博彩对冲

Donald Trump wants factories back in America. The US president鈥檚 goal is certain, even if its achievement is not. The tools he is using in his attempt to invigorate US manufacturing are also known: tariffs, a weaker dollar and low interest rates 鈥� a package that undermines the dollar鈥檚 status as the world鈥檚 favored reserve and trading currency. Cheap oil, gas and coal are in the toolbox too 鈥� potentially undermining a still-globalized energy industry already grappling with splintering markets, geopolitical upheaval and the approach of peak fossil fuel demand. Where it will all settle, no one knows. But in the interim, the structures linking these financial and energy upheavals might well look a lot like this: Oil pricing stays in dollars, and barring a broad Mideast or Pacific war, oil gets cheaper. Renewable generating equipment is increasingly priced in Chinese yuan, ensuring that monetary as well as technology and emissions fissures separate Old American and New Asian Energy Worlds.

Cheap Dollar

Once labeled an 鈥渆xorbitant privilege,鈥� providing the world鈥檚 favored reserve currency has become a job nobody wants. Steven Marin, chair of Trump鈥檚 Council of Economic Advisors, explained around election time last fall in to Restructuring the Global Trading System why the US might upend the global trading system it had designed: A 鈥渃onsistent theme of President Trump for decades鈥� has been that this system puts US industry at an unfair disadvantage, Marin wrote.

Forget the so-called privileges of cheap government borrowing and cheap consumer goods, the dollar鈥檚 role as a reserve currency necessitates a huge trade deficit and 鈥渙vervaluation [of the currency] that prevents the balancing of international trade,鈥� Marin explained. 鈥淎s global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella, as the manufacturing and tradeable sectors bear the brunt of the costs.鈥�

The Chinese apparently came to a similar conclusion some years ago. While Beijing has sought to insulate its trading relationships from the potentially damaging effects of US financial sanctions, it has avoided the free-floating yuan and wide issuance of internationally traded bonds that would be required to promote the yuan as an alternative reserve currency. Yes, China wants to be paid in yuan for its exports and has been testing out central bank digital currencies and other schemes to permit that. No, China does not want its manufacturing sector to face those very burdens of association with a reserve currency that Marin outlined.

Signs abound that the dollar鈥檚 appeal as a reserve currency is diminishing. The strongest evidence cited by panicked economic and financial commentators was a steep fall in both the dollar exchange rate and the price of 10-year US Treasury bonds that accompanied last month鈥檚 tariff-inspired plunge in US stock markets. That convergence is not supposed to happen.

US financial 鈥渆xceptionalism鈥� dictates that when equity markets fall due to a 鈥渇light from risk,鈥� investors shift money into treasuries, as US government bonds are assumed to be the least risky investment anywhere. To have US stocks and bonds, and the dollar, falling simultaneously is 鈥渘ot slam-dunk proof that the dollar鈥檚 dominant reserve currency status is dead but very solid evidence that it is injured,鈥� Katie Martin in the Financial Times in late April.

Cheap Oil

Oil and money have been mutually supportive planks of the US-led international economic order at least since the "petrodollar accords" of 1974 helped stabilize the 鈥淔ree World鈥� financial and energy systems. Those systems had been badly shaken by the Arab oil embargo and resulting global energy crisis of 1973 and by the tumultuous, multistage breakdown of the fixed exchange rates and dollar linkage to gold that dated back to the post-World War II Bretton Woods agreement. The petrodollar accords kept oil priced in dollars despite Opec nationalizations, kept those dollars recycling through a fortified US financial system and offered military protection to the Arab Gulf oil states.

What will it mean to the oil plank if the dollar ceases to be the dominant reserve and trading currency? The dollar would cost less on foreign exchange markets, making US goods and services cheaper in other currencies. Trump wants lower prices for US oil and gas, as well, which would further reduce the cost of US manufactured exports in a world in which the US goes on using fossil fuels while many other countries transition to possibly even cheaper renewable electricity.

All good for the US, but what about other producers and consumers? After Russia鈥檚 2022 invasion of Ukraine, it looked as if oil might lead the way to a diminished dollar role in international trade. While Trump has declared US allegiance to fossil fuel production and use, China is not merely the leading producer and consumer of solar photovoltaic, batteries and electric vehicles (EVs), it is now the absolutely dominant player in the broader energy transition space 鈥� where the US is virtually absent.

The EU, Japan, South Korea, Taiwan and India are reportedly bargaining for peace with Washington in the tariff wars by purchasing more US oil and LNG in the near term. But most are still betting on Chinese renewables and EVs as long-term paths away from fossil fuels. Saudi Arabia and Russia are evidently prepared for now to go along with Trump on cheap oil. All must be considering their relative market positions as the specter of world recession brings closer the likely 鈥減eak鈥� in global oil demand.

New Productive Forces

These shifts start to bring into plausible focus a scenario in which US leadership and dollar pricing of fossil fuels continue in a shrinking Old Energy World, even as Chinese leadership and yuan pricing of renewables and EVs expand in an alternative New Energy World. Other energy producers and consumers are left to navigate the broadening space between those two 鈥� a space that is unlikely to narrow even if a 鈥渄eal鈥� is struck between the two on tariffs and trade issues.

More and more signs point to such a duality. Trump is doubling down on the Biden administration's efforts to keep China鈥檚 solar equipment, batteries and EVs as far as possible from US consumers. Admitting but ignoring climate change, Trump puts fossil fuels at the center of his imagined Made-in-America economic revival. How many tariffs will be retained, how many factories built and how much oil and gas produced remain to be seen. But it鈥檚 all about the US, and the rest of the world will have to adjust. That鈥檚 how it is in Trump鈥檚 Old Energy World.

For its part, Beijing is reportedly doubling down on requests for payment in yuan rather than dollars for manufactured goods. It is adding gold to its foreign reserves and selling a few of its still-plentiful US Treasury bonds. But its efforts to develop yuan-based oil trading have gone quiet, and financial structures are evidently working effectively outside US-controlled channels to accommodate its oil purchases from Russia, Iran and Venezuela. Its consumption of diesel and gasoline is in decline, while the outlook for its supposedly ballooning petrochemical output and feedstock supply have been thrown into disarray by trade war.

Amid all this, it鈥檚 easy to imagine China will find it simpler and more sensible to keep using dollars in the Old Energy realm and focus on yuan and its new trade finance structures for New Energy. Oil and LNG can provide a use and help retain value for the dollar reserves China already holds, while earnings from Chinese President Xi Jinping鈥檚 three 鈥渘ew productive forces鈥� are plowed back into an increasingly domestically oriented economy. That economy will presumably not generate or need to retain foreign exchange reserves as big as the $3.25 trillion equivalent it currently holds.

Such a yawning gap in the world鈥檚 energy systems doesn鈥檛 accord with the way people in the energy business have ever thought about their business. But it could be where we鈥檙e headed.

Sarah Miller is a former editor of Petroleum Intelligence Weekly, World Gas Intelligence and Energy Compass. The views expressed in this article are those of the author.