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ThatBritGuy:
Okay, so you've reinvented the gold standard, but tied it to hydrocarbon calories instead of giant piles of shiny stuff.

Energy is energy is energy. Calories are calories are calories. There's no "tie" involved, just a specification.

The "Petro" is not a "Value Unit" which changes hands, carbon-based or otherwise. It's a unit of measure of value.

An energy standard could be any amount of energy: its origin is immaterial to the function of measurement.

To specify a Petro as "the energy produced when burning 1 litre of n-octane at 20 deg C" means people can relate to it actual Value Units (a litre of gasoline, or heating oil) they understand, and give them a constant price expressed in the Petro.

We could equally define the Petro as the energy produced when x grams of such and such an isotope decays, but that is not as relevant to most people.

An analogy is with a metre as a unit of length. It's on  a human scale fine for many uses, but not for measuring the distance to Alpha Centauri or the dimension of an atom.

The key is to distinguish between Value Units of money's worth - which may be exchanged for other value - and the "Value Standard" by reference to which the exchange is made.

So a litre of Shell unleaded might always have an energy value in its use as fuel of 1 Petro. But that does not mean that litre is a Petro.

ThatBritGuy:

Firstly you've backtracked on the baker units.

In fact, baker units, butcher units, and candlestick maker units, cannot be the basis of generic currencies, since that would fragment the system as you point out. I merely used the example of baker units as an illustration that it is possible.

It has been done though...

Deli Dollars

I see the credit needed for the production and circulation of everyday goods and services as taking place within a "Credit Clearing Union".

The

WIR Bank

shows how it may be done, with the property backing of a charge over business property, in case of defaults.

I advocate the extension of the WIR concept more widely within a "Guarantee Society" framework.  Participants would make provisions into a default pool and backed up in a default situation by the capability of a defaulter to provide services to the community. ie the "backing" for credit would be hours of "unqualified" Labour.

ThatBritGuy:

Finally - what difference does this make? If I can go to a petrol station and buy petrol in pounds, there's no obvious advantage to using an alternative currency instead, even if it's petrol based.

Good point. Your ability to pay has nothing whatever to do with the currency you use in settlement.

The monetisation of energy is aimed both at providing a workable global "common currency" and at facilitating the transition from carbon-based energy to renewables.

If gasoline is 10 US cents per litre, as it is in Iran, then it gets phenomenally wasted - one day in Teheran is enough to appreciate that fact.

I am proposing that by adopting a "Petro" standard for their domestic and international energy sales they will be able to address the intractable issue of energy subsidies in a new way.  

Gasoline, heating oil and  natural gas prices would be brought up to international levels, and complete mayhem would be averted by issuing Energy Units - priced in Petros - equitably to all Iranians to a total amount equivalent to current consumption.

These would rapidly enter circulation, and would be acquired by those who need them with conventional fiat money (Reals) or otherwise (money's worth). There would be a powerful incentive to save energy, and a great many of the Units would not actually be redeemed, but would circulate instead.

New Iranian energy infrastructure, investment in energy efficiency, and in renewables, would be funded by selling Units redeemable in oil or natural gas, priced by reference to Petros. Rather than making loans secured against the sale price of future production, they would receive an interest-free loan for as long as the Unit remained unredeemed.

ThatBritGuy:

Now - if the important feature of this is that energy resources will be held in trust, I'd like to know exactly how that's going to happen politically.

For domestic transactions governments would be the "Custodian".

For international transactions then a generally acceptable  "Custodian" entity - probably Swiss - would be necessary. I am proposing just that in relation to a "Caspian Master Partnership" and a Global Gas Partnership"

ThatBritGuy:

But that's a political problem. Currency is a footnote. OPEC is not, I think, going to be keen on handing over its primary assets - at least not without plausible threats of war.

I have learnt the hard way that the vested interests of the oil market make it impracticable as a starting point.

This is why I propose the global market in natural gas as the best place to start.

(a) gas is homogeneous in a way that oil  - with its myriad qualities and types - is not;

(b) Iran, Qatar and Russia have around two thirds of all reserves, and could therefore credibly lead an initiative;

(c) there is no conventional (spot and derivatives) market in gas due to the constraints of long term infrastructure financing.

The mechanism I have in mind would revolutionise the financing of gas infrastructure, and create the basis of an "International Energy Clearing Union".

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Feb 21st, 2009 at 04:32:38 PM EST
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