International Forecaster Weekly

How Big Oil Engineered the Petrodollar

With the creation of this new system, the petrodollar, the oiligarchs reached unprecedented levels of control over the economy. Not only that, they backed the world monetary system with their commodity, oil, and brought potential competition under their control all in one step.

James Corbett | January 2, 2016

The story of the Oil Shock of 1973 as it has been delivered to us by the history books is well known.

    Narrator: “By the late 1960s the nation relied on imported oil to keep the economy strong. Then in the early 1970s oil-dependent America's nightmares came true: 13 oil-producing countries in the Middle East and South America formed OPEC, the Organization of Petroleum Exporting Countries. In 1973 OPEC placed an oil embargo on the US and other nations that had supported Israel against the Arab states in the Yom Kippur war. The American economy went into a tailspin as gas shortages gripped the nation.” SOURCE: History of Oil (YouTube)

    Few, however, know that the crisis and its ensuing response was in fact prepared months ahead of time at a secret meeting in Sweden in 1973. The meeting was the annual gathering of the Bilderberg Group, a secretive cabal formed by Prince Bernhard of the Netherlands in 1954.

    The Dutch royal family not only gave its royal imprint to Royal Dutch Petroleum, they are still rumoured to be, along with the Rothschilds, one of the largest shareholders in Royal Dutch Shell, from the days when Queen Wilhelmina's Anglo-Dutch Petroleum holdings and other investments made her the world's first female billionaire right through to today. Bernhard's guest list at the Bilderberg Group reflected his position in the oiligarchy; alongside him at the Swedish conference were David Rockefeller of the Standard Oil dynasty and his protege Henry Kissinger, Baron Edmond de Rothschild, E.G. Collado, the Vice President of Exxon, Sir Denis Greenhill, director of British Petroleum, and Gerrit A. Wagner, president of Bernhard's own Royal Dutch Shell.

    At the meeting in Sweden, held five months before the oil crisis began, the oil-igarchs and their political and business allies were planning their response to a monetary crisis that threatened the world dominance of the US dollar. Under the Bretton Woods system, negotiated in the final days of World War II, the US dollar would be the backbone of the world monetary system, convertible to gold at $35 per ounce with all other currencies pegged to it. Increasing US expenditures in Vietnam and decreasing exports caused Germany, France, and other nations to start demanding gold for their dollars.

    With the Federal Reserve's official gold holdings plunging and unable to stem the tide of demand, Nixon abandoned Bretton Woods in August 1971, threatening the dollar's position as the world reserve currency.

    Richard Nixon: “Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators. I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets except in amounts and conditions determined to be in the interest of monetary stability and in the best interest of the United States.”  SOURCE: Nixon Speech 1971

    As leaked documents from the 1973 Bilderberg meeting show, the oiligarchs decided to use their control over the flow of oil to save the American hegemon. Acknowledging that OPEC "could completely disorganize and undermine the world monetary system," the Bilderberg attendees prepared for "an energy crisis or an increase in energy costs," which, they predicted, could mean an oil price between $10 and $12, a staggering 400% increase from the current price of $3.01 per barrel.

    Five months later, Bilderberg attendee and Rockefeller protege Henry Kissinger, acting as Nixon's Secretary of State, engineered the Yom Kippur War and provoked OPEC's response: an oil embargo of the US and other nations that had supported Israel. On October 16, 1973, OPEC raised oil prices by 70%. At their December meeting, the Shah of Iran demanded and received a further price raise to $11.65 a barrel, or 400% of oil's pre-crisis price. When asked by Saudi King Faisal's personal emissary why he had demanded such a bold price increase, he replied:

"Tell your King, if he wants the answer to this question, he should go to Washington and ask Henry Kissinger."

    In the second move of the operation, Kissinger helped negotiate a deal with Saudi Arabia: in exchange for US arms and military protection, the Saudis would price all their future oil sales in dollars and recycle those dollars through treasury purchases via Wall Street banks. The deal was a bonanza for the oiligarchs; not only did they get to pass the price increases on to the consumers, but they benefited from the huge flows of money into their own banks. The Shah of Iran parked the National Iranian Oil Company's revenues in Rockefeller's own Chase Bank, revenues that reached $14 billion per year in the wake of the oil crisis.

    With the creation of this new system, the "petrodollar", the oiligarchs had reached unprecedented levels of control over the economy. Not only that, they had backed the world monetary system with their commodity, oil, and brought potential competition from upstart producer nations under their control all in one step.