YOU CANNOT PHASE OUT FOSSIL FUELS WITHOUT PHASING OUT THE DOLLAR

The petrodollar, fossil fuels, and the transition we are missing

Why phasing out oil is not enough

When we talk about the climate crisis, we almost always talk about energy: solar panels, electric cars, carbon taxes. All of that matters. But there is something almost never mentioned that sits at the heart of the problem: the global monetary system depends on us continuing to burn fossil fuels. It is not just that we burn too much oil. The problem is that the global financial system needs us to keep burning it. The stability of the US dollar depends on it. The US military depends on it. The recycling of petrodollars into Treasury bonds depends on it.

Fossil fuels still provide 86.6% of global energy. Oil consumption reached a record 103.75 million barrels per day in 2024. Oil alone contributes 11.2 gigatonnes of CO² to the atmosphere each year, roughly a third of all global emissions. Why can we not stop burning something that is killing us? Because there is a financial architecture that prevents it. It is called the petrodollar system.

What is the petrodollar?

In 1974, following the oil crisis triggered by the October War of 1973, the US Treasury struck a deal with Saudi Arabia: the Saudis would sell their oil exclusively in dollars and recycle oil revenues by purchasing US sovereign debt (Treasury bonds). In exchange, Washington would provide military protection and oil technology. The rest of OPEC followed suit. The petrodollar was born.

This means that every country in the world that needs oil (and every country does) first has to acquire dollars. Whether you are Colombia, India, or Japan: to buy oil, you need dollars. This creates a permanent artificial demand for the US currency, regardless of America's trade deficits or fiscal policy. Currently, 80% of global oil transactions are conducted in dollars, amounting to roughly $7 billion per day.

To put it simply: imagine every country on earth were forced to keep its savings in one country's bank account, and that country could spend that money however it wished. That is what a reserve currency does. And the dollar is one thanks to oil.

The trap: the carbon economy and dollar hegemony reinforce each other

The US military is the single largest institutional consumer of fossil fuels on the planet and the single largest institutional emitter of atmospheric carbon. The war machine that defends the petrodollar system runs on what the system sells. It is a vicious circle: global oil dependence generates demand for dollars, which finances the US deficit, which sustains the military that protects oil flows, which perpetuates oil dependence.

This is why the energy transition threatens not just oil companies but the entire system of dollar hegemony. And this is why maintaining dollar hegemony requires preventing or controlling any transition to post-carbon energy systems. The climate crisis and the monetary system are not separate problems but aspects of a single complex.

What happens when a country tries to break the petrodollar?

Every time an oil-producing country has attempted to sell its oil in a currency other than the dollar, it has faced sanctions, assassinations, or outright war. The pattern repeats with chilling precision:

Iraq (2003): Saddam Hussein switched Oil-for-Food transactions to euros in October 2000. The United States invaded in March 2003. One of the interim government's first actions was to re-denominate Iraqi oil in dollars.

Libya (2011): Gaddafi proposed a gold-backed African currency (the gold dinar) for the continent's oil trade. NATO intervened militarily. Declassified emails from Hillary Clinton confirmed the monetary threat was among the factors motivating French intervention.

Venezuela (2017–2026): Maduro listed oil in Chinese yuan in 2017. Venezuela, holder of the world's largest proven reserves (303 billion barrels), endured a decade of sanctions, a naval blockade, the seizure of China-bound tankers, and ultimately the capture of its president in January 2026. Venezuelan oil revenues were placed into US Treasury accounts.

Iran (2008–2026): Iran opened an oil bourse on Kish Island trading in euros and yuan. It is the most sanctioned nation on earth. In February 2026, US and Israeli forces assassinated Supreme Leader Khamenei. Iran retaliated by striking oil infrastructure across six Gulf states and closing the Strait of Hormuz, through which 20% of the world's oil flows. Oil prices surged past $100 per barrel.

Not just energy: fossil fuels are the molecular skeleton of industrial civilization

There is something the 'energy transition' narrative conceals. Oil is not just burned: it is the raw material of everyday life. Fossil fuels serve as a reducing agent in steel production, as raw material released by chemical decomposition in cement, as a molecular feedstock in ammonia (on which 40% of global food supply depends), in plastics, pharmaceuticals, synthetic fibres, and as a consumed electrode in aluminium production.

The 'energy transition' addresses, at best, 42–44% of global emissions (electricity, buildings, electrifiable transport). But between 27% and 40% of emissions come from processes where fossil fuels serve as chemical feedstock, not as an energy source. Industrial civilization is not merely powered by fossil fuels: it is made of them. And the petrodollar financial system has a material interest in keeping it that way.

March 2026: the system reveals itself

As preparations are underway for the fossil fuel phase-out conference in Santa Marta, the Strait of Hormuz is closed. Gulf refineries are burning. The petrodollar system that enforces fossil fuel dependence is being disrupted by the very countries it was designed to discipline.

Venezuela shows the system's logic laid bare: the country with the most oil on earth tried to sell it outside the dollar. The response was a decade of sanctions, a naval blockade, and the capture of its president. Its oil revenues now sit in US Treasury accounts. Iran built a parallel oil economy worth $45.7 billion a year entirely outside the dollar system, and responded to the attack on its sovereignty by closing the artery through which the material basis of dollar hegemony flows.

The most revealing figure: an Iranian Shahed-136 drone costs between $20,000 and $50,000. A Patriot interceptor missile costs $4 million. For every dollar Iran spends attacking oil infrastructure, its adversaries spend between $20 and $28 to defend it. Saudi Arabia has invested $80 billion in air defences over three decades. Result: the drones keep getting through.

There cannot be an energy transition without a monetary transition

If the carbon economy and dollar hegemony are mutually constitutive, then there cannot be a genuine energy transition without a monetary transition. It is not enough to install solar panels and shut down oil wells if the global financial system still needs the world to buy dollars to access energy. It is not enough to talk about phasing out fossil fuels if the monetary system that imposes them remains intact.

The American empire is producing the very conditions that have destroyed every previous iteration of the war-money-bondage complex: fiscal crisis, proliferation of monetary alternatives, growing refusal of illegitimate debts, and the ecological limits of the planet. The question is not whether this system ends. The question is: on whose terms? And what replaces it?

A decolonial just transition from below means confronting this question head-on. Not just for energy, but for the molecular basis of production. Not just for oil, but for money. Abolishing fossil fuels requires abolishing the dollar.