The Rise and Fall of the Petrodollar: Batteries Ate My Hegemon

Introduction

In 1974, the US and Saudi Arabia shook hands; the deal: oil gets priced in US dollars forever, and the dollar gets a permanent demand steroid. For half a century, it worked like magic. Then batteries got cheap, EVs killed extra miles, and by 2070 basically zero cars, pickup trucks, semis, or delivery bots will burn petroleum. Hydrogen stays niche, sequestered to steel mills, ammonia plants, and the occasional container ship. Road transport is on the path to 100% battery. Game over for the petrodollar, game on for whatever comes next.

Peak Petro Power

Looking back, the whole arrangement from the Reagan years to the late 2020s is comically lopsided. The world shipped roughly $2 trillion USD of oil every year, and almost every barrel required dollars. Petrostates enjoyed massive surpluses and fed them straight back into US assets. The US ran trade deficits the size of small economies and the sweet deal of only 0.5% real interest. Great while it lasted.

Petrodollar Glory Metrics (2010-2025 average)	Scale
Annual global oil trade value	$1.8 trillion USD
Share of global reserves in USD	60%
US current-account deficit financed by hydrocarbon capital reflux	~55%
Saudi budget breakeven oil price	$90/barrel

The Quiet Collapse

Oil demand does not crash on a single Tuesday in July. It peaks around 2028 at 106 million barrels/day, then autonomy arrives. Robotaxis cut vehicle miles traveled 40% in rich cities by 2045 because one car now serves five households. Heavy trucks go battery because 1.5 MW chargers and 800-mile packs finally make sense. By 2070, total oil demand sits at 18 million barrels/day, almost all for aviation kerosene and plastics. That is an 82% drop. The giant hydrocarbon capital reflux dries up. Central banks sell Treasuries slowly, yields creep up 200 basis points permanently, and the dollar settles around 35% of global reserves. Boring charts, brutal consequences.

The New Scarce Commodity: Terawatt-Hours

With hydrogen sidelined for anything on wheels, the binding constraint in 2070 is simple: cheap, dispatchable terawatt-hours (TWh). Everything electrifies, and everything that moves is autonomous. A fleet of ten million robotaxis in N. America alone sucks down 400 TWh/year just for motion. Training the next AI model takes another 200 GWh in one shot. Data centers, arc furnaces, everything tracked on the blockchain, and battery gigafactories fight for the same electrons.

The new “petrodollar” becomes the “teradollar.” Countries that deliver power at $15/MWh round-the-clock become the new swing producers.

Leading Teradollar Contenders in 2070

Resource	Likely Top Exporters (2070)	Currency Most Likely Tied To It
Solar + battery TWh	Morocco, Oman, Chile, China, Western Australia	High (new sun currencies "sol dollars or sollars")
Wind + hydro TWh	Brazil, Canada, Norway	Medium
Next-gen nuclear TWh	France, China, South Korea	Low
Geothermal TWh	Indonesia, Iceland, New Zealand	Low

My bet: the Moroccan dirham, Omani rial, and Chilean peso become weirdly muscular because they sit on 6,000 kWh/m²/year of sun, empty desert. As we covered in previous posts, the African sunbelt has massive power potential. Someone will price long-term power contracts in whatever basket those currencies live in.

No More Oil Wars

Salt was a strategic commodity for millennia, and people fought, taxed, and killed over it. That era ended, and now it's just another commodity. Oil will undergo a similar transition. 

By 2070, crude oil has quietly slipped from strategic commodity to niche industrial feedstock, like sulfur or zinc. Nobody scrambles carriers through the Strait of Hormuz to babysit tankers anymore. With road transport fully electrified, a barrel of oil matters about as much as a block of ice in 1940. The dollar, unshackled from obligatory oil purchases, settles into its new role: big, liquid, and respected, but no longer magical. It shares reserve status with the yuan, the euro, and a sun-backed basket traded out of Casablanca and Muscat. Exorbitant privilege is gone. The US borrows at market rates like everyone else. Just another world currency.

Conclusion

The petrodollar rose on the roar of V8s and dies with the silence of brushless motors. No drama, no apocalypse, just compounding battery density, minor (but compounding) price decreases in solar, and software eating the last excuses for combustion. Fifty years from now, historians and school children will chuckle that we once spent trillions per year to drill a little deeper for black goo when all we really needed was sunlight, sand, and big enough transmission cables. The dollar survives, but it is no longer special. The new reserve asset is measured in compute time traded in terawatt-hours, with the currency going to the places that figured out how to bottle sunshine the cheapest. Welcome to a future free from fossil fuels, where the geopolitical flex is who can push the most electrons across an ocean before the robots unionize and demand another charge.