the Sea of Arabia. It wouldn't be that hard to construct a large pipeline to do this, and in fact the Qataris were already working on such a plan, but it was low priority because it wouldn't be a whole lot of use with the strait open.

I had long through a canal would be a good solution but it would require a number of locks, and oil tankers are too big for that apparently. But a pipeline would be easy. Maybe not all that profitable but easy.

Dersh is right; we need to address this issue in a way that helps the American consumer and decentralizes the issue. Now we have a central planning scheme that is intimately tied to a bunch of Arabs and Russians and there is nothing we can do about it, except go to war when the supply chain is threatened (and thus we have to hear the endless drivel from the Left about "No blood for oil!"

And of course the Gang Green, the environmentalists, love this because it punishes Americans for relying on an energy supply they deem bad and not buying the expensive and largely useless "renewable" energy that they keep pushing to reduce our living standards and force us all down the socialist rabbit hole.

By squeezing the price of oil in any manner they can the Gang Green wants to force us to use unreliable wind and solar, to run our cars on electricity generated by them, etc. This is a bait and switch; they know renewables will fail but once they get rid of oil and gas (as they largely have gotten rid of coal, at least in the U.S. and Europe) that we will not be able to go back, and they can then regulate energy usage "for the greater good" when shortages or brownouts occur. Then they own you.

At any rate Dershowitz is right about the need to make petroleum a capitalist commodity like others. But it's going to be very, very difficult to do it without wrecking our own economy. You can thank the political class here in America for that.

Posted by: Timothy Birdnow at 08:22 AM | Comments (1) | Add Comment
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1 Double post, Tim.

Posted by: Dana Mathewson at April 08, 2026 12:13 AM (YGEcJ)

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