Professional Documents
Culture Documents
Oil DA
Index
Index....................................................................................................................................................................................................1 1NC Link.............................................................................................................................................................................................3 1NC Russia !.......................................................................................................................................................................................4 1NC Gradualism Turn (1 of 2)............................................................................................................................................................5 1NC Gradualism Turn (2 of 2)............................................................................................................................................................6 U- Prices..............................................................................................................................................................................................7 U- Transition (1 of 3)..........................................................................................................................................................................8 U- Transition (2 of 3)..........................................................................................................................................................................9 U- Transition (3 of 3)........................................................................................................................................................................10 U- Transition- SUVs Module............................................................................................................................................................11 L- Glut...............................................................................................................................................................................................12 L- Glut- Saudi Arabia.......................................................................................................................................................................13 L- Boosters........................................................................................................................................................................................14 !- T/ Case (1 of 2)..............................................................................................................................................................................15 !- T/ Case (2 of 2)..............................................................................................................................................................................16 !- Econ...............................................................................................................................................................................................17 !- Hege...............................................................................................................................................................................................18 !- Iraqi Econ......................................................................................................................................................................................19 !- Mexico 2NC..................................................................................................................................................................................20 !- Mexico- Oil Key............................................................................................................................................................................21 !- Middle East Stability.....................................................................................................................................................................22 !- Poverty...........................................................................................................................................................................................23 !- Russia- Lashout 2NC.....................................................................................................................................................................24 !- Russia- Econ- Oil Key...................................................................................................................................................................25 !- Russia- Econ- Inflation IL.............................................................................................................................................................26 !- Russia- Trade Leverage.................................................................................................................................................................27 !- Saudi Arabia 2NC..........................................................................................................................................................................28 !- Saudi Arabia- IL- US Imports Key...............................................................................................................................................29 !- Saudi Arabia- !- Econ....................................................................................................................................................................30 !- Saudi Arabia- !- Terror..................................................................................................................................................................31 !- Venezuela......................................................................................................................................................................................32 Chinese Growth DA 1NC.................................................................................................................................................................33 Chinese Growth DA- L.....................................................................................................................................................................34 2NC AT Peak....................................................................................................................................................................................35 Aff- U- Prices Wont Stay High (1 of 2)...........................................................................................................................................36 Aff- U- Prices Wont Stay High (2 of 2)...........................................................................................................................................37 Aff- U- High Prices Inev...................................................................................................................................................................38 Aff- U- AT High Prices S Case (1 of 2)............................................................................................................................................39 Aff- U- AT High Prices S Case (2 of 2)............................................................................................................................................40 Aff- U- AT Markets S.......................................................................................................................................................................41 Aff- No L..........................................................................................................................................................................................42 Aff- !- Dollar.....................................................................................................................................................................................43 Aff- !- Econ (1 of 2)..........................................................................................................................................................................44 Aff- !- Econ (2 of 2)..........................................................................................................................................................................45 Aff- !- Food Prices............................................................................................................................................................................46 Aff- !- Free Trade (1 of 2).................................................................................................................................................................47 Aff- !- Free Trade (2 of 2).................................................................................................................................................................48 Aff- !- Manufacturing- U..................................................................................................................................................................49 Aff- !- Regional War.........................................................................................................................................................................50 Aff- !- Resource Wars (1 of 3)..........................................................................................................................................................51 Aff- !- Resource Wars (2 of 3)..........................................................................................................................................................51 Aff- !- Resource Wars (3 of 3)..........................................................................................................................................................52 Aff- !- Russia- Dem ! T/ (1 of 2).......................................................................................................................................................54 Aff- !- Russia- Dem ! T/ (2 of 2).......................................................................................................................................................54 Aff- !- Russia- U...............................................................................................................................................................................56 Aff- !- Russia- Prices Key.................................................................................................................................................................57 1
CNDI Regents
Oil DA
Aff- !- Russia- Econ- Resilient.........................................................................................................................................................58 Aff- !- Russia- Hege (1 of 2).............................................................................................................................................................59 Aff- !- Russia- Hege (2 of 2).............................................................................................................................................................60 Aff- !- Venezuela..............................................................................................................................................................................61
CNDI Regents
Oil DA
1NC Link
Oil prices are and will stay high
Krauss 7-2
Clifford Krauss July 2, 2008 Clifford Krauss has been a New York Times correspondent since 1990. He currently is a national business correspondent based in Houston. He covered the State Department, Congress and the New York City police department before serving as Buenos Aires bureau chief and Toronto bureau chief. He is author of "Inside Central America: Its People, Politics and History," (1991). He has published articles in Foreign Affairs, GQ and Wilson Quarterly, along with other publications. Oil Demand Will Grow, Despite Prices, Report Says http://www.nytimes.com/2008/07/02/business/02oil.html?ref=business
World demand for oil should continue to climb, despite the doubling of oil prices and weakening economic growth, according to a report released Tuesday by the International Energy Agency. That should mean tightening supplies, decreasing the odds that drivers will get much relief at the gasoline pump. The Paris-based agency, which advises governments of the industrialized countries, predicted that oil consumption would decline slightly in the United States and other developed countries over the next couple of years. Americans, the report said, are beginning to drive more fuel-efficient vehicles and taking mass transit when it is available. But the small decline in oil demand in the industrialized countries will be more than offset by an estimated increase in demand of 3.7 percent a year from 2008 to 2013 in developing countries, particularly in Asia, the Middle East and Latin America. said The report is only further confirmation of the inability of global supply to catch up with rising demands,Chris Ruppel, an energy analyst at Execution, an institutional brokerage firm. After five years of record increases in oil prices, producers are still unable
to sufficiently expand output. It means we are in for rough times. The report said energy consumption was increasing in developing countries because of increased trade, growing internal markets and strong commodity prices. But subsidies that typically shield gasoline consumers in developing countries, the report said, are also important in sustaining strong demand, particularly in oil-producing countries. By 2013, oil demand in developing countries will account for nearly 49 percent of total global demand, the report said, compared with 36 percent as recently as 1996. Demand will rise the most in China, as it has since 2004. China will account for almost a third of the worlds annual demand increase in the 2008-2013 period, the report said. That projection is based on International Monetary Fund predictions of doubledigit annual economic growth rates in China for the foreseeable future. The global picture for oil production is little better. The agencys forecast for oil production capacity actually declined by about 3 percent for 2012 from what it forecast a year ago. High prices have stimulated exploration and field development, but the agency projects an increase in annual global production capacity of 1.5 million to 2.5 million barrels a day by 2010 from current levels, or roughly twice the current production in the Gulf of Mexico. After that, the agency expects annual growth below one million barrels a day from 2011 to 2013. Those modest increases result from project delays and exploding costs for many oil field projects around the world, declining production in major fields in Mexico and the North Sea, and political turbulence in Nigeria and other producing countries. There are some bright spots for supplies; at least 250 major new field or field expansion projects are expected to begin production in the next few years in non-OPEC countries alone. Spare capacity in OPEC countries is projected to rise from 2.5 million barrels a day in 2008 to more than 4 million barrels a day in 2010, although that will still be less than 5 percent of global demand. Production growth is robust in Brazil, Kazakhstan, Azerbaijan and Iraq. But the agency predicted that the tight markets would keep prices high. And it discounted the impact of speculation, which has been blamed by many politicians in the United States recently for the spike in prices. Blaming speculation is an easy solution which avoids taking the necessary steps to improve supply-side access and investment or to implement measures to improve energy efficiency, the report said
OPEC will increase supply in response to the plan and decrease the price
Southeast Farm Press 1
12/19 But just when it appears something will in fact be done toward increasing domestic energy supplies, getting serious about alternative sources, and making a long-term commitment toward reducing our dependence on foreign oil well, miraculously, prices go down. OPEC magnanimously increases supply, refineries begin humming, and once again thoughts of a national energy policy fade like the Cheshire cat. Only the cat's grin is left. And the cat is OPEC and the energy industry. They've seen it all before. They know they have only to wait; that we in the United States have a short memory, and that as long as they toss us a sop of energy bargains from time to time, we'll moan and groan and pay their price the rest of the time.
CNDI Regents
Oil DA
1NC Russia !
Low prices devastate the Russian economy
Hudson Institute Study Group on U.S.-Russian Relations, U.S.-RUSSIAN RELATIONS: IS CONFLICT INEVITABLE?, Summer 2007, http://www.hudson.org/files/pdf_upload/Russia-Web%20(2).pdf The economy Putin is leaving to Russia looks impressive. Gross domestic product has risen during his presidency from $200 billion in 1999 to $920 billion in 2006 (in current dollars); the gold and currency reserves have risen from $12.7 billion in 1999 to $ 303.86 billion in February 2007. The reserves of the Stabilization Fund, into which oil revenues are deposited, have reached $70 billion. In 2006 the trade profit was over $120 billion, and the budget profit is 7.5 percent of gross domestic product. The Russian economy is now the twelfth largest in the world. Although since 2005 economic growth has been slowing down (from 10 percent in 2000 to 6.8 percent in 2006) it still looks fairly impressive. A boom is continuing not only in the extractive sectors of the economy but also in construction, trade, and the service and banking sectors. Russian business has shown it is able to organize large scale production, successfully competing against international corporations. Russia, which in the 1990s had humiliatingly to beg for loans, repaid her debt to the Paris Club ahead of time. The number of major businessmen in Russia is increasing more than twice as fast as in the U.S.: in 2005 the number of dollar millionaires in Russia grew by 17.4 percent as against 6 percent in the U.S. However, like everything else in Russia, the economy has a false bottom. The causes of the economys success give no grounds for optimism, mainly because it is associated with high oil prices and has partly been achieved by sectors protected from foreign competition. A collapse of the oil price could plunge the Russian economy into recession, and people remember what a fall in the oil price means. Yegor Gaidar has repeatedly reminded us that the sixfold decrease in the oil price in 1986 led to the collapse of the USSR, and the twofold fall in 1998 caused a financial crisis that almost finished off the barely breathing Russian economy.
than most analysts feared. If conditions get worse, even the stoic Russian people will soon run out of patience. A future conflict would quickly draw in Russia's military. In the Soviet days civilian rule kept the powerful armed forces in check. But with the Communist Party out of office, what
little civilian control remains relies on an exceedingly fragile foundation -- personal friendships between government leaders and military commanders. Meanwhile, the morale of Russian soldiers has fallen to a dangerous low. Drastic cuts in spending mean inadequate pay, housing, and medical care. A new emphasis on domestic missions has created an ideological split between the old and new guard in the military leadership, increasing the risk that disgruntled generals may enter the political fray and feeding the resentment of soldiers who dislike being used as a national police force. Newly enhanced ties between military units and local authorities pose another danger. Soldiers grow ever more dependent on local governments for housing, food, and wages. Draftees serve closer to home, and new laws have increased local control over the armed forces. Were a conflict to emerge between a regional power and Moscow, it is not at all clear which side the military would support. Divining the military's allegiance is crucial, however, since the structure of the Russian Federation makes it virtually certain that regional conflicts will continue to erupt. Russia's 89 republics, krais, and oblasts grow ever more independent in a system that does little to keep them together. As the central government finds itself unable to force its will beyond Moscow (if even that far), power devolves to the periphery. With the economy collapsing, republics feel less and less incentive to pay taxes to Moscow when they receive so little in return. Three-quarters of them already have their own constitutions, nearly all of which make some claim to sovereignty. Strong ethnic bonds promoted by shortsighted Soviet policies may motivate non-Russians to secede from the Federation. Chechnya's successful revolt against Russian control inspired similar movements for autonomy and independence throughout the country. If these rebellions spread and Moscow responds with force, civil war is likely. Should Russia succumb to internal war, the consequences for the United States and Europe will be severe. A
major power like Russia -- even though in decline -- does not suffer civil war quietly or alone. An embattled Russian Federation might provoke opportunistic attacks from enemies such as China. Massive flows of refugees would pour into central and western Europe. Armed struggles in Russia could easily spill into its neighbors. Damage from the fighting, particularly attacks on nuclear plants, would poison the environment of much of Europe and Asia.
Within Russia, the consequences would be even worse. Just as the sheer brutality of the last Russian civil war laid the basis for the privations of Soviet communism, a second civil war might produce another horrific regime. Most alarming is the real possibility that the violent disintegration of Russia could lead to loss of control over its nuclear arsenal. No nuclear state has ever fallen victim to civil war, but even without a clear precedent the grim consequences can be foreseen. Russia retains some 20,000 nuclear weapons and the raw material for tens of thousands more, in
scores of sites scattered throughout the country. So far, the government has managed to prevent the loss of any weapons or much material. If war erupts, however, Moscow's already weak grip on nuclear sites will slacken, making weapons and supplies available to a wide range of anti-American groups and states. Such dispersal of nuclear weapons represents the greatest physical threat America now faces. And it is hard to think of anything that would increase this threat more than the chaos that would follow a Russian civil war
CNDI Regents
Oil DA
Even without subsidies, market share mandates, or carbon taxes, heightened concerns over climate change and air quality will prove a chink in oil's competitive armor, according to Sullivan.
"Carbon capture and advanced emissions controls will drive up the effective cost of fossil fuel resources," she said. "Great progress is needed on these fronts, given the ready availability and high reliability of that resource, balanced against the challenge of global climate change , , , I do not think
we are about to drive traditional fossil fuels out of the picture by any means, but we are headed to a situation where renewables are a significant part of almost every energy supplier's balanced portfolio."
Making the transition
If the depletionists are right about global oil production peaking around the turn of the decade, then renewables won't need much in the way of subsidies or Kyoto mandates; skyrocketing costs of oil will help usher in a renewables era sooner than anyone currently predicts. But the resulting high energy costs for everyone will prove a
massive economic dislocation for the world, a grim scenario often outlined by the peak-oil theorists. Some have even painted alarming pictures of civilization crumbling as a result of this new oil shock. "No
technology breakthrough can come to alter the imminent oil peak; it would take much too long to put new technology in place to hope to dent oil and gas demand," said A.M. Samsam Bakhtiari, National Iranian Oil Co. senior expert. "Even if the two great hopes of solar and cold fusion would materialize, they could not be developed in time, as it takes decades (not years) to put in place the necessary infrastructures." But there is a prevailing view among most energy economists that an approaching peak and subsequent steep decline in global oil production will send early price signals that will crimp demand, spur development of nonconventional oil resources, and thus stave off the peak day. Another prominent peak-oil theorist, who declined to be identified, acknowledged that "prices will
rise, but they will send a signal that comes too late, given the long lead times to create new energy infrastructures. This will result in a reduction of demand but, unfortunately, the so-created room of maneuver will be shortlived because non-Middle East oil supply will continue to decline with little chance that new investments will be sufficient to compensate for both this decline and the potential [overall] rise of demand. "To this equation, one should add the negative impact on the GDP, as was the case during the last 30 years each time the price of oil went up. I believe that it won't be the end of the civilization, but it will certainly be a painful transition."
Some of the depletionists contend that the only answer is for governments to take steps now to boost
energy prices and thereby conserve what oil reserves remain. But the unidentified peak-oil theorist is a
contrarian on that score.
"The idea that planners, and especially state planners, could be smart enough to rise the prices progressively to avoid a shock is totally unrealistic," he told OGJ. "My preference is to leave things happen and ensure that governments will not intervene. A competitive industry is by far the best means to ensure a rapid and correct adaptation."
Rowley too sees increasing pressure on oil supplies within the next decade but offers a less apocalyptic vision. "[Natural] gas will act as a next phase after oil, but what we expect to see over the next decade is a realization that conventional
"The global economy has a wonderful way of coping, and transition away from conventional to renewables will occur. "The real pivotal impact of renewable energy will be within the period of 2010-20, where players will be making
energy costs can only go one way, up," he said.
significant choices between a maturing renewable sector and conventional [energy sources]." Noting that recent history is full of instances in which technical progress or volatility of primary energy sources has led to major changes in energy supply or energy consumption, Mogford voices the BP stance that "oil will remain in relatively abundant supply for at least the next 15 years, with gas being plentiful for several decades longer. "More than economics will drive the growth of alternative energy. Security of supply, minimization of environmental impacts, and technical advances will also be factors." But will the transition to renewables be an orderly one? Sullivan expressed her belief in an orderly transition: "We have seen occasional price spikes in traditional energy resources over the last 30 years, and I suspect we will continue to see those from time
governments will tailor their policies on emissions, renewable portfolio requirements, and technology funding to ensure that, except for the occasional, unusual price spikes, there is an orderly transition to an era in which renewables and non-conventional fossil fuel technologies are playing a major role in our energy supply picture."
to time, for various reasons. "But I also suspect that
CNDI Regents
Therefore, she reckons that
Oil DA it will be another 20-25 years before alternative energy sources play a dominant role the
world's energy mix. But orderly and rapid are not necessarily mutually exclusive in this outlook, says Namovicz.
Namovicz also cautions observers to remember the effect of market feedbacks in citing his expectation that it will be a long time before renewables can become the world's dominant energy source. "If wind becomes economic because natural gas is too expensive, then they will build lots of wind [projects]. But this will take market share from gas and lower the gas price. At the lower gas price, the new economics for wind may dampen its growth."
In addition to the existing-capital-stock issue, Human concerns
If in fact a permanent oil shock is looming on the near horizon, it would seem that an early effort to impose higher energy prices for that reason or to support an early transition to renewables would have its own severe economic consequences, especially for developing countries. In effect, this could accelerate the price shock. The likely deep recession that would ensue could hit not only the developing countries
directly but also squelch economic growth in the developed countries, upon which the former depend heavily for export markets and economic aid.
CNDI Regents
Oil DA
U- Prices
OIL PRICES WILL RISE INEVITABLY The International Herald Tribune 2008 [Oil price forecast: Up, then down, then up again, lexis] Flynn said he thought that oil prices were more likely to fall than rise, ''because I think the factors that drove us to today are unlikely to repeat in 2008.'' He added that he thinks the dollar will find a bottom in 2008 and that the problems in housing are already priced into the markets. But most experts say that if oil prices do go down, they will probably not go down very far or for very long. Richels said that consumers in Europe and Japan were not feeling the same pressure as Americans because their currencies have been strengthening and not weakening. ''There is still a lot of demand that is outside of the United States,'' Richels said. ''There is increasing oil consumption, particularly in the developing nations, and oil is getting more difficult to find.'' OIL PRICES WILL STAY HIGH The Gazette 2008 [Montreal, Surging oil prices threatening global growth, geopolitical balance; Spurring search for energy alternatives, by RICHARD VALDMANIS, June 3, https://www.lexisnexis.com/us/lnacademic/results/docview/docview.do? docLinkInd=true&risb=21_T4067419295&format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T406741929 9&cisb=22_T4067419298&treeMax=true&treeWidth=0&csi=8355&docNo=5] Oil prices have doubled in a year to around $130 a barrel as rapid increases in consumption in China and other developing countries strain supplies, and some analysts have said crude could top $200 a barrel by 2010 as the market remains tight. While the boom has helped big oil-producer countries, particularly Russia and parts of the Middle East, there are signs the major consumers - the United States and parts of Europe and Asia - are starting to crack under the strain.
CNDI Regents
Oil DA
U- Transition (1 of 3)
High prices are spurring a slow transition that will solve the case now
Wherry 7
[Rob, writer for the Smart Money magazine, Alternative-Energy Funds Could Offer High-Powered Returns, http://www.smartmoney.com/fundinsight/index.cfm?story=20070621&hpadref=1)] Wind power and other forms of alternative energy solar, hydro, geothermal, biomass are quickly coming into vogue across the globe thanks to record high oil prices, shrinking reserves and world-wide demand that is expected to increase 50% by 2030, according to the International Energy Agency. What has also given them some attention is that these sources are now at the heart of profitable businesses. That hasn't always been the case. Clean Edge, an industry research firm, anticipates biofuels, wind, solar and fuel cells will generate $217 billion in industrywide revenues by 2016, up from $56 billion in 2006. Even the typical American has changed his perception: A survey by Calvert, a socially-responsible investment firm, found that 85% of the 1,094 people that they polled thought putting money into alternative energy was a good way to protect the environment and make money, too. Add all that up and you have a decent investing opportunity. You could spend your time reading over analyst reports on alternativeenergy companies what little there are on these thinly-traded firms looking for a diamond in the rough. But a smarter option is to scoop up the shares of one of the growing number of mutual and exchange-traded funds that specialize in this field. As always, though, be prepared for sector funds like these to experience dramatic ups and downs. And we would suggest only building a 5% or smaller position in this niche. The concerns here are numerous. Many alternative-energy companies are small firms that are barely profitable. Lose a few customers or fail to make a piece of technology work and it could be lights out. Alternative-energy investors not only need to be aware of the price of a commodity like oil the higher it goes the more attractive managing solar and wind farms becomes but also others like corn, a chief ingredient in ethanol. There are political concerns, too. "Both Republicans and Democrats agree we need to be energy independent," says Todd Rustman, president of GR Capital Asset Management in Newport Beach, Calif. But that doesn't mean there aren't gripes. Locals, especially, complain that wind farms are eyesores and hurt property values. Those protests can lead to costly delays or even derail some potential money-making projects. HIGH OIL PRICES ARE FORCING INVESTMENT IN ALTERNATIVE ENERGIES The Gazette 2008 [Montreal, Surging oil prices threatening global growth, geopolitical balance; Spurring search for energy alternatives, by RICHARD VALDMANIS, June 3, https://www.lexisnexis.com/us/lnacademic/results/docview/docview.do? docLinkInd=true&risb=21_T4067419295&format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T406741929 9&cisb=22_T4067419298&treeMax=true&treeWidth=0&csi=8355&docNo=5] A surge in the price of crude is threatening global growth for the first time in decades and spurring a desperate surge in interest in energy alternatives and new technology to keep conventional oil flowing. How companies and governments navigate the treacherous energy landscape - which some analysts liken to that of the 1970s and 1980s - will shape the future of the global economy and potentially tilt the geopolitical balance, experts said. "What happens 10 years down the road will be determined by the decisions made on energy today," said David Kirsch, analyst at PFC Energy in Washington. "Countries need to get serious about the underlying problem of demand for oil." High oil will encourage innovations Newsweek June 23, 2008 Learning From the Oil Shock; SECTION: ROBERT J. SAMUELSON; JUDGMENT CALLS; Pg. 39 Vol. 151 No. 25 ISSN Finally, we need to let high prices work. Aside from encouraging fuel-efficient vehicles and disciplining driving habits, they may also stimulate development of new biofuels from wood chips, food waste and switch grass. Production costs of these fuels may be in the range of $1 a gallon, says David Cole of the Center for Automotive Research. If true, that's well below today's wholesale gasoline prices. To assure new producers that they wouldn't be wiped out if oil prices plunged, we should set a floor price for oil of $50 to $80 a barrel, about 40 percent to 60 percent of today's levels, says Cole. It's a worthy idea and can be done with a standby tariff. It would activate only if prices hit the threshold. We know that oil prices are unpredictable, and should a price collapse occur, Americans wouldn't be deluded into thinking we've returned permanently to cheap energy. We've made that mistake before.
CNDI Regents
Oil DA
U- Transition (2 of 3)
Greener technologies wont make a difference in the short term
Newsweek June 9, 2008 The Coming Energy Wars; Rana Foroohar; With Barrett Sheridan in New York WORLD AFFAIRS; Pg. 0 Vol. 151 No. 23 ISSN: 0163-7053 And while higher prices are already driving down energy consumption in rich nations, that drop does not offset the booming demand in emerging markets. Meanwhile, though numerous green technologies hold plenty of promise, none of them are going to save the day any time soon. "It's a false god," says Robin West, chairman of PFC Energy. "There will be step changes in technology, but people forget the scale of the oil business. Ethanol production was 5 billion gallons last year, with huge subsidies to farmers and rising food prices. But that's the size of one production platform off the coast of West Africa." High oil prices cause gradual market innovations that will solve current problems Financial Times June 29, 2008, The positive side of high oil price http://www.gulfnews.com/business/Comment_and_Analysis/10224724.html
Peak oil or freak oil? The current oil shock, with Nymex crude touching $142 on Friday, has as much to do with bad luck as geology. And, as usual with luck, man has largely made his own. The central theme of this decade's bull market in crude is little different from previous oil shocks: a change in expectations about future supplies. In other words, many think we have enough oil today but might not tomorrow. A series of largely man-made disruptions has fed that fear. In countries such as Russia and Mexico, resource nationalism has stifled investment in supply. Violence in Nigeria and Iraq has shut down fields. The Energy Policy Research Foundation estimates the world's lost output of up to 4.5 million barrels a day is the equivalent of twice the world's effective spare capacity. Whether the problems are
below or above the ground, the result is the same: fewer barrels available. The distinction, however, is important - if only because humans, even politicians, can alter their behaviour. When oil prices are rising, producers have an incentive to keep markets tight. But, eventually, expensive oil encourages conservation, new investment and the search for alternatives. Meanwhile, protectionism breeds inefficiency. Russia and Mexico, for example, are taking steps to reduce oil taxes or attract foreign companies, respectively, to address stagnant or falling output. The same point extends to the demand side. In the US, high oil prices prompt drivers to buy more fuel-efficient cars. Meanwhile, even if Asia's drivers are becoming richer, they will never reach America's currently bloated per capita usage of oil. Governments across Asia are already cutting expensive fuel price subsidies. Shocks are occasionally necessary to change human behaviour. High prices are painful, but will ensure the world does not run out of oil. High prices cause more alternative energy innovation Caryle Murphy June 23, 2008 Saudi Arabia to boost oil output. Will gas prices fall? Correspondent of The Christian Science Monitor http://www.csmonitor.com/2008/0623/p06s02-wome.html If there is one word that has long described Saudi Arabia's oil policies, it is "stability." The Saudis have prided themselves on being a reliable source of oil. They like price rises, but they dislike the wild swings that bring market uncertainty. Only 10 years ago the Saudis were in dire economic straits. Oil was $10 a barrel and the kingdom's debts were the equivalent of 130 percent of its gross domestic product, mostly because it had financed the $60 billion-plus cost of the 1990-91 Gulf War to eject Saddam Hussein from Kuwait. Their greatest fear, say observers, is a severe drop in oil prices that would throw their ambitious development projects, including the building of six new megacities, into disarray. Despite the cash windfall, the Saudis fear high prices will sour political ties with important allies like the US and accelerate the development of alternative fuels. On Sunday, British Prime
Minister Gordon Brown called for a "global new deal" between consumers and oil producers based on "a shared interest in a more diversified range of nonoil energy sources." He said oil exporters should be able to "recycle" their windfall oil profits "into alternative energy investments in developed market economies." In turn, Britain should offer the producers "genuine openness and partnership in our investment markets." Cognizant of the hardship caused by high oil prices, the Saudi king called for an international initiative to help developing countries meet their energy needs, pledging $500 million in soft loans. He also suggested that OPEC contribute $1 billion.
HIGH PRICES FORCING ALTERNATIVE ENERGY INNOVATION NOW AP 2008 [Gas at $4 brings promises, pandering, By TOM RAUM Jun 23, 2008, http://ap.google.com/article/ALeqM5isJU4OyzZglXxAWlzkvmnslNP3-wD91FUOI00] Both want to boost alternative energy technology, press for more fuel efficiency and promote more conservation. Both McCain and Obama favor expanding the electricity grid, implementing caps on carbon emissions to curb global warming, spend billions on clean-coal research and give nuclear energy a larger role. They differ on offshore drilling, but agree on keeping the ban on oil exploration in the Arctic National Wildlife Refuge. Despite the flurry of activity and rhetoric, major factors in the rise of gas prices the weak dollar, soaring demand in China and India, market speculation, supply problems are beyond U.S. policy-makers' direct control. 9
CNDI Regents
Oil DA
U- Transition (3 of 3)
HIGH OIL PRICES CAUSING A SHIFT TO RENEWABLES IN THE STATUS QUO The Deal 2008 [Fueling the alternatives, lexis] HIGHLIGHT: The increased demand for energy galvanizes interest in alternative sources at the government and private-sector level. Oil prices are reaching record levels, evidence is mounting on the degradation caused by carbon-based fuels, fossil fuel reserves are declining, green tax breaks are becoming more popular, and the U.S. Senate is working on legislation aimed at cutting U.S. emissions by 70% before 2050. This, combined with an increased demand for energy, is fueling interest in alternative energy sources at the government and private-sector level. In 2008 the reallocation of venture capital and private placements from coal and biofuel producers (including corn ethanol) to cane ethanol, wind and solar-energy-producing companies will continue to increase in order to meet increased demand. In February J.P. Morgan Chase & Co., Morgan Stanley and Citigroup Inc. partnered for the purpose of creating The Carbon Principles -- climate change guidelines for advisers and lenders to the U.S. power industry. The banks worked in conjunction with power companies and the Natural Resources Defense Council and Environmental Defense to create the guidelines and a framework for lenders to understand better and evaluate the potential carbon risks associated with coal-fired power plants. The Principles, which are expected to be implemented by the U.S. government in the next two years, will require federal caps on carbon dioxide and should lead to reductions in both the financing and building of coal-fired power plants. Some companies, noting the rising costs of energy production and anticipating the Carbon Principles and other federal regulations, are beginning to invest in more environmentally conscious alternative energy sources. HIGH PRICES INCENTIVIZES PEOPLE AWAY FROM OIL DEPENDENCE USA TODAY 2008 [It can be a gamble to invest in alternative energy; Consider companies that dabble in wind power, conservation, by John Waggoner, https://www.lexisnexis.com/us/lnacademic/results/docview/docview.do? docLinkInd=true&risb=21_T4067427500&format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T406742750 3&cisb=22_T4067427502&treeMax=true&treeWidth=0&csi=8213&docNo=15] Nevertheless, as oil prices hover above $110 a barrel, it's a safe bet that people will be thinking much harder about how to replace the gas-powered engine, or at least how to make it use less fuel. Are there investment plays for that? Sure. But only with money you're willing to see go up in smoke. Although oil prices are down from their peak of nearly $120 just a few weeks ago, a barrel of light, sweet crude closed at $112.52 Thursday, up from $63.19 a year ago. The average price of a gallon of regular gasoline hit an all-time record high of $3.603 this week, according to the government. Back when gasoline was less than $1 a gallon, there was no real urgency to explore alternatives. But the prospect of $4-a-gallon gas has focused Wall Street's collective mind wonderfully on alternative energy. "When gas gets dear, it doesn't take long for people to say, 'What else is available?'" says Robert Wilder, CEO of WilderShares, which created the WilderHill Clean Energy index. HIGH OIL PRICES FORCING A TRANSITION NOW New Delhi 2008 [An alternative scenario for oil, by Akash Prakash, June 25, http://www.businessstandard.com/common/news_article.php?leftnm=10&bKeyFlag=BO&autono=326997] Secondly, there seems to be a serious mood change in the US towards energy security. The fact that John McCain has openly come out and suggested a revival of the US nuclear programme, and that the Governor of Florida has talked of re-examining the ban on offshore drilling, are just straws in the wind, pointing to a change in political mood. The US consumer is now feeling the pain of higher gas prices and the country will I think become more pragmatic in balancing environmental and energy security concerns. Who would have thought that the Americans can ever be weaned away from their gas-guzzling SUVs? But that is exactly what is happening. As consumers adapt to high petroleum prices, this adaptation will soon manifest in policy change as well. One cannot rule out tax changes designed to reduce the carbon intensity of the economy.
10
CNDI Regents
Oil DA
11
CNDI Regents
Oil DA
L- Glut
Oil glut saps motivation to develop renewables Time 11/7/94 The oil glut of the 1980s sapped any motivation to develop alternative energy sources. Solar moved to the fringes of public consciousness in the U.S. as the Reagan Administration eliminated most of the federal funding for research, and big oil companies dropped their development programs. Result: solar accounts for less than 0.5% of the power generated in the U.S. today, instead of the 2% to 5% envisioned in the late 1970s. OPEC will flood NYT 00
IF there was one thing America's scientists seemed sure of during the energy crisis of the 1970's, it was that new methods of generating energy from the wind, the sun, the ocean waves and other sources would soon free the country from its dependence on foreign oil. In particular, a form of nuclear energy called fusion promised clean, safe and inexhaustible energy. In an editorial in August 1975 that mirrored scientific optimism, The New York Times noted a recent ''major breakthrough in fusion research'' and predicted that a test reactor could be working ''as early as the mid-1980's; commercial applications could become a reality a decade later.'' What happened? Why couldn't President Clinton flood power grids with wind, solar or fusion energy during the recent oil squeeze? ''In 1976, almost everybody said the price of oil would keep going up,'' said Dr. Steve Fetter, a professor of public policy at the University of Maryland. ''In fact, that's what drove a lot of the optimism about nonfossil technology.'' Instead, the Organization of Petroleum Exporting Countries -- the monopoly -- opened the spigots again, new reserves of fossil fuels were found, energy prices fell and financing for alternative energy research plummeted.
OPEC backlash at the plan Freeman, FNS, 9-17-2004
I was just going to comment because this is the Middle East Policy Council and we try to focus on the implications of things for U.S.-Arab relations. The major oil producers in the Persian Gulf - Saudi Arabia most notable among them - do not take kindly to the idea of raising prices through taxes if the taxes go to the governments that levy them, not to the producers of oil. This is, in fact, a major point of dispute between the Saudis and various European governments who have chosen to tax gasoline at the pump at very high levels, both in order to raise revenue for roads and mass transit systems and to reduce demand for energy, and thereby preserve a measure of independence from foreign supply, but also for other purposes, none of which are particularly congenial to the oil producers.
OPEC will flood with cheap oil causing price collapse CJ Campbell, 3-20-2000 (oil and gas journal p.20)
Norway and Mexico offered to cut production to help support price. The OPEC countries themselves did everything possible to foster the notion that they could flood the world with cheap oil at the flick of a switch. It was a strategy aimed to inhibit investments in gas, non-conventional oil, renewable energy or energy saving that they feared might undermine the market for their oil, on which they utterly depend.
12
CNDI Regents
Oil DA
Surprisingly, Saudi Arabia's decision to increase oil production is not necessarily aimed at increasing profits in the near term; instead, it is designed to maintain the nation's franchise well into the future. According to the report, government officials in Saudi Arabia worry that if oil prices remain too high, oil dependent nations such as the United States will increase oil exploration and development of alternative energy sources. "Saudi Arabia plans on being in the oil game for many years to come," commented Leuffer. "They do not want to risk their future prosperity on present day greed." According to Leuffer, Saudi Arabia would like oil to fall to $25 dollars a barrel and he believes the Saudis will continue to produce oil until that is achieved. However, as other nations look to cash in before oil prices drop, production will increase beyond the desired levels. "It is difficult to engineer such a precise correction. Once oil prices start to fall, it will be hard to stop them," said the Bear Stearns analyst. Leuffer believes oil prices could eventually fall to $20 a barrel.
Saudi Arabia is willing to boost oil production Caryle Murphy June 23, 2008 Saudi Arabia to boost oil output. Will gas prices fall? Correspondent of The Christian Science Monitor http://www.csmonitor.com/2008/0623/p06s02-wome.html Jeddah, Saudi Arabia - Saudi Arabia will produce more oil if customers need it the kingdom's oil minister promised Sunday. For the remainder of the year "Saudi Arabia is willing to produce additional barrels of crude oil above and beyond the 9.7 million barrels per day which we plan to produce during the month of July," Oil Minister Ali al-Naimi said at a rare meeting of the world's top energy officials in this Red Sea port town. The unusual gathering was called by the Saudis to draw up a plan of action to address the unprecedented rise of oil prices and to defuse what Saudi officials see as an alarming political backlash against oil-exporting nations. Mr. Naimi also said Sunday that the kingdom was willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009, reversing previous statements that the country would not go beyond that figure. "In addition, we have identified a series of future crude oil megaincrements totaling another 2.5 million barrels per day of capacity that could be built if and when crude oil demand levels warrant their development," he said. The world's biggest oil producer has already announced modest increases (300,000 barrels in June, and 200,000 in July) but those steps have not done much to stem the skyrocketing price of oil, which closed near $135 a barrel on Friday. Politicians and financial analysts, however, say there is no quick fix for the coincidence of complex economic factors pushing oil prices up. "We [have] been 30 years digging ourselves into this hole, and this is not something we're going to be relieved of in any short term," US Energy Secretary Samuel Bodman told reporters here. Oil's soaring price has contributed to the spikes in food and transportation costs that have sparked angry street protests in places as diverse as Spain, Nepal, Indonesia, and Egypt. Americans are furious about $4-a-gallon gas, and airlines are abandoning low fares to cover higher fuel costs. Politicians in oil-consuming and oilproducing nations fear that rising prices could contribute to a global recession that would hurt all sides.
13
CNDI Regents
Oil DA
L- Boosters
PRICE DECLINES SNOWBALL LOWER PROFITS GIVE EACH MEMBER AN INCENTIVE TO CHEAT TO GRAB SCARCE REVENUES THE ECONOMIST 3/27/1999 The question is not whether there will be cheating, but how much. The recent deal was struck because OPEC producers had seen their oil income decline by more than $60 billion in 1998, compared with the previous year. They are desperately short of money. Yet, for the same reason, each now has more incentive than ever to raise revenues by failing to stick to promised production cuts. Members were ill-disciplined even when the price languished at around $11 last year, argues Fadhil Chalabi, a former OPEC official who now runs London's Centre for Global Energy Studies. They may well seize on today's prices to make extra money while they can. Mr Chalabi also points out that it was not the cartel that created this week's deal, but a smaller cabal of producers: a few Gulf countries, led by Saudi Arabia, as well as several non-OPEC producers, including Mexico and Norway. Stocks of oil are close to a record 400m barrels; that means that the recent price rise could quickly be reversed at the first hint of disunity. The new group will find unity elusive: it is too disparate to function as an effective new OPEC. OPEC itself has been plagued by divisions. Iran refused last year to acknowledge that it was producing more than its quota, insisting that it had secretly been given the right to produce an extra 300,000 barrels a day. Saudi Arabia, OPEC's linchpin, grudgingly gave ground. With such a precedent, the Iranians may be tempted to try again. In Venezuela, the Saudis pin their hopes on the newly elected president, Hugo Chavez. But Mr Chavez, a populist who was borne to office on a surge of popular disaffection, will find it just as hard to restrain output as did his predecessor. If the Venezuelan economy worsens, he will face increasing pressure to cheat. empirically proven production increases by one country spill over collapsing opec unity business wire 7/17/2000 High gas prices have hurt customers all summer, but relief is now on the way and cash strapped drivers can thank Saudi Arabia, according to a new report by Bear Stearns senior managing director and oil analyst Fred Leuffer. According to the report, Saudi Arabia's unilateral pledge to increase production by 500,000 barrels a day will start a chain reaction among oil producing nations, which will cause oil prices to fall below the intended price. "The flood gates are now open," commented Leuffer. "Saudi Arabia's decision to produce more oil means OPEC unity is out the window. The race is on to see which countries can capitalize on these high oil prices while they last." Leuffer says compliance among OPEC countries has already been suspect; according to reports, every country except Nigeria has cheated on its production during the past two months. Saudi's Long Term Greed. Surprisingly, Saudi Arabia's decision to increase oil production is not necessarily aimed at increasing profits in the near term; instead, it is designed to maintain the nation's franchise well into the future. According to the report, government officials in Saudi Arabia worry that if oil prices remain too high, oil dependent nations such as the United States will increase oil exploration and development of alternative energy sources. "Saudi Arabia plans on being in the oil game for many years to come," commented Leuffer. "They do not want to risk their future prosperity on present day greed." According to Leuffer, Saudi Arabia would like oil to fall to $25 dollars a barrel and he believes the Saudis will continue to produce oil until that is achieved. However, as other nations look to cash in before oil prices drop, production will increase beyond the desired levels. "It is difficult to engineer such a precise correction. Once oil prices start to fall, it will be hard to stop them," said the Bear Stearns analyst. Leuffer believes oil prices could eventually fall to $20 a barrel.
14
CNDI Regents
Oil DA
!- T/ Case (1 of 2)
Low prices encourage consumption worsening pollution Peter coy, 11-3-97 (clean air in an era of cheap oil) The expensive oil of the 1970s and early 1980s had one virtue: By discouraging consumption, it lessened the pollution caused by the burning of gasoline, diesel, and other petroleum products. Environmentalists hoped rising oil prices would promote a switch to cleaner energy sources, such as solar power. If oil instead remains cheap for decades to come, the harm to the environment from sulfur dioxide, carbon monoxide, particulates, and other poisons could be enormous. Combustion of oil, coal, and other carbon-based fuels may also overheat the planet by creating an insulating layer of carbon dioxide. Indeed, cheap oil is bound to complicate efforts to achieve a treaty on global warming in Kyoto, Japan, this December (page 158). PRICE TAGS. Luckily, there's growing support for a new pollution-fighting approach that harnesses market forces instead of fighting them. The concept--embraced by economists and market-savvy environmentalists--is to charge polluters for each unit of pollution they emit. A few polluters that can't easily cut emissions will pay a hefty cost, but many others that have the technology to cheaply cut emissions will be motivated to reduce them far more than they would have under traditional regulation. The result: Profit-seeking behavior leads to bigger reductions at lower costs than might have seemed possible. CHEAP OIL RESULTS IN INCREASED FOSSIL FUEL DEPENDENCE The New Zealand Herald 2007 [Upside to rising price of the black stuff, By Mathew Dearnaley, http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10469826 "Yes, it causes hardship for some people as the price goes up, but I think we've been cursed with cheap oil," he told the Herald in Auckland, en route to the third national Ecoshow held in Taupo at the weekend. "It has lulled us into complacency about using this non-renewable resource at ever-increasing rates and we simply can't continue to do that - if it takes high prices to change our behaviour then so be it.
"For the last couple of centuries we've been doing something incredibly stupid - developing economies on the ever-increasing consumption of non-renewable resources." Mr Heinberg is revered as a leading educator on the concept of Peak Oil, the point at which world production begins a slippery slide from an all-time high, sparking what its proponents warn will be shortages and widespread conflict between or even within nations unless the international community can agree on quotas for curbing demand. For him, that landmark is already in his rear-view mirror. He says production from oil wells peaked in 2005 at 74.2 million barrels a day and supplies extracted from all sources have declined since July last year. Oil has meanwhile hit a record price above US$83 ($107) a barrel - more than three times higher than in 2004 - and he predicts an escalation to between US$100 and US$120 by this time next year and "on and up from there".
The black stuff will continue to be discovered but in ever-smaller amounts in increasingly inaccessible parts of the world, such as the Arctic Circle, where extraction will be more likely to damage fragile ecosystems.
Although Mr Heinberg and his books, such as The Party's Over, have been attacked by oil giant Exxon-Mobil as unfounded scare-mongering, even the International Energy Agency predicts a supply "crunch" by 2012, followed by an inability to satisfy unabated demand fuelled by tiger economies such as China and India. Mr Heinberg acknowledges climate change as a problem of "much greater consequence" for the world. "But I would say oil depletion is a problem of much greater urgency, because the consequences to human societies will come faster and thicker." He believes an "oil depletion protocol" by which communities and countries could take greater control over their futures by reducing consumption by about 2.6 per cent a year - equal to his estimate of the depletion rate of world oil reserves - would be easier for the public to grasp than the Kyoto Protocol against climate change.
"It is simpler because everyone is in the same boat. The only way you can reduce vulnerability to supply shocks is to reduce your dependence on oil." LOW COST MEANS THE PLAN CANT SOLVE BRYCE 2006 [ROBERT, an Austin writer and managing editor of Energy Tribune, Opinion Forum: viewpoints on issues in energy, geopolitics and civilization, http://www.petroleumworld.com/SF07012801.htm] Cheap crude will short-circuit the push for renewable energy. We've seen this before. The surge in oil prices that occurred after the 1973 oil embargo didn't last. As prices softened, so, too, did the interest in solar power, wind power and other technologies. The best hope for the renewable energy sector is a sustained period of high prices for fossil fuels of all types, from coal to natural gas.
15
CNDI Regents
Oil DA
!- T/ Case (2 of 2)
Renewables cannot remain cost-competitive with low priced oil Michael renneris, 2-6-3 (UPI) Sustained low prices would critically undermine the fledgling efforts to build wind, solar, and hydrogen industries, kick away the economic incentive to use energy more prudently, and effectively destroy the Kyoto protocol. Wind power in particular has come a long way, growing by more than 30 percent annually in recent years and now costcompetitive with most conventional sources of energy. Such advances could fall victim to artificially cheap oil -- a fuel whose considerable ecological and security costs are not properly accounted for. This is by no means an inevitable scenario. Just as it is possible that weapons inspections and determined global opposition to warmongering, can yet avert an invasion of Iraq, there is no reason why the United States cannot face up to its oil addiction. Neither is likely to happen in the absence of an informed, vocal public that demands an alternative approach to matters of war and peace and the environment. LOW COST RESULTS IN LESS EFFICIENCY BRYCE 2006 [ROBERT, an Austin writer and managing editor of Energy Tribune, Opinion Forum: viewpoints on issues in energy, geopolitics and civilization, http://www.petroleumworld.com/SF07012801.htm] Cheap crude would short-circuit the push for greater automotive fuel efficiency. American motorists who've become accustomed to $3 per-gallon gasoline have, of late, been buying more fuel-efficient vehicles. If crude (and therefore, gasoline) prices continue to fall, they will happily return to their Hummers, big pickups, and SUVs. And that will, once again, set up a scenario that will allow foreign automakers like Toyota, Nissan and Honda to capture even larger shares of the auto industry when gasoline prices rise again, and they will. LOW COST MEANS THE PLAN CANT SOLVE BRYCE 2006 [ROBERT, an Austin writer and managing editor of Energy Tribune, Opinion Forum: viewpoints on issues in energy, geopolitics and civilization, http://www.petroleumworld.com/SF07012801.htm] Cheap crude will short-circuit the push for renewable energy. We've seen this before. The surge in oil prices that occurred after the 1973 oil embargo didn't last. As prices softened, so, too, did the interest in solar power, wind power and other technologies. The best hope for the renewable energy sector is a sustained period of high prices for fossil fuels of all types, from coal to natural gas. LOW COST LEADS TO GLOBAL WARMING BRYCE 2006 [ROBERT, an Austin writer and managing editor of Energy Tribune, Opinion Forum: viewpoints on issues in energy, geopolitics and civilization, http://www.petroleumworld.com/SF07012801.htm] Low-cost oil would increase emissions of greenhouse gases. One can argue all day about what's causing global warming. But if policymakers want to embrace Kyoto or other anti-warming initiatives, cheap oil is the last thing they should want. A collapse in oil prices would mean a collapse in America's domestic oil production. We've seen this movie before, too. In the early 1980s, Dallas and Houston were in a frenzy fueled by high-priced oil and a river of cheap money provided by crooked savings and loan operators. Everyone was convinced that high prices were here to stay. That illusion ended with the oil price crash of 1986 , which, by the way, was largely precipitated by unrestricted production from Saudi Arabia. The crash resulted in bankruptcies from Midland to Tulsa. Idle drilling rigs were cut up and sold for scrap. Skilled oilfield workers left the industry for good. Cheap oil increases America's reliance on foreign oil. Back in 1985, when America's domestic oil production was on the upswing, OPEC countries supplied 41 percent of America's imported oil. By 1990, with domestic production decimated, OPEC's share had climbed to 60 percent. If a stint of low crude prices persists, the U.S. domestic oil industry will, once again, fall on hard times. That will mean foreign producers, who generally have lower production costs, will be able to gain market share at the expense of domestic producers.
16
CNDI Regents
Oil DA
!- Econ
High oil prices are key to manufacturing Newsweek June 23, 2008 Learning From the Oil Shock; SECTION: ROBERT J. SAMUELSON; JUDGMENT CALLS; Pg. 39 Vol. 151 No. 25 ISSN We all know that gasoline is at $4 a gallon and oil is at $135 a barrel. But if you think that's the end of the story, don't talk to economist Jeffrey Rubin of CIBC World Markets. By Rubin's reckoning, we've barely passed the halfway point on a steady march upward that will take gasoline to $7 a gallon and oil to $225 by 2012. Though there will be fluctuations, the underlying rise in prices, he says, will have pervasive and often surprising side effects. Among them: U.S. manufacturers benefit, because rising ocean-freight costs--reflecting fuel prices--make imports more expensive. Some production returns to the United States, and some shifts from Asia to closer exporters (Mexico over China). Since 2000, estimates Rubin, the cost of shipping a 40-foot container from East Asia has gone from $3,000 to $8,000. With oil at $200 a barrel, the shipping cost would be $15,000. Already, he says, China's steel exports to the United States are falling while U.S. production is rising. HIGHER PRICES DONT HURT THE ECONOMY The Independent 2008 [OIL: THE POWER TO SHOCK, lexis] For now, most analysts remain relatively sanguine. They argue that the global economy is in a much better position to deal with the rising costs because it is being driven by strong growth rather than a dramatic constriction of supply. Julian Lee, senior energy analyst at the Centre for Global Energy Studies, said: "In the shocks in the 70s, we had very dramatic rises in oil prices in very short periods of time, largely due to the supply disruption and the panic response of consumers. It's much more slow and steady now. We have had changes over three to four years when similar movements happened in a matter of weeks or months [in the 1970s]." The market has already begun to respond. As the price has risen, global demand growth has decreased drastically in recent years, from 3 per cent in 2004 to 1.5 per cent in 2005 to an expected 0.8 per cent this year. Countries are also less dependent on petroleum than they once were after having invested heavily in alternatives energies such as nuclear and natural gas in the wake of the 1970s' crises. Large corporations, meanwhile, have done their best to absorb the hit by reducing costs elsewhere - principally employee salaries. Brandishing the threat of outsourcing and cheaper immigrant workers, companies have also managed to browbeat workers into being more productive and working more. Janet Henry, an economist at HSBC, said: "Corporates have dealt with it so far by keeping a lid on some of their other costs. Wage growth has remained very low in an era of phenomenal corporate sector profitability. There is a danger, though, that this will now be passed through."
17
CNDI Regents
Oil DA
!- Hege
Energy independence kills hege BRYCE 2008 [ROBERT, an Austin writer and managing editor of Energy Tribune, Gusher of Lies, republished in the New York Times, http://www.nytimes.com/2008/03/07/books/chapters/first-chapter-gusher-of-lies.html?_r=1&ref=books&pagewanted=all] Americas future when it comes to energy as well its future in politics, trade, and the environment lies in accepting the reality of an increasingly interdependent world. Obtaining the energy that the U.S. will need in future decades requires American politicians, diplomats, and businesspeople to be actively engaged with the energy-producing countries of the world, particularly the Arab and Islamic producers. Obtaining the countrys future energy supplies means that the U.S. must embrace the global market while also acknowledging the practical limits on the ability of wind power and solar power to displace large amounts of the electricity thats now generated by fossil fuels and nuclear reactors. The rhetoric about the need for energy independence continues largely because the American public is woefully ignorant about the fundamentals of energy and the energy business. It appears that voters respond to the phrase, in part, because it has become a type of code that stands for foreign policy isolationism the idea being that if only the U.S. didnt buy oil from the Arab and Islamic countries, then all would be better. The rhetoric of energy independence provides political cover for protectionist trade policies, which have inevitably led to ever larger subsidies for politically connected domestic energy producers, the corn ethanol industry being the most obvious example. But going it alone with regard to energy will not provide energy security or any other type of security. Energy independence, at its root, means protectionism and isolationism, both of which are in direct opposition to Americas long-term interests in the Persian Gulf and globally.
18
CNDI Regents
Oil DA
!- Iraqi Econ
LOW PRICES KILL IRAQS ECONOMY BRYCE 2006 [ROBERT, an Austin writer and managing editor of Energy Tribune, Opinion Forum: viewpoints on issues in energy, geopolitics and civilization, http://www.petroleumworld.com/SF07012801.htm] Lower prices would further damage Iraq's economy. Amid the torrent of bad news in Iraq, higher oil prices have been among the few positive news developments, allowing the country to amass sizable funds for the rebuilding effort. Iraq's oil output has plummeted since Bush and the neocons rushed to invade the country in March 2003. But that falling output has been offset, at least partially, by higher prices. And given that Iraq will for good or ill be America's colonial possession in the Persian Gulf for the foreseeable future, higher oil prices are far better than lower prices.
19
CNDI Regents
Oil DA
!- Mexico 2NC
High prices boost the Mexican economy
Mike Moffat, About, June 5, 2007 (from article Will High Oil Prices Slow Down Globalization and International Trade) "Instead of finding cheap labour halfway around the world, the key will be to find the cheapest labour force within reasonable shipping distance to your market," according to Rubin.
In that type of world, Mexico's proximity to the rest of North America, combined with its labor costs, will give it a second chance to compete with Pacific Rim production, according to Rubin, who predicts that when oil prices reach US$200 a barrel, it will cost three times as much to ship the same container from China than from Mexico. The related increase in oil prices and decline in the U.S. dollar is changing trade patterns, and this change is showing up in international shipping data. Justin Fox explains:
In 2007 Long Beach imported 3,704,593 loaded twenty-foot equivalent units (TEUs), shipped out 1,574,241 loaded TEUs, and handled 2,033,631 empties--almost all of which were outbound. So "loaded mainly with empty containers" is correct with respect to last year. Starting early this year, though, things changed. Loaded outbound containers outnumbered empties in February, March, and April, the first such three-month run, Wong says, since the spring of 2000. The totals so far in 2008 are 1,033,655 loaded inbound, 595,232 loaded outbound, and 476,853 empties. And while in 2000 the balance swung back to mostly empties for the full year, I get the feeling that won't be the case this year.
Mexico is a major international player. If its economy were to collapse, it would drag down a few other countries and thousands of foreign investors. If recovery is prolonged, the world economy will feel the slowdown. "It took a peso devaluation so that other countries could notice the key role that Mexico plays in today's global economy," said economist Victor Lpez Villafane of the Monterrey Institute of Technology. "I hate to say it, but if Mexico were to default on its debts, that would trigger an international financial collapse" not seen since the Great Depression, said Dr. Lpez, who has conducted comparative studies of the Mexican
economy and the economies of some Asian and Latin American countries. Chris H. Lewis in his book "The Coming Age of Scarcity" p. 56 1998 Most critics would argue, probably correctly, that instead of allowing underdeveloped countries to withdraw from the global economy and undermine the economies of the developed world, the United States, Europe, and Japan and others will fight neocolonial wars to force these countries to remain within this collapsing global economy. These neocolonial wars will result in mass death, suffering, and even regional nuclear wars. If first world countries choose military confrontation and political repression to maintain the global economy, then we may see mass death and genocide on a global scale that will make the deaths of World War II pale in comparison. However, these neocolonial wars, fought to maintain the developed nations' economic and political hegemony, will cause the final collapse of our global industrial civilization. These wars will so damage the complex economic and trading networks and squander material, biological and energy resources that they will undermine the global economy and its ability to support the earth's 6 to 8 billion people. This would be the worst case scenario for the collapse of global civilization
20
CNDI Regents
Oil DA
21
CNDI Regents
Oil DA
22
CNDI Regents
Oil DA
!- Poverty
High Oil prices key to solving poverty.
McKillop 04 Andrew McKillop, April 19, 2004, Oil and Gas Journal http://www.gasandoil.com/goc/features/fex42297.htm Conversely, low oil and energy prices entraining low real resource prices, combined with rising population numbers, surely aggravate the cycle of poverty in low-income commodity exporter countries. Deprived of sufficient revenues, such countries can become "basket case" indebted countries, subjected to draconian conditions by the Club of Paris, World Bank, and International Monetary Fund for debt refinancing and restructuring. The ability and capacity for investing huge amounts of capital into oil, gas, and other energy production infrastructures by low-income, indebted countries is realistically very low or zero. Yet estimates for world investment needs of the oil and gas industry through the next 10- 15 years extend into the range of several thousand billion dollars. Without strong economic growth, it is unrealistic to expect that any "energy transition" can occur, for example, as predicated by the Kyoto Treaty on climate change. More critically, it also is unrealistic to expect that world oil supply can be increased at the rates required or as deemed feasible in such publications as the IEA's World Energy Outlook -- that is a net average increase of about 2.25 million b/d/year during 2003-20 (raising capacity to about 115 million b/d), over and above replacement of capacity lost through depletion.
that structure is itself a product of society's collective human choices, concerning how to distribute the collective wealth of the society.
These are not acts of God. I am contrasting `structural' with `behavioral violence' by which I mean the non-natural deaths and injuries that are caused by specific behavioral actions of individuals against individuals, such as the deaths we attribute to homicide, suicide, soldiers in warfare, capital punishment, and so on." -(Gilligan, J., MD, Violence: Reflections On a National Epidemic (New York: Vintage, 1996), 192.)
This form of violence, not covered by any of the majoritarian, corporate, ruling-class protected media, is invisible to us and because of its invisibility, all the more insidious. How dangerous is it -- really? Gilligan notes: "[E]very fifteen years, on the average, as many people die because of relative poverty as would be killed in a nuclear war that caused 232 million deaths; and every single year, two to three times as many people die from poverty throughout the world as were killed by the Nazi genocide of the Jews over a six-year period. This is, in effect, the equivalent of an ongoing, unending, in fact accelerating, thermonuclear war, or genocide on the weak and poor every year of every decade, throughout the world." [Gilligan, p. 196]
< continues> This vicious, circular, and invisible violence, unacknowledged by the corporate media, uncriticized in substandard educational systems, and un-understood by the very folks who suffer in its grips, feeds on the spectacular and more common forms of violence that the system makes damn sure -- that we can recognize and must react to it.
This fatal and systematic violence may be called The War on the Poor.
23
CNDI Regents
Oil DA
Nuclear war
Ariel Cohen, Ph.D.January 25, 1996 The New "Great Game": Oil Politics in the Caucasus and Central Asia http://www.heritage.org/Research/RussiaandEurasia/BG1065.cfm Much is at stake in Eurasia for the U.S. and its allies. Attempts to restore its empire will doom Russia's transition to a democracy and free-market economy. The ongoing war in Chechnya alone has cost Russia $6 billion to date (equal to Russia's IMF and World Bank loans for 1995). Moreover, it has extracted a tremendous price from Russian society. The wars which would be required to restore the Russian empire would prove much more costly not just for Russia and the region, but for peace, world stability, and security. As the former Soviet arsenals are spread throughout the NIS, these conflicts may escalate to include the use of weapons of mass destruction. Scenarios including unauthorized missile launches are especially threatening. Moreover, if successful, a reconstituted Russian empire would become a major destabilizing influence both in Eurasia and throughout the world. It would endanger not only Russia's neighbors, but also the U.S. and its allies in Europe and the Middle East. And, of course, a neo-imperialist Russia could imperil the oil reserves of the Persian Gulf.15 Domination of the Caucasus would bring Russia closer to the Balkans, the Mediterranean Sea, and the Middle East. Russian imperialists, such as radical nationalist Vladimir Zhirinovsky, have resurrected the old dream of obtaining a warm port on the Indian Ocean. If Russia succeeds in establishing its domination in the south, the threat to Ukraine, Turkey, Iran, and Afganistan will increase. The independence of pro-Western Georgia and Azerbaijan already has been undermined by pressures from the Russian armed forces and covert actions by the intelligence and security services, in addition to which Russian hegemony would make Western political and economic efforts to stave off Islamic militancy more difficult. Eurasian oil resources are pivotal to economic development in the early 21st century. The supply of Middle Eastern oil would become precarious if Saudi Arabia became unstable, or if Iran or Iraq provoked another military conflict in the area. Eurasian oil is also key to the economic development of the southern NIS. Only with oil revenues can these countries sever their dependence on Moscow and develop modern market economies and free societies. Moreover, if these vast oil reserves were tapped and developed, tens of thousands of U.S. and Western jobs would be created. The U.S. should ensure free access to these reserves for the benefit of both Western and local economies. 24
CNDI Regents
Oil DA
Although record high oil prices have once again led to a boom, Russias current prosperity may be a bubble. As Clifford G. Gaddy and Barry W. Ickes explain, Russias addiction persists, and its political-economic system is still driven by the imperatives of distributing the wealth from oil and gas.
High oil prices is what keeps Russias economy going, keeping it out of a recession.
FreshPlaza 07 FreshPlaza News, Netherlands, Associated Content, July 20, 2007 https://www.usrbc.org/aboutus/usrbcinnews/article/1323/ Lawson emphasized that Russia's money from oil revenues has at last "trickled down", and Russian consumers are ready to buy plenty of foreign goods and services, while Russian investors have plenty of cash that they would love to sink into Western businesses. Russia's economy was so bad less than a decade ago that it was no longer considered to be a "superpower" and its future looked utterly grim. Many Russian citizens who had rallied behind the bloodless revolution of 1991, when the Soviet government finally collapsed in line with the fall of the Soviet-backed communist government of East Germany in 1989, were clamoring for at least a partial return to the old ways. Record-low prices for oil-Russia's greatest exportable commodity-and a financial crisis in 1998 when the Ruble lost 70% of its value against the U.S. dollar in only six months of currency trading and behind-the-scenes corruption flourished almost without limits in the broken pieces of the former government and economy made Russia an economic wasteland, arguably worse off than before the revolution. But since then, most things about the economy have gone in the opposite direction for Russia. Now, according to the World Bank, the steeply rising price of oil is set to continue bringing new money into the exploding Russian economy. In fact, the influx of foreign investment and oil profits is so strong now that it could hinder government attempts to keep a cap on inflation. Oil prices are key to stability within Russia David Satter, 2003 "A low, dishonest Decadence http://findarticles.com/p/articles/mi_m2751/is_72/ai_105369906/pg_7?tag=artBody;col1 THE PROBLEMS of lawlessness, lack of respect for human life and moral disorientation shadow the visible changes in Moscow that have led many to describe Russia as a political and economic success. The improved appearance of Moscow is indisputable, but it is mainly a product of the high price of oil. Every dollar difference in the price of oil translates into roughly $1 billion in budget revenue; a high price for oil has therefore become the key to the government's ability to balance the budget, pay state employees and repay Russia's foreign debt. If the price should fall significantly and stay relatively low, as it did in much of the 1980s and 1990s, Russia will be plunged into a severe economic crisis. At that point, the invisible moral factors in Russia's situation will be become critical to its stability.
current economic recovery and apparent political stabilization sit on a fairly fragile foundation. A crash in the price of oil will upset the current stability just as it was a precursor to major change and then collapse in the Soviet Union 20 years ago. There 25
CNDI Regents
Oil DA
is no question that Putin and his team see themselves presiding over a stable authoritarian modernization of Russia for the next two to three decades. But history is replete with nations pursuing authoritarian modernization plans that have gone awry.
26
CNDI Regents
Oil DA
27
CNDI Regents
Oil DA
28
CNDI Regents
Oil DA
29
CNDI Regents
Oil DA
30
CNDI Regents
Oil DA
31
CNDI Regents
Oil DA
!- Venezuela
US Oil market is key to Venezuelan Econ
Cesar J. Alvarez, Stephanie Hanson, June 27, 2008
Though Venezuela has repeatedly threatened to cut off its oil exports to the United States, analysts say the two countries are mutually dependent. Venezuela supplies about 1.5 million barrels of crude oil and refined petroleum products to the U.S. market every day, according to the EIA. Venezuelan oil comprises about 11 percent of U.S. crude oil imports, which amounts to 60 percent of Venezuelas total exports. PDVSA also wholly owns five refineries in the United States and partly owns four refineries, either through partnerships with U.S. companies or through PDVSAs U.S. subsidiary, CITGO. A U.S. Government Accountability Office (GAO) report (PDF) says Venezuelas exports of crude oil and refined petroleum products to the United States have been relatively stable with the exception of the strike period.
The World Bank's Frepes-Cibils says Venezuela will continue to be a key player in the U.S. market. He argues that in the short term it will be very difficult for Venezuela to make a significant shift in supply from the United States. Nevertheless, Chavez has increasingly made efforts to diversify his oil clients in order to lessen the countrys dependence on the United States. The GAO report says the sudden loss of Venezuelan oil in the world market would raise world oil prices and slow the economic growth of the United States.
32
CNDI Regents
Oil DA
33
CNDI Regents
Oil DA
34
CNDI Regents
Oil DA
2NC AT Peak
Peak oil is a myth Asia Times 2007 By F William Engdahl author of A Century of War: Anglo-American Oil Politics and the New World Order Russia is far from oil's peak http://www.atimes.com/atimes/Central_Asia/II27Ag02.html Peak Oil theory is based on a 1956 paper by the late Marion King Hubbert, a Texas geologist working for Shell Oil. He argued that oil wells produced in a bell-curve manner, and once their "peak" was hit, inevitable decline followed. He predicted that US oil production would peak in 1970. A modest man, he named the production curve he invented Hubbert's Curve, and the peak as Hubbert's Peak. When US oil output began to decline in about 1970, Hubbert gained a certain fame. The only problem was, it peaked not because of resource depletion in the US fields. It "peaked" because Shell, Mobil, Texaco and the other partners of Saudi Aramco were flooding the US market with dirt-cheap imports from the Middle East, tarifffree, at prices so low California and many Texas domestic producers could not compete and were forced to shut their wells. While the US oil multinationals were busy controlling the easily accessible large fields of Saudi Arabia, Kuwait, Iran and other areas of cheap, abundant oil during the 1960s, the Russians were busy testing their alternative theory. They began drilling in a supposedly barren region of Siberia. There they developed 11 major oilfields and one giant field based on their deep abiotic geological estimates. They drilled into crystalline basement rock and hit black gold of a scale comparable to the Alaska North Slope. They then went to Vietnam in the 1980s and offered to finance drilling costs to show that their new geological theory worked. Russian company Petrosov drilled in Vietnam's White Tiger oilfield offshore into basalt rock some 5,000 meters down and extracted 6,000 barrels a day of oil to feed the energy-starved Vietnam economy. In the USSR, abiotic-trained Russian geologists perfected their knowledge and the Soviet Union emerged as the world's largest oil producer by the mid-1980s. Few in the West understood why, or bothered to ask. Dr J F Kenney is one of the only Western geophysicists who has taught and worked in Russia, studying under Vladilen Krayushkin, who developed the huge Dnieper-Donets Basin. Kenney told me in a recent interview that "alone to have produced the amount of oil to date that [Saudi Arabia's] Ghawar field has produced would have required a cube of fossilized dinosaur detritus, assuming 100% conversion efficiency, measuring 19 miles [30.5 kilometers] deep, wide and high." In short, an absurdity. Western geologists do not bother to offer hard scientific proof of fossil origins. They merely assert their belief as a holy truth. The Russians have produced volumes of scientific papers, most in Russian. The dominant Western journals have no interest in publishing such a revolutionary view. Careers, entire academic professions are at stake, after all.
The 2003 arrest of Russian Mikhail Khodorkovsky, of Yukos Oil, took place just before he could sell a dominant stake in Yukos to ExxonMobil after a private meeting with Cheney. Had Exxon gotten the stake, it would have had control of the world's largest resource of geologists and engineers trained in the abiotic techniques of deep drilling. Since 2003, Russian scientific sharing of knowledge has markedly lessened. Offers in the early 1990s to share knowledge with US and other oil geophysicists were met with cold rejection, according to American geophysicists involved. Why then the high-risk war to control Iraq? For a century, US and allied Western oil giants have controlled world oil via control of Saudi Arabia or Kuwait or Nigeria. Today, as many giant fields are declining, the companies see the state-controlled oilfields of Iraq and Iran as the largest remaining base of cheap, easy oil. With the huge demand for oil from China and now India, it becomes a geopolitical imperative for the United States to take direct military control of those Middle East reserves as fast as possible. Cheney came to the job of vice president from Halliburton Corp, the world's largest oil-geophysical-services company. The only potential threat to that US control of oil just happens to lie inside Russia and with the now-state-controlled Russian energy giants. According to Kenney, Russian geophysicists used the theories of brilliant German scientist Alfred Wegener fully 30 years before Western geologists "discovered" Wegener in the 1960s. In 1915, Wegener published the seminal text The Origin of Continents and Oceans, which suggested an original unified landmass or Pangaea more than 200 million years ago that separated into present continents by what he called continental drift. Up to the 1960s, supposed US scientists such as Dr Frank Press, the White House science adviser, referred to Wegener as "lunatic". Geologists at the end of the 1960s were forced to eat their words as Wegener offered the only interpretation that allowed them to discover the vast oil resources of the North Sea.
Perhaps in some decades Western geologists will rethink their mythology of fossil origins and realize what the Russians have known since the 1950s. In the meantime, Moscow holds a massive energy trump card.
35
CNDI Regents
Oil DA
36
CNDI Regents
Oil DA
37
CNDI Regents
Oil DA
38
CNDI Regents
Oil DA
39
CNDI Regents
Oil DA
40
CNDI Regents
Oil DA
Aff- U- AT Markets S
Energy should not be left to the markets to solve something must be done W Joseph Stroupe Nov 22, 2006 Russia tips the balance THE NEW WORLD OIL ORDER, Part 2 author of the new book Russian Rubicon: Impending Checkmate of the West and editor of Global Events http://www.atimes.com/atimes/central_asia/hk22ag01.html Goldwyn stated: "The United States is more energy-insecure today than it has been in nearly 30 years. We are insecure because the global oil market is more fragile, more competitive and more volatile than it has been in decades." Goldwyn referred to the fact that "the growing [energy] dependence of rising powers such as China and India is rapidly eroding US global power and influence around the world" as those rising powers increasingly enter bilateral long-term contracts with suppliers, ever greater numbers of which do not allow free market access by the West's oil majors to production and exploration acreage and which are creating a strategically tight market for the rest of the world. Goldwyn observed: "This 'tight' market is undermining the fluidity and fairness of the market for available oil supplies and exploration acreage. New competitors like China and India are trying to negotiate long-term supply contracts (at market prices) to ensure that they have supplies in the event of a crisis or supply disruption ... the trend is counter to the market system that operates so efficiently ... the trend of long-term contracts runs counter to the modern liquid global market which operates efficiently in rapidly moving supplies to meet market demand ... China has not yet developed faith in these market mechanisms." While Goldwyn presented such concerns in the context of a rising but not yet imminent threat to the current order, in testimony before the US Senate Committee on Foreign Relations nearly a year earlier, on July 26, 2005, Mikkal Herberg of the National Bureau of Asian Research in Seattle, Senator Richard Lugar, the committee chairman, heard the following facts: For China and India both, as well as the other Asian powers, energy is becoming a matter of "high politics" of national security and no longer just the "low politics" of domestic energy policy. Governments in both countries have decided that energy security is too important to be left entirely to the [US-led liberal] markets as their economic prosperity increasingly is exposed to the risks of global supply disruptions, chronic instability in energy exporting regions, and the vagaries of global energy geopolitics. Markets wont shift on their own too much money is needed Michael T Klare Apr 17, 2008 The rise of the new energy world order http://www.atimes.com/atimes/Global_Economy/JD17Dj04.html According to the DoE, renewable fuels, including wind, solar and hydropower (along with "traditional" fuels like firewood and dung), supplied but 7.4% of global energy in 2004; biofuels added another 0.3%. Meanwhile, fossil fuels - oil, coal and natural gas - supplied 86% of world energy, nuclear power another 6%. Based on current rates of development and investment, the DoE offers the following dismal projection: In 2030, fossil fuels will still account for exactly the same share of world energy as in 2004. The expected increase in renewables and biofuels is so slight - a mere 8.1% - as to be virtually meaningless. In global warming terms, the implications are nothing short of catastrophic: Rising reliance on coal (especially in China, India and the United States) means that global emissions of carbon dioxide are projected to rise by 59% over the next quarter-century, from 26.9 billion metric tons to 42.9 billion tons. The meaning of this is simple. If these figures hold, there is no hope of averting the worst effects of climate change. When it comes to global energy supplies, the implications are nearly as dire. To meet soaring energy demand, we would need a massive influx of alternative fuels, which would mean equally massive investment - in the trillions of dollars - to ensure that the newest possibilities move rapidly from laboratory to full-scale commercial production; but that, sad to say, is not in the cards.
41
CNDI Regents
Oil DA
Aff- No L
Demand will increase even with wealthy nations reducing consumption Newsweek June 23, 2008 Learning From the Oil Shock; SECTION: ROBERT J. SAMUELSON; JUDGMENT CALLS; Pg. 39 Vol. 151 No. 25 ISSN But higher demand from developing countries and oil producers is offsetting the lower demand of wealthy countries. Consumption in these countries will rise 3 percent in 2008, or 1.2 million barrels a day, projects the International Energy Agency. Many of these countries subsidize fuel so that final customers are insulated from price increases. Gasoline is about 25 cents a gallon in Venezuela and about 60 cents in Saudi Arabia, Kuwait and Iran, notes Rubin. China also subsidizes fuel. ALTERNATE FUELS WONT LOWER PRICES FINDING AN ALTERNATIVE IS ESSENTIAL TO SOLVE THE OIL CRUNCH Business World 2008 [No end in sight to high fuel prices, lexis] While the government has stressed that indigenous and alternative fuels would ease market pressure from imported fuel, Energy department director Mario C. Marasigan yesterday admitted "They will not necessarily lower oil prices." "It's primarily to find alternatives to our [shrinking] supply. But cheaper alternatives can balance high prices of imported oil," he said. For today's launch, Mr. Marasigan said "The important thing here is that CNG is indigenous, it's our gas. There's no foreign exchange cost."
42
CNDI Regents
Oil DA
Aff- !- Dollar
High oil prices kill the value of the US dollar, killing USs geopolitical dominance W Joseph Stroupe Nov 22, 2006 Russia tips the balance THE NEW WORLD OIL ORDER, Part 2 author of the new book Russian Rubicon: Impending Checkmate of the West and editor of Global Events http://www.atimes.com/atimes/central_asia/hk22ag01.html The dollar will begin to weaken as its international support and devotion wanes, or even sinks. As the dollar weakens, the price in dollars for everything the US imports will skyrocket, adding a powerful inflationary hit to the US economy. Along with the impending US recession, that will further weaken the dollar and likely its decline, or outright collapse, will feed on itself. As the dollar weakens and energy price volatility increases on the New York-London exchanges, producers will have further powerful incentive to switch their product offering to the non-dollar-denominated exchanges, where there will be greater stability and where they will not be forced to take payment for their products in the increasingly undesirable weakened dollar. The profound risks to the West as respects its ability then to secure access to sufficient energy resources should be self-evident. Left with a severely shrunken dollar-denominated pool of oil and gas, a pool that virtually only the West draws from, the viability of a potential targeted embargo will have increased exponentially. The globe's producers will be fully able to "throttle" the economies of the West by virtue of controlling how much of their oil and gas they sell into the dollar-denominated pool. This represents the nightmare scenario for the US. Perhaps the most disturbing aspect of this analysis is the fact that it is not based on any hypothetical conspiracy theory, but rather on solid economic and market principles and the increasingly ominous warnings of experts and informed leaders. Additionally, the key developments that are already pushing the world order to the eventuality described here, that of a full exploitation of the West's Achilles' heel by Russia and its global partners leading to a loss of the US global position of economic and geopolitical dominance, are already well established. Russia, in conceiving the new model of "international" energy security and a new global energy order, and in winning increasing numbers of key converts and adherents to its model, thereby defines and draws the circle of international energy security. Those inside the circle will achieve Russia's definition of "energy security", but those left outside will be left with little if any energy security by any definition.
43
CNDI Regents
Oil DA
Aff- !- Econ (1 of 2)
High oil prices collapse the economy Jennifer Yousfi Wednesday, June 25th, 2008 Declining Russian Oil Production Could Lead to $200 Oil and Global Recession, Says Deutsche Bank Managing Editor http://www.moneymorning.com/2008/06/25/declining-russian-oil-production-could-leadto-200-oil-and-global-recession-says-deutsche-bank/ Higher oil could lead to a worldwide economic collapse, according to a top analyst at Germanys largest bank. "Two-hundred dollar oil would break the back of the global economy," Adam Sieminski, chief energy economist at Deutsche Bank AG (DB), told Bloomberg News in an interview yesterday (Wednesday) in Tokyo. "Next step after $200 would be global recession and bad news for everybody."Just a little over a year ago, $200 oil seemed out of the question. But the Deutsche Bank prediction of oilfueled global recession follows a Goldman Sachs Group Inc. (GS) forecast that oil might climb as high as $200 per barrel in two years. Keith Fitz-Gerald, Money Mornings Investment Director - and one of the first global financial gurus to predict triple-digit oil prices - recently boosted his target price for crude oil from $187 to $225. "The math is really simple here," Fitz-Gerald said back in May, when oil futures were trading around $123 a barrel. "We are burning through supplies at a rate thats four times to five times faster than were discovering new reserves," he said. "Throw in a few [surprises] perhaps a terrorist event and add in the accelerating use of oil and gasoline in Third World countries, and we have the recipe for far higher prices."Since the time of Fitz-Geralds prediction, oil has gone on to several new highs, nearly breaking through the $140 barrier on June 16, earlier this month. Russias Bubbling Oil Troubles Exacerbating the high oil prices are production problems in Russia, the worlds second largest oil exporter. Aging oil fields and a lack of infrastructure investment has led to the countrys first annual production decline in 10 years. Output fell 0.9% to 9.76 million barrels a day in the first five months 2008, Bloomberg reported. "Growth last
quarter fell on a year-on-year basis, and this has to do with the policies implemented over the prior year to raise taxes on oil industries," Deutsche Banks Sieminski said, speaking of Russias oil difficulties. "This made it difficult for foreign capital to come in." But "if Russia could reverse some of these policies and get their own oil industry back on, this will help very much" with supply concerns, he added. Fear of government corruption and takeover of assets has dissuaded some firms from seeking investment in Russia.
HIGH OIL PRICES WOULD TIP THE UNITED STATES INTO A RECESSION AND SLOW GLOBAL TRADE The International Herald Tribune 2008 [Oil price forecast: Up, then down, then up again, lexis] But with oil prices rising at an increasingly rapid rate over the past few months in conjunction with the U.S. housing market slump and credit squeeze, many economists wonder whether oil prices could tip the economy into a recession. A recession, of course, would curb oil demand. That would push oil prices right back down again, or so the theory goes, as fewer consumers drive to the mall, companies produce and ship less and world trade slows. ''If we are slowing down, we will not be buying as much goods from China and services from India,'' said Addison Armstrong, director for market research at Tradition Energy, an energy broker that deals with banks and hedge funds. ''My forecast for 2008 is that crude prices will average $75 a barrel, and that is based on a scenario of a slowing economy in the United States.'' HIGH OIL PRICES KILL THE ECONOMY New Delhi 2008 [An alternative scenario for oil, by Akash Prakash, June 25, http://www.businessstandard.com/common/news_article.php?leftnm=10&bKeyFlag=BO&autono=326997] Oil prices have now become the single-biggest issue facing the global economy. The long-term negative impact of the sharp surge in oil prices far exceeds any effects of the sub-prime crisis. High oil prices affect the poor disproportionately, and will increase global poverty. Unlike the credit crisis, it is not investment bankers but the man on the street who will feel the pinch. The rise in prices from $70 to near $140 a barrel will alone transfer in excess of $2 trillion from oil consumers to producers. Countries and politicians can no longer wait for or afford the luxury of markets finding their own equilibrium. We will see action of the type outlined above and more as policymakers are forced to try and engineer a reduction in oil prices. Current prices are causing too much political and economic damage across too many countries and the beginnings of action to reverse this rise are now visible. I think we have crossed the limits and the world will act through all the policy levers at its command, both obvious and unconventional. HIGH OIL PRICES KILL THE ECONOMY The International Herald Tribune 2008 [Scrambling for answers to oil shock; Decisions today will play out in 10 years; June 2, lexis] While the boom has helped major oil producing countries, particularly Russia and parts of the Middle East, there are signs that the major consumers - the economies of the United States and parts of Europe and Asia - are starting to crack under the strain. High prices are hitting motorists at the pumps, hobbling energy-intensive industries like airlines, freight and fishing and feeding broader inflation - alongside higher food prices - sparking protests and even riots around the world. ''The oil price is unsustainable,'' said James Hamilton, a professor of economics at the University of California at San Diego. ''I think we've reached the point now where we're starting to see significant responses from consumers.'' 44
CNDI Regents
Oil DA
Aff- !- Econ (2 of 2)
Economic collapse unlikely but continued inflation due to oil is bad for the global economy Times Anatole Kaletsky July 02, 2008 Oil prices key to economic recovery http://www.theaustralian.news.com.au/story/0,25197,23954826-30538,00.html The possibility of a serious US recession, which has dominated most media and market comment since the credit crunch began in America, is in my view the least plausible of these threats. Statistics suggest that the US economic slowdown is already at or near its low point and the risks of a serious recession are rapidly diminishing. GDP, consumption, industrial activity and employment have all been consistent with a fairly typical mid-cycle slowdown and none have fallen sufficiently to signal even a mild recession. Of course it is possible that the US economy will deteriorate in the months ahead, but this seems unlikely, given the huge tax cuts and interest rate reductions to which US consumers are likely to start responding in the second half of this year. But if a global recession is likely to be avoided, why are investors in such a funk? The answer is that most now see inflation as a much greater threat than recession. This makes sense, but only up to a point. The bad news is that inflation is much harder to cure than weak growth or unemployment because the remedies required -- higher interest rates and cuts in government spending -- are painful to implement. The good news is that inflationary pressures in the US, Britain and the eurozone are still fairly weak -- and will get weaker in the year ahead, as house prices keep falling, consumption growth slows and unemployment drifts up. I suspect what really worries investors in the US and Europe is not really the likelihood of high inflation, but the risk that central banks will overreact to inflation fears. If central banks are paralysed by fears of igniting inflationary expectations they may stop supporting financial institutions through the credit crunch. This seems to be behind the panic selling of financial stocks. In addition, there is a growing worry that developing countries, including China, will be overwhelmed by inflation, like Italy and Britain in the 1970s, instead of learning to tame it as did Germany and Japan. A long period of disappointing performance from the developing countries would be a big shock to the world economy, since global growth depends increasingly on emerging markets. US consumption growth, while it is not collapsing, is bound to be much weaker in the next decade than it was in the last. What is ailing the world economy is now quite simple: it is $US140 oil. If investors come back to their senses, the oil price will fall back below $US100 after the northern summer and the second half of this year will prove less traumatic than the first. But in the unlikely event that oil is still trading above $US140 by the year-end, all bets are off on world economic prosperity.
45
CNDI Regents
Oil DA
46
CNDI Regents
Oil DA
47
CNDI Regents
Oil DA
The rising price of oil is making international trade of heavy cargo prohibitively expensive, and acting as an incentive for importers to find products such as steel closer to home, new research by CIBC World Markets shows.
For heavy products, rising shipping costs are eroding the low-wage advantage of China over North America, say chief economist Jeff Rubin and senior economist Benjamin Tal. If oil prices continue to rise, the soaring cost of global transport will act like a major tariff barrier and lead to a substantial slow down in international trade, they argue. Globalization is reversible, they state.
Oil passed $133 (U.S.) a barrel on Monday, and Mr. Rubin forecasts the price will average $106 this year, $130 next year, $150 in 2010 and $225 by 2012.
These days, the cost of oil is the equivalent of imposing a tariff rate of about nine per cent on goods coming into
the United States. At $150 a barrel, transport costs act like a tariff of 11 per cent. And at $200, all the trade liberalization efforts of the past 30 years are reversed, Mr. Rubin said.
48
CNDI Regents
Oil DA
Aff- !- Manufacturing- U
MANUFACTURING SECTION IS DOING POORLY American Machinist 2008 [05/08/, No growth in manufacturing sector while overall economy grows, http://www.americanmachinist.com/304/News/Article/False/80210/] Manufacturing failed to grow for the third consecutive month in April as the PMI registered 48.6 percent, the same as in March. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI in excess of 41.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates the overall economy is growing and the manufacturing sector is contracting at this time. Ore stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through April (49.1 percent) corresponds to a 2.5 percent increase in real gross domestic product (GDP). In addition, if the PMI for April (48.6 percent) is annualized, it corresponds to a 2.4 percent increase in real GDP annually."
49
CNDI Regents
Oil DA
50
CNDI Regents
Oil DA
authoritative International Energy Agency foresees an oil supply crunch within 5 years forcing up prices to unprecedented levels and greatly increasing western dependence on Opec. And the oil industry itself in its own report Facing the Hard Truths about Energy, produced by 175 authorities including all the heads of the world's big oil companies, for the first time predicted that oil and gas may run short by 2015. The geopolitical implications of this gathering crisis for world oil supply 2010-15 are immense. The risk of further military interventions and conflicts in the Middle East is clearly high. Total world oil reserves are estimated at 2.5-2.9 trillion barrels, of which half has now been already consumed, while half of the 51 oil-producing countries reported output declines in 2006. Non-Opec production is expected to peak and decline within the next five years, driven mainly by burgeoning demand from China and the US, together with restricted output from Iraq. Then in the following five years Opec's diminishing spare capacity will probably become increasingly unable to accommodate short-term fluctuations, depending on how fast world demand grows and how extensively Opec invests in new capacity. The latter may well not raise production capacity high enough or quickly enough, whether for political reasons or because internal decisionmaking is too slow or the security environment too hostile. There are of course exits from this doom-stricken scenario, though none is at all credible.
First, discovery of major new oilfields could alter the picture. However, though billions have been spent on the search for new fields, discovery peaked in the mid1960s and the last big ones were found in the 1970s. Only Iraq has undeveloped super-giant oilfields at West Qurna, Athabascan tar sands (from Alberta, Canada), extra-heavy oil (from the Orinoco belt in Venezuela), oil shale, and mature source rocks. But the almost insurmountable problem is recoverability, whether poor quality oil (extra-heavy oil), poor quality reservoirs (oil from source rocks), or both (oil shale). Worse, production may be uneconomic because of a very low net energy gain, ie it requires almost as much energy to extract the oil as is made available for subsequent use. And the enormous hike in greenhouse gases generated could produce a turbo climate change effect that would wipe out any benefit from a global post-Kyoto agreement. But even if supply constraints are ineluctable as the explosion of Chinese growth coincides with falling non-Opec oil production and the beginnings of a slow but remorseless slippage in Opec capacity.
Oil shortages will create escalating resource wars Michael Meacher guardian.co.uk, Sunday June 29, 2008 The era of oil wars Growing competition for oil may escalate to something as hot and dangerous as nuclear proliferation http://www.guardian.co.uk/commentisfree/2008/jun/29/oil.oilandgascompanies What is most disturbing of all is that the big powers, so far from seeking major adjustments of their energy policies on either the supply or demand fronts or making a major switch into renewables, are actually massively intensifying their competitive struggle short-term for the limited oil reserves left. Despite an unwinnable war in Iraq, the US is still constructing at least five large permanent military bases there in order, according to evidence given to a US Congressional Committee, to control access to Gulf oil, including in Saudi and Iran. As one neocon recently put it, "one of the reasons we had no exit plan from Iraq is that we didn't intend to leave". The US is also trying to force through a new Iraqi oil law that would give western, primarily American, oil multinationals control of Iraqi oilfields for the next 30 years. The US maintains 737 military bases in 130 countries under cover of the "war on terror" to defend American economic interests, particularly access to oil. The principal objective for the continued existence and expansion of Nato post-cold war is the encirclement of Russia and the pre-emption of China dominating access to oil and gas in the Caspian Sea and Middle East regions. It is only the beginning of the unannounced titanic global resource struggle between the US and China, the world's largest importers of oil (China overtook Japan in 2003). Islam has been dragged into this tussle
because it is in the Islamic world where most of these resources lie, but Islam is only a secondary player. In the case of Russia, the recent pronounced stepping up of western attacks on Putin and claims he is undermining democracy are ultimately aimed at securing a pro-western government there, and access to Russian oil and gas when Russia has more of these two hydrocarbons together than any other country in the world. The struggle has also spilled over into West Africa, reckoned to hold some 66 billion barrels of oil typically low in sulphur and thus ideal for refining. In 2005 the US imported more oil from the Gulf of Guinea than from Saudi and Kuwait combined, and is expected over the next 10 years to import more oil from Africa than from the Middle East. In step with this, the Pentagon is setting up a new unified military command for the continent named Africom. Conversely, Angola is now China's main supplier of crude oil, overtaking Saudi Arabia last year. There is no doubt that Africom, which will greatly increase the US military presence in Africa, is aimed at the growing conflict with China over oil supplies. As Joe Lieberman, former US presidential candidate, put it, efforts by the US and China to use imports to meet growing demand "may escalate competition
for oil to something as hot and dangerous as the nuclear arms race between the US and the Soviet Union".
CNDI Regents
Oil DA
Energy reliance escalates into regional conflicts, arms wars and draw in larger powers Michael T Klare Apr 17, 2008 The rise of the new energy world order http://www.atimes.com/atimes/Global_Economy/JD17Dj04.html A growing risk of conflict. Throughout history, major shifts in power have normally been accompanied by violence - in some cases, protracted violent upheavals. Either states at the pinnacle of power have struggled to prevent the loss of their privileged status, or challengers have fought to topple those at the top of the heap. Will that happen now? Will energy-deficit states launch campaigns to wrest the oil and gas reserves of surplus states from their control - the George W Bush administration's war in Iraq might already be thought of as one such attempt or to eliminate competitors among their deficit-state rivals? The high costs and risks of modern warfare are well known and there is a widespread perception that energy problems can best be solved through economic means, not military ones. Nevertheless, the major powers are employing military means in their efforts to gain advantage in the global struggle for energy, and no one should be deluded on the subject. These endeavors could easily enough lead to unintended escalation and conflict. One conspicuous use of military means in the pursuit of energy is obviously the regular transfer of arms and military-support services by the major energy-importing states to their principal suppliers. Both the United States and China, for example, have stepped up their deliveries of arms and equipment to oil-producing states like Angola, Nigeria and Sudan in Africa and, in the Caspian Sea basin, Azerbaijan, Kazakhstan and Kyrgyzstan. The United States has placed particular emphasis on suppressing the armed insurgency in the vital Niger Delta region of Nigeria, where most of the country's oil is produced; Beijing has emphasized arms aid to Sudan, where Chinese-led oil operations are threatened by insurgencies in both the South and Darfur. Russia is also using arms transfers as an instrument in its efforts to gain influence in the major oil- and gas-producing regions of the Caspian Sea basin and the Persian Gulf. Its urge is not to procure energy for its own use, but to dominate the flow of energy to others. In particular, Moscow seeks a monopoly on the transportation of Central Asian gas to Europe via Gazprom's vast pipeline network; it also wants to tap into Iran's mammoth gas fields, further cementing Russia's control over the trade in natural gas. The danger, of course, is that such endeavors, multiplied over time, will provoke regional arms races, exacerbate regional tensions and increase the danger of great-power involvement in any local conflicts that erupt. History has all too many examples of such miscalculations leading to wars that spiral out of control. Think of the years leading up to World War I. In fact, Central Asia and the Caspian today, with their multiple ethnic disorders and great-power rivalries, bear more than a glancing resemblance to the Balkans in the years leading up to 1914. What this adds up to is simple and sobering: the end of the world as you've known it. In the new, energy-centric world we have all now entered, the price of oil will dominate our lives and power will reside in the hands of those who control its global distribution. Supply is not growing as fast as demand which creates fierce competition between buyers Michael T Klare Apr 17, 2008 The rise of the new energy world order http://www.atimes.com/atimes/Global_Economy/JD17Dj04.html An increase of this sort would not be a matter of deep anxiety if the world's primary energy suppliers were capable of producing the needed additional fuels. Instead, we face a frightening reality: a marked slowdown in the expansion of global energy supplies just as demand rises precipitously. These supplies are not exactly disappearing - though that will occur sooner or later - but they are not growing fast enough to satisfy soaring global demand. The combination of rising demand, the emergence of powerful new energy consumers, and the contraction of the global energy supply is demolishing the energy-abundant world we are familiar with and creating in its place a new world order. Think of it as rising powers/shrinking planet. This new world order will be characterized by fierce international competition for dwindling stocks of oil, natural gas, coal and uranium, as well as by a tidal shift in power and wealth from energy-deficit states like China, Japan and the United States to energy-surplus states like Russia, Saudi Arabia and Venezuela. In the process, the lives of everyone will be affected in one way or another - with poor and middle-class consumers in the energy-deficit states experiencing the harshest effects. That's most of us and our children, in case you hadn't quite taken it in.
CNDI Regents
Oil DA
Oil will begin to decline within the decade Michael T Klare Apr 17, 2008 The rise of the new energy world order http://www.atimes.com/atimes/Global_Economy/JD17Dj04.html The insufficiency of primary energy supplies. The capacity of the global energy industry to satisfy demand is shrinking. By all accounts, the global supply of oil will expand for perhaps another half decade before reaching a peak and beginning to decline, while supplies of natural gas, coal and uranium will probably grow for another decade or two before peaking and commencing their own inevitable declines. In the meantime, global supplies of these existing fuels will prove incapable of reaching the elevated levels demanded. Take oil. The US DoE claims that world oil demand, expected to reach 117.6 million barrels per day in 2030, will be matched by a supply that - miracle of miracles - will hit exactly 117.7 million barrels (including petroleum liquids derived from allied substances like natural gas and Canadian tar sands) at the same time. Most energy professionals, however, consider this estimate highly unrealistic. "One hundred million barrels is now in my view an optimistic case," the chief executive officer of Total, Christophe de Margerie, typically told a London oil conference in October 2007. "It is not my view; it is the industry view, or the view of those who like to speak clearly, honestly, and [are] not just trying to please people." Similarly, the authors of the Medium-Term Oil Market Report, published in July 2007 by the International Energy Agency, an affiliate of the Organization for Economic Cooperation and Development, concluded that world oil output might hit 96 million barrels per day by 2012, but was unlikely to go much beyond that as a dearth of new discoveries made future growth impossible. Oil nationalization is exacerbating the conflicts of the energy crisis W Joseph Stroupe Nov 22, 2006 Russia tips the balance THE NEW WORLD OIL ORDER, Part 2 author of the new book Russian Rubicon: Impending Checkmate of the West and editor of Global Events http://www.atimes.com/atimes/central_asia/hk22ag01.html Professor Peter Odell, quoted in Part 1 of this report, alluded to this danger when he warned that Russia's oil grab presented an impending threat to the energy supplies of the West. The issue here is control of the production of oil and gas fields, and therefore where and to whom that production will be offered - within the open, liberal US-led model or within the rival, more rigid and private Russian-led one. The global production and profits of the West's international oil majors are still very high. However, behind that facade of apparent market control and dominance lurks the specter of an impending, perhaps precipitous, collapse of the role and leverage of those oil majors the West relies on for its energy security. In The Observer of London on October 29, in an article titled "Big oil may have to get even bigger to survive", the author notes that the West's international oil majors are in real trouble as regards the collapsing of their control over global energy reserves and face a global wave of nationalization, forced renegotiation of existing agreements, inability to get access to new exploration and production acreage and rising taxes. It is a caustic mix that is dissolving the glue that holds together the US-backed oil order. As the oil majors produce oil for the market, they must replace their reserves. In 1997 they were able to replace 140% of their reserves, but in 2005 they were able to replace far less - only 75%. Consequently, they are rapidly shrinking while the state-owned companies around the globe are rapidly expanding as respects market dominance as measured by the crucial parameter of control of reserves. Furthermore, the mounting global wave of oil-sector nationalization that is pushing international oil majors on to the sidelines as respects control of reserves could easily and quickly take an even more ominous turn - cutting significantly into the current production capabilities of the oil majors and placing the energy security of the US in acute jeopardy. Assumptions that such a scenario deserves little worry and attention are not valid or safe in the environment of ever more nationalistic leanings on the part of the oil-producing regimes around the globe and the specter of forced renegotiations of PSAs (production sharing agreements) and cancellations of operating licenses. What applies to production acreage also applies to exploration acreage, and access to and control over both are being massively forfeited by the West and its oil majors. Foreign investment in energy-producing enterprises and acreage is being severely restricted as a result, and this ensures strategically tight global supply, further exacerbating the mounting energy security misfortunes of the West. This is because in the absence of abundant global supply the West has no viable means to counteract the locking up of increasing amounts of the global supply by Russia's new model.
53
CNDI Regents
Oil DA
Since coming to office, President Bush has made real progress in challenging some of the lingering legacies of the Cold War. He has advanced a vision of defending U.S. national security interests that is not constrained by Cold War logic and agreements. Mr. Bushs new approach to international security issues has yielded real resultsincluding most notably President Putins agreement in July to rethink Russias categorical rejection of missile defense systems.
But to end the Cold War totally will require Bush to advance new thinking on the other major legacy of that erathe divide between rich and poor, democratic and autocratic, NATO and non-NATOthat still separates Europe into East and West. This final remnant of the Cold War will disappear only when
Russia becomes a democracy, fully integrated into Western institutions. Unfortunately, the promotion of Russian democracy has taken a back seat to arms control. In the long run, this is a bad trade for American security interests.
Bush is our first truly postCold War president. Before becoming president, even Bill Clinton worried about multiple warheads on Soviet ICBMs, pondered communist expansion in Asia, and was curious enough about the Soviet Union to travel there. Bush was doing other things during the Cold War. My guess is that he never met a "Soviet" citizen. Unlike most of his foreign-policy advisers, who made their careers fighting the Cold War, Bushs thinking is unencumbered by a past era.
CNDI Regents
Oil DA
For many, this lack of experience is frightening. Yet Bushs lack of baggage also presents opportunities. Twelve years after the fall of the Berlin Wall, and 10 years after the Soviet Union broke up, it is striking how many Cold War practices continue. Tens of thousands of U.S. troops remain in Germany, Pentagon war plans still aim to destroy with nuclear missiles Russian military plants (many of which are long out of business), and U.S. and Russian heads of state still meet to discuss arms control.
"The best defense against a hostile Russia in the future? Promoting Russian democracy and integration into the West now."
Bushs willingness to think beyond the Cold War must be applauded. Already, he has compelled everyone to rethink the strategic equation between offensive and defensive weapons systems. Although still unwilling to discuss concrete numbers, Bush has reiterated his campaign promise to reduce unilaterally, if necessarythe number of nuclear warheads in the U.S. arsenal. In agreeing with Putin this past July to link the discussion of these reductions with consultations about defense systems, Bush has moved closer to convincing the Russians that his plans for missile defense need not threaten their security. But getting Russian acquiescence on this new equation is the easy part of dismantling Cold War legacies. After all, Presidents Yeltsin and Clinton agreed years ago that nuclear arsenals should be reduced far below levels agreed to in Start II. And despite all the posturing, Putin and his security officials dont really believe that the Anti-Ballistic Missile Treaty is the "cornerstone" of strategic stability between the United States and Russia. They rightly have calculated that even the most robust U.S. missile defense system will not make nuclear deterrence obsolete. Most important, Russian government officials know that a U.S. missile defense system is a tool of limited utility in most foreign and security policy issues. And thats the problem with Bushs current policy toward Russia. By focusing almost exclusively on securing Russian acquiescence to missile defense and U.S. withdrawal from the ABM treaty, Bush has devoted almost no attention to the most important issue in U.S.-Russian relations Russian democracy and Russian integration into the West.
If Russia becomes a full-blown dictatorship in the next 10 years, a U.S. missile defense system will be a rather useless weapon in the arsenal for dealing with an enemy Russia. If, in this worst-case scenario, autocratic Russia decides to invade NATO member Latvia, destabilize the Georgian government, or trade nuclear weapons with Iran, Iraq, or China, our missile defense system will do little to deter these hostile acts against U.S. national interests. "If Bush can nudge Putin in a more democratic direction, then he will be remembered as the president who dispelled the last lingering elements of the Cold War." The best defense against these potential hostile acts is to promote Russian democracy and integration into the West now. If Russia becomes a full-blown democracy in the next 10 years, then the prospects for conflict between the United States and Russia, be it over the Latvian border or the balance of nuclear weapons, will be reduced dramatically. A democratic Russia moving toward entry into the European Union and even NATO will also make possible the unification of Europe and the final disappearance of East-West walls (be it through visa regimes or military alliances) that still divide Europe.
55
CNDI Regents
Oil DA
Aff- !- Russia- U
Russias new president is moving towards democracy AP Press July 6 2008 Vogel: We must respect Russia, engage China
56
CNDI Regents
Oil DA
57
CNDI Regents
Oil DA
58
CNDI Regents
Oil DA
US Senator Richard Lugar, who recently labeled Russia an "adversarial regime" that increasingly uses its growing energy dominance as a powerful geopolitical weapon, has warned of economic "catastrophe" for the United States, notwithstanding its status as a superpower. Consequently, informed and reasoned leaders such as Lugar increasingly see the US in energy-based jeopardy. Such leaders clearly do not put blind trust in the conventional wisdom that keeps insisting the US giant has no Achilles' heel and is virtually immune to the efforts on the part of comparatively smaller powers such as Russia and its partners to undermine the current US global position of supremacy.
Backing up the mounting concerns of such leaders as Lugar, as reported on October 1 by The Guardian Unlimited, widely respected energy economist Professor Peter Odell, who was an adviser to Tony Benn, the British energy minister in the late 1970s, and who has since worked for a host of different foreign governments, said he was not being alarmist or controversial when he recently warned that the West was at imminent risk of losing access to global energy resources
as a result of Russia's global oil grab. High oil prices allow Russia to change the economic system threatening the Wests very survival W Joseph Stroupe Nov 22, 2006 Russia attacks the West's Achilles' heel THE NEW WORLD OIL ORDER, author of the new book Russian Rubicon: Impending Checkmate of the West and editor of Global Events Magazine Part 1 http://www.atimes.com/atimes/central_asia/hk22ag01.html Under the new market arrangement, nearly all oil became highly visible and instantly accessible because the traditional longterm supply contracts became the minor factor while the spot markets and highly liquid oil-futures contracts became the major factors. In effect, this radically raised the visibility, accessibility and fungibility of global oil supplies to unheard-of heights and made it possible for oil lost for some reason in one part of the market to be easily, naturally and almost instantly replaced by oil from another part of the market.
In effect, the new exchanges facilitated the creation of one virtual global pool of oil denominated in US dollars into which nearly all exporters sell their oil and out of which nearly all importers purchase oil, all on a daily basis. A discrete global pool of oil does not physically exist anywhere on the planet, of course. But it does exist in a virtual sense, powerfully mimicking a literal global pool of oil, because the structure and presence of the new exchanges and the global adherence and devotion to them ensures that oil is bought, sold and delivered largely as if such a pool literally exists. And the global dominance of the West's oil majors, whose task it has been to capture global oil supplies for
full incorporation into the new US-led liberal global oil-market order, has been the key factor perpetuating the global dominance of that order.
As long as the Western oil majors hold global sway and the US-backed liberal order is globally adhered to, therefore, any attempt to target the US with an oil embargo, as by the efforts of an exporter or group of exporters refusing to sell to the US, would fail miserably because the US would merely draw oil elsewhere from the global pool to suffice its needs. Importantly, the US and Britain accomplished two goals of profound importance and value with the creation of their new liberalized global oil-market order. First, they prevented the enacting of any targeted oil embargo, and they greatly enhanced the leverage of the West's oil majors, their de facto state sponsors and the West's financial institutions in the new market arrangement while simultaneously fundamentally undermining the leverage of producers, thus powerfully bolstering the strategic energy security of the West.
Second, they consolidated and powerfully solidified the role of the US dollar as the unquestioned international currency, since the one virtual global pool of oil created and maintained by the new liberalized market order is denominated in US dollars alone. But it is crucial to understand that the West's immunity from a targeted embargo is assured only as long as the current liberal, highly liquid US-led global oil market is unwaveringly adhered to. Once the movers and shakers (now Russia and its producing and consuming partners) begin again to revert to the rigid bilateral long-term supply contracts conducted privately between producers and consumers, thereby incrementally altering the foundations of the global oil-market order by decreasing its level of liquidity, then the real potential for a revoking of a significant measure of oil's fungibility exists. This means that the ability to enact an effective targeted embargo is once again incrementally revived. A meaningful loss of fungibility of oil would spell potential economic-geopolitical doom for the West. This is the Achilles' heel of the West. As we shall see, it is that very Achilles' heel Russia and its partners have found and are already energetically exploiting in a bid to shift the US colossus out of its current position of global dominance. Swiftly mounting anxiety on the part of increasing numbers of the globe's key energy-hungry economies in the East as respects energy security is already fueling incremental abandonment and circumvention of the US-dominated liberal global oil market. 59
CNDI Regents
Oil DA
60
CNDI Regents
Oil DA
Aff- !- Venezuela
Low oil prices oust Chavez Martin Hutchinson Jun 25, 2008 A new model for nastiness author of Great Conservatives http://www.atimes.com/atimes/Global_Economy/JF25Dj04.html If China and to a lesser extent India suffer severe downturns, then oil demand must drop off correspondingly and it becomes unlikely that the 1970s pattern of continuing high oil prices even in a recession will be repeated. If oil prices drop sharply, the political effect on oil producing countries will be considerable, and not necessarily pleasant. The Shah of Iran basically fell because of the 1973 oil price rise. He was already overspending in 1972-3, supported largely by bank loans, then he spent with total abandon in 1974 as higher revenues had appeared to make Iran's oil wealth inexhaustible. Needless to say, he then ran out of money, as the international banking system would not provide him with sufficient funds to complete the projects he'd initiated in the bubble year. 1976 and 1977 were thus years of relative austerity in Iran, much to the fury of the Iranian people who had come to expect a bonanza. It should thus have been no surprise that revolution occurred in 1979, although robust US support for the shah might have enabled him to overcome it. This time around, the overspending oil producers are obvious: Venezuela and Russia. Venezuela will undoubtedly get into severe difficulty once the oil price collapses. This is on balance likely to favor US interests (and those of the Venezuelan people) provided that the crisis can be leveraged to remove Hugo Chavez from the country's leadership. If he remains, Venezuela will become another Cuba, with deep repression and a suffering and impoverished populace but forming no real threat to the United States. Russia is a much more dangerous story, being both economically and militarily more powerful. The parallels with Germany of the 1930s are disquieting, although the move to aggression in an economic downturn would presumably take the form of an assumption of further authoritarian powers by Vladimir Putin, rather than his replacement by an even more sinister figure. However a downturn in the oil price might well cause an aggressive Russia to intervene militarily in its neighbors, use the weapon of Gazprom's gas pipelines disruptively against Western Europe and devote 25% of output to the military, as did the Soviet Union in its most aggressive periods. Should that happen, Russia would become a considerably more dangerous threat to the world than al-Qaeda could ever dream of; it is to be hoped that western leaders, particularly in Europe, recognize the danger early and effectively. The balance of probability must thus be for a global downturn which combines the inflation of the 1970s with the severe recession and geopolitical danger of the 1930s. Not an appealing prospect.
61