Bloomberg.com: Energy

April 19 (Bloomberg) -- Qatar, the world's largest producer of liquefied natural gas, is diverting supplies destined for the U.S. and Europe to China because the Asian country pays more, Qatar's oil minister said today.

A supply agreement this month between Qatar and China ``is a diversion'' from Europe and the U.S., ``not new production,'' Abdullah bin Hamad al-Attiyah told reporters as he arrived in Rome for the International Energy Forum. ``We are not in the charity business. Whoever will give me the best price, I will follow him.''

OPEC member Qatar just gave the U.S. notice that it will not honor energy commitments if another nation, such as China, comes along and raises the ante. Until recently this would have been unthinkable. We have just been put on notice that we no longer hold a position of authority and respect with primary energy producers. China is literally eating our lunch. The next shoe to drop could be the end of pricing oil in U.S. dollars. That would really knock out the economy.

Just remember that Saudi arabia will never drop the dollar!

So no change in the future

We can no longer rely on an oil-backed dollar.

We need to go back to a commodity standard.

A rather interesting article I read a while ago in The Week.

Ahmadinejad (Iranian Leader) - "The US gets our oil and gives us a worthless piece of paper." We no longer even trade with them.

Chavez (Venezuelan Leader) - "The empire of the dollar has to end." - The US definately hasn't traded with them since Bush called him an 'axis of evil'.

But why you ask, am I telling you all this if we don't even trade with these people? Well:

Saud al-Faisal (Saudi Foreign Minister) was caught on tape before he realized saying that the currency question should be left to the finance ministers of the OPEC countries. He also said the group - that he was speaking too - should not say anything about the matter, lest that drive the dollar down even further- which is just what happened when reports of the conference surfaced in the financial press.

Are you so sure Saudi Arabia will hold?

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Kingdom of Heaven- A king may move a man, a father may claim a son. But remember that, even when those who move you be kings or men of power, your soul is in your keeping alone. When you stand before God you cannot say "but I was told by others to do thus" or that "virtue was not convenient at the time. This will not suffice. Remember that.

Helder Camara- When I give food to the hungry, they call me a saint. But when I ask why the poor have no food, they call me a communist.

Anyone who thinks the U.S. is calling the shots in our relationship with OPEC is living in a fantasyland. It is they who have us over the (oil) barrel. Saudi Arabia and the other oil producing countries will drop the dollar as the base for their product as soon as they think it is in their best interest. There are increasing signs that OPEC is moving toward cutting its ties to the U.S. in favor of stronger relations with China and other emerging powers. As the supplies of oil become increasingly tight oil producing nations will use their remaining reserves to their best interests - not ours.

Drops in supply of oil from the Middle East has proven to hurt in the short run, but in the long run has been rather beneficial. Decrease supplies have only led to increase in research for alternative energy resources, and increased fuel efficiency. It has also diverted the market to other sources of oil to diversify the market (like Alberta or the Gulf of Mexico).
China will never need as much oil per capita as the US, there's a reason Japan, although the second economy in the world for decades until China is emitting much less per capita: population density. You don't need to drive an hour to go to the supermarket in China.
I don't see it has stealing (or "eating our lunches"). It's all a competition.
And what's with the talk against a fiat currency? Fiat currencies have proven excessively efficient and a reliable form of "fake commodity" as Polany would have put it