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Energy as the ‘Non-Devaluing’ Currency: A Store of Wealth in Today’s World

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Energy and Human Resource Development in Developing Countries

Abstract

Energy underpins most of the world’s financial and economic transactions. Countries with ample energy reserves of natural resources, such as in the Middle East and in Asia, have grown rich with them, though not all the wealth has been shared proportionally. Countries bereft of natural resources such as Korea, Japan, and Singapore, have been forced to develop better downstream value-added activity and technology, via either refining, production or financial services. So much money, mostly via the US petrodollar, underpins energy transactions that many financial mechanisms have been created by various entities, including government, to distribute and serve it, from sovereign wealth funds to derivatives to crack spreads in refining. Commodity prices, mostly of crude oil, then become the world’s most tangible and mobile asset. In all the above scenarios, energy then becomes a world currency medium.

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Hickey, W. (2017). Energy as the ‘Non-Devaluing’ Currency: A Store of Wealth in Today’s World. In: Energy and Human Resource Development in Developing Countries. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-57082-6_3

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