Gonzaga Debate Institute 2008

Lacy/Symonds/Bowen

1 Oil Toolkit

Oil Tool-Kit Index
Peak Oil Advantage (1/9)................................................................................................................................................4 ***Hard/Soft Landing***.............................................................................................................................................13 Hard Landing Now........................................................................................................................................................14 Renewables key to Soft Landing..................................................................................................................................15 Soft Landing Key..........................................................................................................................................................16 Soft Landing is Linear – each step improves our landing.............................................................................................17 ***High Oil Prices Bad***..........................................................................................................................................18 High Oil Prices Now (1/5)............................................................................................................................................19 High Oil Prices Now – $200/barrel soon......................................................................................................................24 High Oil Prices Now – A2: New Oil Fields..................................................................................................................25 High Oil Prices Now – Production Delays...................................................................................................................26 High Oil Prices Bad – Global Depression....................................................................................................................27 High Oil Prices Bad – Hurts Growth (1/3)...................................................................................................................28 High Oil Prices Bad – Inflation.....................................................................................................................................32 High Oil Prices Bad – Transportation Sector................................................................................................................33 High Oil Prices Bad – Hurts Oil Refining....................................................................................................................34 High Oil Prices Bad – Global Poverty..........................................................................................................................35 High Oil Prices Bad – Props up dictators.....................................................................................................................36 High Oil Prices Bad – Disease, Poverty.......................................................................................................................37 High Oil Prices Bad – Chinese Economic Collapse.....................................................................................................38 A2: Oil Prices declines hurt the Economy....................................................................................................................39 ***Oil Shocks***.........................................................................................................................................................40 Oil Shocks Brink (1/2)..................................................................................................................................................41 Consensus Agrees: Shock timeframe < 10 years..........................................................................................................43 Recession causes the Oil Speculation Bubble to burst..................................................................................................44 Oil Shocks cause Recession..........................................................................................................................................45 Oil Shocks cause Depression (1/2)...............................................................................................................................46 Oil Shocks hurt US transportation sector......................................................................................................................48 Oil Shocks hurt US consumer confidence (1/2)............................................................................................................49 ***Peak Oil***.............................................................................................................................................................51 Peak Now (1/2).............................................................................................................................................................52 Must Act Now to avoid the Peak..................................................................................................................................54 Quick Action Saves Money...........................................................................................................................................55 Peak Oil Coming...........................................................................................................................................................56 A2: New Discoveries solve Peak Oil............................................................................................................................57 A2: Technology solves Peak Oil...................................................................................................................................58 Peak Oil will cause Oil Price Spikes.............................................................................................................................59 Peak Oil causes Price Spikes in All Sectors..................................................................................................................60 Peak Oil causes Global Depression (1/2)......................................................................................................................61 Peak Oil causes Economic Downturn in Developing Countries...................................................................................63 Peak Oil causes instability............................................................................................................................................64 Peak Oil Causes Extinction (1/6)..................................................................................................................................65 Overpopulation puts us on the brink of extinction........................................................................................................71 Peak Oil causes anarchy................................................................................................................................................72 ***Resource Wars***...................................................................................................................................................73 Oil Dependence Bad – Terrorism (1/2).........................................................................................................................74 Oil Dependence Bad – Resource wars (1/2).................................................................................................................76 Alternate China Resource Wars Scenario (1/2).............................................................................................................78 Oil Dependence Bad – Resource wars with China (1/7)..............................................................................................80 Oil Dependence Bad – Resource wars with China/India..............................................................................................88 China/India war will draw in Japan..............................................................................................................................89 Oil Dependence Bad – China War / Spratlys (1/2).......................................................................................................90 China push for the Spratlys is likely.............................................................................................................................92 US/China War over Spratlys = Nuclear War.................................................................................................................93 Oil is Zero-Sum between US & China..........................................................................................................................94

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

2 Oil Toolkit

Chinese Oil Demand Increasing...................................................................................................................................95 A2: China wants to cooperate.......................................................................................................................................96 Alternate Russia Resource Wars Scenario....................................................................................................................97 Oil Dependence Bad – Resource wars with Russia (1/2).............................................................................................98 Oil Dependence Bad - War with Russia in the Arctic Circle (1/2).............................................................................100 War with Russia goes Nuclear....................................................................................................................................102 Resource wars most likely form of conflict................................................................................................................103 Warming makes Resource Wars likely........................................................................................................................104 ***Food Prices***......................................................................................................................................................105 Food Prices High Now................................................................................................................................................106 Food Prices High Now – Oil (1/2)..............................................................................................................................107 Food Prices High Now – Longterm Trend..................................................................................................................109 Famine Brink (1/2)......................................................................................................................................................110 High Food Prices = Famine.........................................................................................................................................112 High Food Prices = Famine.........................................................................................................................................113 Food Price Spikes Kill Billions...................................................................................................................................114 High Food Prices = Regional Wars.............................................................................................................................115 Oil prices are the root cause for food prices (1/2).......................................................................................................116 Government action to incentivize renewables is key to solve....................................................................................118 ***Random Stuff***..................................................................................................................................................119 Oil is key to Hegemony..............................................................................................................................................120 Oil Scarcity Justifies Hegemony.................................................................................................................................121 Oil Dependence Undermines US Soft Power (1/3)....................................................................................................122 A2: SPR CP.................................................................................................................................................................125 A2: ANWR CP............................................................................................................................................................126 US-Saudi Relations Declining....................................................................................................................................127 ***NEG***................................................................................................................................................................128 ***Soft Landing Now***...........................................................................................................................................129 Soft Landing Now.......................................................................................................................................................130 A2: Soft Landing – It’s impossible.............................................................................................................................131 ***A2: High Oil Prices***.........................................................................................................................................132 A2: High Oil Prices hurt the Economy (1/3)..............................................................................................................133 A2: High Oil Prices hurt the Economy – Resilient.....................................................................................................136 A2: High Oil Prices hurt the Economy – Alt Cause...................................................................................................137 A2: High Oil Prices cause inflation (1/2)....................................................................................................................138 High Oil Prices Good – Renewables...........................................................................................................................140 High Oil Prices Good – Texas Economy....................................................................................................................141 High Oil Prices Good – Reduces Unemployment......................................................................................................142 ***A2: Oil Shocks***................................................................................................................................................143 A2: Oil Shocks – No Impact (1/4)..............................................................................................................................144 Turn: Oil Shocks boost the economy..........................................................................................................................148 ***A2: Peak Oil***....................................................................................................................................................149 A2: Peak Oil................................................................................................................................................................150 A2: Peak Oil – Technology Solves.............................................................................................................................151 A2: Peak Oil – It’s good, causes renewables..............................................................................................................152 A2: Peak Oil – It’s a Myth..........................................................................................................................................153 A2: Peak Oil – Oil is renewable (1/2).........................................................................................................................154 No Energy Crunch (1/3)..............................................................................................................................................156 New energy makes the crash harder (1/2)...................................................................................................................159 Peak Oil Kish Links....................................................................................................................................................162 ***A2: High Food Prices***......................................................................................................................................163 High Food Prices Good - Growth...............................................................................................................................164 High Food Prices Good - Environment.......................................................................................................................165 High Food Prices Good – Welfare..............................................................................................................................166 A2: High Food Prices cause Famine...........................................................................................................................167 A2: High Food Prices – Alt Cause, Global Capitalism (1/4)......................................................................................168 ***A2: Resource Wars***..........................................................................................................................................172

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

3 Oil Toolkit

A2: Resource Wars (1/5).............................................................................................................................................173 A2: Warming causes disease spread............................................................................................................................178 A2: Resource Wars with China (1/5)..........................................................................................................................179 A2: Resource Wars with China/India..........................................................................................................................184 Russia wants Cooperation with the West (1/2)...........................................................................................................185 Russia can’t start a war with the West.........................................................................................................................187 US-Russia Cooperation now (1/2)..............................................................................................................................188 Alt Cause: NMD.........................................................................................................................................................190 CP to solve Resource Wars.........................................................................................................................................191 Warming increases cooperation over resources..........................................................................................................192 ***Random Neg***...................................................................................................................................................193 High oil prices are driven by speculators (1/3)...........................................................................................................194 A2: Speculators responsible for high oil prices (1/2).................................................................................................197 Gas Tax CP..................................................................................................................................................................199 Can’t replace Oil effectively.......................................................................................................................................200 Energy Independence is Impossible............................................................................................................................201 GW Fear / AE boost undermines Oil Refining...........................................................................................................202 ....................................................................................................................................................................................202

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

4 Oil Toolkit

Peak Oil Advantage (1/9)
Oil prices are high and steadily rising. $200 barrels are right around the corner Johnson, Lead Editor of Environmental Captial, 08 (Keith, Environmental Capital/The Wall Street Journal, June
26, Oil Shock: Analyst Predicts $7 Gass, “Mass Exodus” of U.S. Cars, http://blogs.wsj.com/environmentalcapital/2008/06/26/oil-shock-analyst-predicts-7-gas-mass-exodus-of-us-cars/, 7/2/08) Oil at $135? That was just the opening skirmish in the “peak oil” wars. The latest smart money? $200 oil in 2010, with gasoline at $7 a gallon. And that is going to turn Americans into car-shunning Europeans once and for all—poor Americans, at least. That’s the latest gloomy forecast from Jeff Rubin at Canadian brokerage CIBC World Markets, who just a few months ago figured $200 oil would be a thing of the distant future—like 2012. Mr. Rubin laughs off recent attempts to take the steam out of global oil markets. Saudi production promises of 200,000 barrels a day doesn’t dent the 4 million barrel-per-day decline from aging fields every year, for starters. And it will just be “gobbled up” by increasing domestic consumption in Saudi Arabia, like other oilproducing countries that subsidize fuel. So what about China’s flirtation with market reality by unwinding some fuel subsidies? No luck in curbing demand or prices, either. Not only does China’s recent move translate into $3.25 a gallon gas— still a steal, relatively speaking—it’s given fresh legs to beleaguered Chinese refiners who’ve been operating in the red, thanks to Chinese price controls. So now they are producing even more gasoline and fueling even more cars than they were before. The upshot? Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America’s highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today—a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks.
And who will be parking their cars? The 57 million American households that have both cars and access to something resembling public transit. Gasoline at $7 begins to approach prices Europeans have paid for years, meaning that chunk of America “will start to act more and more like Europeans,” Mr. Rubin says. Not soccer moms in a minivan—soccer fans, searching for tokens: Our analysis suggests that about half of the number of cars coming off the road in the next four years will be from low income households who have access to public transit. At their current driving habits, filling up the tank will have risen from about 7% of their income to 20%, an increase that will see many start taking the bus. Gas prices already appear to be reshaping suburbia. But what Mr. Rubin is predicting is a far bigger shock to the American system. Europe has had decades to develop a society based on expensive energy. What will happen if Americans suddenly are forced

to shoulder European-style energy prices — but without the European-style society to cope with them?

High oil prices are here to stay – Oil production will peak no later than 2015, current energy initiatives are woefully inadequate. Andrews, Co-founder of the Association for the Study of Peak Oil US affiliate, 08 (Steve, Energy Bulletin, "Rejecting the real snake oil," 6-27-7, http://www.energybulletin.net/node/31362, 6-30-8)
8. Depletion of aging oil fields is relentless. The world's largest oil fields -- all of which once produced at least one million barrels of oil/day -- are all in permanent decline. The smaller new fields brought into production can't offset the declines in the old war horses. It's like being on a treadmill that is both speeding and ramping up, where you work harder and harder just to stay in place. 9. New technology isn't saving the day. In the US, where we've applied the best technology available, production has slowly declined since the late 1970s. 10. Oil exports are riding for a fall. In exporting countries like Mexico, where production slips while domestic
consumption grows, exports will shrink at an accelerated rate. China, the UK and Indonesia, oil exporters during the 1990s, are now importers. World oil exports will peak before world oil production peaks. Highly hyped liquid substitute fuels, such as ethanol from corn and liquids from coal or oil shale, come with their own unique baggage. They can't be scaled up quickly, require huge energy and water inputs, and pose a range of environmental problems. Given the above facts and trends, ASPO-USA and a

growing list of respected energy analysts anticipate a peaking in world oil production soon, most likely between 2010 and 2015. Such a turning point in world energy consumption and production patterns will undoubtedly have serious consequences on the world's economy. Those possible consequences should be anticipated and acted upon by decision makers at every level. Those who deny this looming reality are
part of the problem, not part of the intelligent response.

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

5 Oil Toolkit

Peak Oil Advantage (2/9)
The peak will have devastating consequences unless we move toward alternative energies now to preserve a soft landing Stanton, Editor of Motor Transport, 08 (Justin, Road Transport, "Worried about oil shortage?" 1-31-8, http://www.roadtransport.com/Articles/2008/01/31/129670/worried-about-oil-shortage.html, 7-18)
Gilbert's working conclusion is that world leaders must prepare for the worst. The fall in production could be anticipated by ratcheting down demand in advance of the fall in production: this allows a 'soft landing'. Or a fall in consumption could be brought about as a result of high prices (due to the shortfall): this would be a 'hard landing', resulting in severe economic, social and geopolitical disruption. Gilbert's thesis proposes a number of inter-linked solutions to ensure we can continue to live our lives largely in the manner to which we have become accustomed. First and foremost is the switch to electricity as the power source for road transport. But how to overcome the challenge of the on-board storage of electricity? Simple, says Gilbert: all vehicles will have to be connected to the grid. Now clearly that's going to require some heavy infrastructure investment and funding to develop renewable generation of electricity: where's that money going to come from? Stop all road-building and airport construction now, Gilbert says, and divert those funds into developing alternative power sources (for transport and all other users). Funds can also be raised by taxing aviation fuel. At the very least, all governments should be setting up transport redevelopment agencies to reconfigure how transport needs are met. He also proposes the increased use of rail and low-speed marine transport in place of road and air, and the use of collectively managed transport in place of personal transport.

Peak Oil risks ______ scenarios for disaster

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

6 Oil Toolkit

Peak Oil Advantage (3/9)
Scenario _____ – The Economy High Oil Prices Will Lead to Another Great Depression Within Three Months Leatherdale 2008 (Linda, Finances Columnist for the Toronto Sun, “Next Great Depression?”,
TorontoSun.com, http://www.torontosun.com/Money/2008/06/22/5952466-sun.html, June 22, 2008) But while our competition watchdog, finally, laid charges of price fixing in Quebec, and you and I struggle with pump prices on their way to $1.50 a litre, NOCs subsidize fuel prices for their civilians. That's why Venezuela enjoys the cheapest gas in the world at 12 cents US a gallon, followed by Nigeria at 38 cents, Kuwait 78 cents and Saudi Arabia at 91 cents. Energy-guzzling China, the world's new superpower as the United States self-destructs, also subsidizes prices. Which is why our big North American automakers, devastated by slumping sales and high gas prices, are showcasing their luxurious gas guzzlers in China, where an emerging middle class can afford them, and the gas. But even China realizes the damages of outof-control oil prices, and this past week hiked its subsidized fuel prices in hopes of softening demand and bringing oil back down to earth. Which leads to this: While we debate nationalized energy vs free capital forces, and whether I'm a Marxist or not -- dire warnings are hinting that if we don't stop this madness, we're heading to the biggest meltdown since the Great Market Crash of 1929 and the next Great Depression. "A very nasty period is soon to be upon us -- be prepared," Bob Janjuah, a credit strategist for the Royal Bank of Scotland, wrote in a report that sent shockwaves through the global financial community. Janjuah is warning that these skyrocketing energy prices are inflicting big damage by fuelling inflation and paralysing major central banks, who may be forced to hike interest rates at a time economies are slowing and the U.S. subprime crisis is sending a tidal wave around the world, sparking a global credit crunch. Janjuah says the crash will hit within three months, with Wall Street's S&P 500 crashing by more than 300 points as "all the chickens come home to roost" from the excesses of the global boom. Such a slide, Janjuah warns, would amount to one of the worst bear markets of the past century. "Cash is the key safe haven. This is about not losing your money and not losing your job," said Janjuah, who last year correctly called the credit crisis. He added that "globalization was always going to risk putting G7 bankers into a dangerous corner at some point. We have gotten to that point," thanks to this energy-price shocker. DIRE WARNING Another dire warning comes from the Bank of International Settlements, which warns we're headed for the next Great Depression, thanks to a lax monetary policy that gave birth to complex credit instruments, a strong appetite for risk, record household debt levels and imbalances in the world's currency system. I'm not alone in warning it may be our own capitalist greed that's killing the golden goose. Paul Craig Roberts, former assistant secretary to the U.S. Treasury during the Reagan administration and now associate editor at The Wall Street Journal, writes that "something is wrong here" when GDP grows while household incomes fall, or "Karl Marx was right that capitalism works to concentrate income in the hands of a few capitalists." Roberts points out that while people lose jobs and homes, life savings go up in smoke and energy prices nail the coffin shut -- the top 20 earners among private equity and hedge fund managers earned an average of $657 million US last year, with four earning more than $1 billion, while the top 20 CEOs of publicly held companies took home an average $36.4 million. Energy brass are among this high-paid elite, with a blatant example of greed when former Exxon CEO Lee Raymond, who was paid $52 million a year, walked out the door with a retirement package worth $400 million. And if you check out insider trading info, you'll find energy CEOs and executives are cashing out big time. In my capitalist world, wealth is not hoarded by a greedy few, while hard-working, middle-class citizens get slaughtered. End of conversation.

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

7 Oil Toolkit

Peak Oil Advantage (4/9)
High Oil Prices also risk a devastating round of price shocks that would hammer the global economy into recession Clayton, Staff Writer, 08 (Mark, The Christian Science Monitor, May 12, With prices at $120 a barrel, Americans
are facing an oil adjustment, http://www.csmonitor.com/2008/0512/p13s01-wmgn.html, 7/5/08) Two years ago a leading economist published a study provocatively titled: "What would $120 oil mean for the global economy?" Answer: a global recession, if the price stayed there for a year. Now the future has arrived, with the United States and other nations getting a double whammy from both the mortgage crisis and oil futures hovering at $120 per barrel. If oil prices stay stratospheric, the cost of fueling cars and planes could slash US economic growth up to 2.3 percent and global growth by 3.6 percent, says Robert Wescott, former chief economist of the president's council of economic advisers and author of the $120 oil report. While many energy-security experts worry about a terrorist attack that suddenly crimps global oil supplies and hammers the US economy, Dr. Wescott and other experts say a terror attack is hardly the only, or even the worst, oil threat the nation now faces. "What we are seeing today is more of a slow-motion, rolling oil crisis rather than a sharp shock, yet ultimately we end up with the same sorts of impacts [as a terror attack]," says Wescott, now president of Keybridge Research, a Washington economic-consulting firm. Unlike the 1970s, when an oil embargo left Americans waiting in long lines at gasoline stations and paying higher prices, today's oil crisis has been stealthy. Its economic impact has been masked by consumers tapping credit cards and home equity to cover the rising cost of energy and some consumer goods. "We're having a replay of the 1970s without the Arab oil embargo part, so it's been hard for many people
to see," says Amy Myers Jaffe, an energy scholar at the Baker Institute at Rice University in Houston. Even with US airlines cutting flights and SUV sales now tanking, the effects of expensive oil on the American family could be stark, Wescott's report says. In 2003, with oil approaching $40 per barrel, the average US family spent about $1,900 (4.8 percent of its income) on natural gas, heating oil, and gasoline. But today at the $120 per barrel level, a family will spend about $6,000 a year or about 15 percent of total annual income, Wescott's report predicts. Compared with the oil crises of the 1970s, the US paradoxically is in a bit better, yet also worse, position. The good news is the US economy is less energy intensive – using only about half the energy it did in the 1980s to produce a dollar of economic growth. That should make it more resilient. But the bad news is that imported oil has risen to about 12 million barrels a day, about 60 percent of the 21 million barrels

the US consumes daily. That financial drain at $120 per barrel is jamming the brakes on the US economy and inflating the trade deficit, economists agree. "The question now isn't whether we're going into recession, it's whether there will be a soft landing ... or we have a hard landing," Ms. Jaffe says. Nariman Behravesh, chief economist at Global Insight, Lexington, Mass., has done economic projections with oil at even higher prices. While oil at $120 a barrel "makes a mild recession a little deeper," the results of oil at $150 would be much worse with the nation "looking at a fairly serious recession." But where there is awareness of the problem there is hope. Perhaps nobody knows better what the
nation could do – but mostly has not yet done – than Amory Lovins. An American energy guru since the gas lines of the 1970s, he has focused like a laser beam on how the nation can save energy. "What we need to do to cut oil consumption is quite

clear," says the cofounder of the Rocky Mountain Institute, an energy think tank in Snowmass, Colo. "But attention keeps getting focused on the wrong things – like subsidies for the oil industry to find more oil. That's the wrong way to go." Congress's move last year to raise vehicle fuel-economy standards to 35 miles per gallon by 2020
was a good first step – but not enough, he says. In today's slowly unfolding yet serious oil crisis, Mr. Lovins would slash 9 percent of the nation's oil demand in one year with more than 30 fuel-saving measures. Among them: •Reduce speed limits to 60 miles per hour for light vehicles, 55 m.p.h. for heavy trucks. Expand HOV-lane use to include alternative fuel vehicles (AFVs), hybrids, and all-electric vehicles. •Encourage mass-transit use by letting all citizens deduct the cost from their taxes. Require "parking cash-out" so employees can take cash instead of free parking at work. •Extend federal tax credits for AFV, hybrid, and electric vehicles to many more than the current 60,000 vehicles per manufacturer limit. •Require one-engine-only idling for jet aircraft waiting to take off. Offer US loan guarantees to airlines upgrading to efficient aircraft and tax credits for replacing heavy interior parts with lightweight materials. One measure Lovins and Ann Korin, chairman of Set America Free, an energy-security coalition, agree on is for the government to mandate that all vehicles be "flex fuel" burning so Americans can choose alternatives to gasoline. The move, she says, would reduce the nation's exposure to a terrorist attack. "There's not much we can do today if an attack occurs other than band-aid responses like tapping into the strategic petroleum reserve," Ms. Korin says. "If every garage had a plug-in [hybrid gas-electric] or flex-fuel vehicle, you could still get around. Oil goes up, but we're not held hostage." The US already has "solutions that can take away the strategic

power of oil," adds Robert "Bud" McFarlane, national security adviser to President Reagan in the mid-1980s, referring to ethanol, methanol, biodiesel, and electricity for vehicle propulsion. Dennis McGinn agrees. A retired vice admiral of the Navy and a national-security expert, he is acutely aware of the fragile oil-supply line and many energy choke points around the globe. Still, he, too, sees a silver lining in this crisis if Americans can wake up and respond to it. "Our nation has met a whole lot of crises in our history," he says. "This energy and climate-change challenge is perfect for the American public, industry, and government to really do something about. We just need to be honest with ourselves that business as usual can't continue."

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

8 Oil Toolkit

Peak Oil Advantage (5/9)
Independently, the Oil Peak will cause unrelenting global depression Dawson, Associate Professor of English at the College of Staten Island/City University of New York. He has
two books scheduled for publication this spring Mongrel Nation: Diasporic Culture and the Making of Postcolonial Britain (U Michigan Press) and an essay collection Exceptional State: Contemporary U.S. Culture and the New Imperialism, which he co-edits with Malini Johar Schueller,2007 (Ashley, “The Return of Limits,” New Politics Vol. 11, Issue 3; pg. 94, Summer, 2007) The peak of the world's cheap supply of petroleum in the near future will shatter this perennial American attitude and, potentially, destroy the material underpinnings of American prosperity. Inevitable rises in the cost of crude as a result of increasing scarcity over the next couple of decades will rock the economy of the United States, triggering a wave of recessions that are likely to end in unrelenting depression. In addition, the end of cheap oil will reveal the ecologically unsustainable character of fundamental aspects of contemporary American culture such as suburban development and industrialized corporate agriculture. Not only will we find it difficult to get around quickly and to heat our homes in the winter, but the abundant food supplies that Americans and other residents of industrialized nations have taken for granted over the last century are likely to dwindle. How quickly all of this will happen is of course subject to debate, yet there can be no denying the fact that the so-called American way of life and the cultural attitudes on which it is based are unsustainable in the long run. If Americans do not awaken from their Panglossian reverie, like Candide they will soon learn that they do not live in the best of all possible worlds.

Economic Decline causes Nuclear War Mead, New Perspective Quarterly Board of Advisors, 92
(Walter Russell, New Perspectives Quarterly, Summer, p.30)
What if the global economy stagnates-or even shrinks? In the case, we will face a new period of international conflict: South against North, rich against poor, Russia, China, India-these countries with their billions of people and their nuclear weapons will pose a much greater danger to world order than Germany and Japan did in the ‘30s.

Oil induced economic collapse will trigger the final Armageddon Bearden, Fellow Emeritus and Alpha Foundation's Institute for Advanced Study (AIAS), 00.
(T.E., Z Power, "The Unnecessary Energy Crisis: How to Solve It Quickly," zpower.com, 6-12-00, http://www.zpower.com/en/documents/ZPEPaper_TheUnnecessaryEnergyCrisisHowToSolveItQuickly.pdf, 7-3-8) My personal estimate is that, beginning about 2007, on our present energy course we will have reached an 80% probability of this "final destruction of civilization itself" scenario occurring at any time, with the probability slowly increasing as time passes. One may argue about the timing, slide the dates a year or two, etc., but the basic premise and general time frame holds. We face not only a world economic crisis, but also a world destruction crisis. So unless we dramatically and quickly solve the energy crisis — rapidly replacing a substantial part of the "electrical power derived from oil" by "electrical power freely derived from the vacuum" — we are going to incur the final "Great Armageddon" the nations of the world have been fearing for so long. I personally regard this as the greatest strategic threat of all times — to the United States, the Western World, all the rest of the nations of the world, and civilization itself.

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

9 Oil Toolkit

Peak Oil Advantage (6/9)
Scenario _____ – Global Famine If current trend continues, a majority of the world will be malnourished Whitman, Financial Post Consultant, 08 (Janet, Financial Post, July 2, Speculators Escape Blame for
Commodity Price Surge, http://www.financialpost.com/story.html?id=625556, 7/2/08) NEW YORK - Speculators don't appear to be to blame for the doubling of commodity prices over the past couple of years, but that doesn't mean relief from high food prices is in sight, according to a new report from the International Monetary Fund. The IMF expects the food price surge to take longer than usual to unwind because of the likelihood of further increases in the production of biofuels, continued strong growth in developing countries and the added expense created by record-high oil prices. Exacerbating the problem has been the sluggish increase in supply to meet growing demand. Any longterm increase in the supply of food, oil and other commodities is likely to remain gradual and hinge on better policies, the world agency said. Washington lawmakers have held a series of hearings this year to get to the bottom of the surge in oil and commodity prices. Many lawmakers have singled out investors, including the billions of dollars flowing into commodity markets from pension funds and other speculators, as the culprit. However, the IMF said in its report yesterday that it sees "no compelling evidence" that the growing popularity of commodity markets as an asset class is behind the run up in oil and commodity prices. It said that the weak U. S. dollar and low interest rates could be contributing factors to higher prices. Although the impact of soaring commodity prices has been felt around the globe, it is having the worst impact on poor nations that are dependent on imports and "middle-income" countries, which face higher inflation and deepening poverty. "Some countries are at a tipping point," Dominique Strauss-Kahn, managing director of the IMF, said as the study was released yesterday. "If food prices rise further and oil prices stay the same, some governments will no longer be able to feed their people and at the same time maintain stability in their economies." The hurdle for those countries -- and the international community -- is to make sure food supplies are adequate while also trying to keep benefits that have cut poverty in recent years, including faster growth, low inflation and better budgets. The IMF is pushing for a broad co-operative approach involving the countries affected, donors, and international organizations to cope with the problem. "Working closely with our member countries, the Fund has been actively involved in providing advice and financial support to address their urgent concerns and help mitigate the impact of this crisis," he said. "Every country is different and exact policy prescriptions will vary considerably." The study -- the IMF's first broad-based analysis of the effect of rising commodity prices on developing countries --found that annual food price inflation for 120 low-income and emerging market countries increased 12% at the end of March, up from 10% three months earlier. Fuel prices, meanwhile, gained 9% from 6.7% over the same period. The IMF cautioned that, according to preliminary data, the problem is worsening. Household spending on food in developing economies usually tops 50%,making them particularly vulnerable. If the price shock persists, the share of undernourished in developing countries soon might rise above the current 40% of total population, the IMF warned.

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

10 Oil Toolkit

Peak Oil Advantage (7/9)
Elimination of the poor through starvation deaths are caused by massive spikes in food costs and famine Chossudovsky, Professor of Economics at the University of Ottawa, Director of the Centre for Research on Globalization, Contributor to the Encyclopedia Britannica, 08 (Michel, Global Research, "Global Famine," 5-2-8, http://www.globalresearch.ca/index.php?context=va&aid=8877, 7-6-8)
With large sectors of the World population already well below the poverty line, the short-term hike in the prices of food staples is devastating. Millions of people around the World are unable to purchase food for their survival. These hikes are contributing in a very real sense to "eliminating the poor" through "starvation deaths". In the words of Henry Kissinger: "Control oil and you control nations; control food and you control the people." In this regard, Kissinger had intimated in the context of the 1974 National Security Study Memorandum 200: Implications of Worldwide Population Growth for U.S. Security and Overseas Interests" that the recurrence of famines could constitute a de facto instrument of population control. According to the FAO, the price of grain staples has increased by 88% since March 2007. The price of wheat has increased by 181% over a three year period. The price of rice has increased by 50% over the last three months (See Ian Angus, Food Crisis: "The greatest demonstration of the historical failure of the capitalist model", Global Research, April 2008): "The most popular grade of Thailand rice sold for $198 a ton, five years ago and $323 a ton a year ago. In April 2008, the price hit $1,000. Increases are even greater on local markets — in Haiti, the market price of a 50 kilo bag of rice doubled in one week at the end of March 2008. These increases are catastrophic for the 2.6 billion people around the world who live on less than US$2 a day and spend 60% to 80% of their incomes on food. Hundreds of millions cannot afford to eat" (Ibid)

Unchecked, Peak Oil will kill over 4 billion people through Famine Goodchild, Award-winning television producer and the former head of Science and Features at the BBC, 07 (Peter, Counter Currents, "Peak Oil and Famine: Four Billion Deaths," 10-29-7, http://www.countercurrents.org/goodchild291007.htm, 7-2-8)
At some point in the early years of the 21st century, there will be a clash of two giant forces: overpopulation and oil depletion. That much has been known for a long time. It is also well known that population must eventually decline in order to match the decline in oil production. A further problem, however, is that it will be impossible to get those two giant forces into equilibrium in any gentle fashion, because of a matter that is rarely considered: that in every year that has gone by — and every year that will arrive — the population of the earth is automatically adjusted so that it is almost exactly equal to its carrying capacity. We are always barely surviving. Population growth is soaring, whereas oil production is plunging. If, at the start of any year, the world’s population is greater than its carrying capacity, only simple arithmetic is needed to see that the difference between the two numbers means that mortality will be above the normal by the end of that year. In fact, over the course of the 21st century there will be about 4 billion deaths (probably about 3.6, to be more precise) above normal. Let us refer to those 4 billion above-normal deaths as "famine deaths," for lack of a better term, since "peak oil" in terms of daily life is really "peak food." There will, of course, also be famines for other reasons. It is also true that warfare and plague will take their toll to a large extent before famine claims those same humans as its victims.

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11 Oil Toolkit

Peak Oil Advantage (8/9)
Independently, Oil production directly determines carrying capacity; when oil production tanks, billions of people will die; multiple causes Goodchild, Award-winning television producer and the former head of Science and Features at the BBC, 07 (Peter, Counter Currents, "Peak Oil and Famine: Four Billion Deaths," 10-29-7, http://www.countercurrents.org/goodchild291007.htm, 7-2-8)
Because oil production is the determining factor in population growth, we now have a useful set of numbers: the "existing population" for any given year in the past is roughly the same thing as the "carrying capacity" for that year. We can thereby deduce another useful set of numbers: the "existing population" at the start of any given year in the future must decrease to become the "carrying capacity" for that year. "Oil production determines carrying capacity": that is an immutable law. Human population will collapse in any year in which there is a difference between the initial population and the carrying capacity. The equation is not complex: (A) the previous year’s population (in billions) can be subtracted from (B) the carrying capacity (in billions) to give us (C) the number of deaths (in billions) by famine. The data for carrying capacity can be inserted by looking at similar data for oil production and population in the years 1900 to 2000. Some samples of future years are: 2031 (oil 13.8G bbl): (A) 3.5 minus (B) 3.4 equals (C) 0.1 2032 (oil 13.2G bbl): (A) 3.4 minus (B) 3.4 equals (C) 0.1 2033 (oil 12.6G bbl): (A) 3.4 minus (B) 3.3 equals (C) 0.1 (The "normal," non-famine-related, birth and death rates are not included in these figures, since for most of pre-industrial human history the sum of the two — i.e. the "growth rate" — has been nearly zero. And the future will be generally "pre-industrial.") Applying the above equation to all the years from 2000 to 2100, we arrive at a total number of famine deaths of about 4 billion, with the greatest annual mortality in the earlier years. Following these equations further down the years, we find that by 2100 there are still 2 billion humans, with 10 million famine deaths in that year of. The famine deaths do not become zero until nearly the end of the 22nd century, when the population reaches about 1 billion, with almost no oil left, duplicating the conditions of the year 1900 or earlier. That 22nd century may add another 1 or 2 billion famine deaths to the 4 billion of the 21st century. These later figures, of course, are far less reliable. War, disease, global warming, topsoil deterioration, and other factors will have unforeseeable effects of their own. These equations obliterate all previous estimates of future population growth. Instead of a steady rise over the course of the century, there will be a sudden slump, with the clash of the two giant forces of overpopulation and oil depletion, followed by a less precipitous ride into the unknown future.

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12 Oil Toolkit

Peak Oil Advantage (9/9)
Scenario _____ – Resource Wars US action now is key to avoid coming resource wars that will drive humanity to extinction Richard Heinberg, New College of California Core Faculty, Power Down: Options and Actions For A PostCarbon World, 2004, p. 111
The US is also uniquely positioned to lead the global energy transition. While it is the world's foremost energy user, the US also possesses advanced renewable-energy research facilities. And China, if it were to follow the model of Kerala or Cuba, rather than attempting to shift its economy in the direction of greater energyresource dependency, could be a beacon to the less-industrialized nations of the world. However, currently neither nation is on the path to lead a global Powerdown. Indeed, present trends suggest that the US and China are on a collision course, as the energy appetites of both nations continue to grow in the context of deepening energy- resource depletion. For the sake of American readers, I will put the matter as bluntly as possible: A peaceful global Powerdown is possible only if the US leads the way. If current American domestic and foreign polices continue, Powerdown efforts on the part of other nations may result in improved survival options for the people of those nations, but for the world as a whole by far the most likely outcome will be devastating resource wars continuing until the resources themselves are exhausted, the human species is extinct, or the fabric of modern societies has been shredded to the point that anarchy - in the worst sense of the word - prevails nearly everywhere.

Addiction to oil risks nuclear war with China and Russia, culminating in extinction Henderson, Besline Research CEO/President/consultant, 07 (Bill, CounterCurrents.org, February 24, “Climate
Change, Peak Oil, and Nuclear War”, http://www.countercurrents.org/cc-henderson240207.htm, 7/9/08)
Countercurrents.org By Bill Henderson Damocles had one life threatening sword hanging by a thread over his head. We have three:

The awakening public now know that climate change is real and human caused but still grossly underestimate the seriousness of the danger, the increasing probability of extinction, and how close and insidious this danger is - runaway climate change, the threshold of which, with carbon cycle time lags, we are close to if not upon. A steep spike in the price of oil, precipitated perhaps by an attack on Iran or Middle East instability spreading the insurgency to Saudi Arabia, could lead to an economic dislocation paralyzing the global economy. Such a shock coming at the end of cheap oil but before major development of alternative energy economies could mean the end of civilization as we know it. And there is a building new cold war with still potent nuclear power Russia and China reacting to a belligerent, unilateralist America on record that it will use military power to secure vital resources and to not allow any other country to threaten it's world dominance. The world is closer to a final, nuclear, world war than at any time since the Cuban missile crisis in 1962 with a beginning arms race and tactical confrontation over weapons in space and even serious talk of pre-emptive nuclear attack. These three immediate threats to humanity, to each of us now but also to future generations, are inter-related, interact upon each other, and complicate any possible approach to individual solution. The fossil fuel energy path has taken us to a way of life that is killing us and may lead to extinction for humanity and much of what we now recognize as nature.

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13 Oil Toolkit

***Hard/Soft Landing***

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14 Oil Toolkit

Hard Landing Now
The high price of oil and the coming peak are setting the United States up for a hard landing which will have global ramifications Roubini, Professor of Economics at New York University, 08
(Nouriel, The Banker, "Hard Landing Looks Likely - The Risks Of A US Recession This Year Are High, And There Is Little Likelihood That The Rest Of The Global Economy Can Uncouple Itself To Prevent A Sharp Global Slowdown," 1-1-7, http://goliath.ecnext.com/coms2/gi_0199-6125619/DAVOS-Top-Economist-Hard-Landing.html, 7-1-8) The odds that the US will slide into a recession in 2007 are very high: a hard landing of the economy is more likely than the soft landing scenario predicted by the consensus of macro forecasters. The US Federal Reserve (Fed) will cut the Fed Funds rate too late in the first quarter of 2007, when the signs of the coming recession are stronger; but such easing will not prevent the recession. The implications of a hard landing will be felt globally. The rest of the world will not decouple from the US recession, as some analysts predict. When the US sneezes, the rest of the world still gets the cold. The US recession will be triggered by three unstoppable bearish forces: the housing bust, one of the worst in decades; the high oil and energy prices; and the delayed effects on the economy of the increases in the Fed Funds rate in 2006. The US consumer, already burdened with negative savings, high debt ratios, falling housing wealth, rising debt servicing ratios, flat real wages and a weakening labour...

In the Middle East The World Next Week, 08 (The World Next Week, "Middle East: hard landing?" 4-26-8, http://www.oxan.com/worldnextweek/2008-04-24/middleeasthardlanding.aspx, 6-30-8)
Almost every day brings news of rising inflation, fiscal strains or unrest from the Middle East. Countries that are not cushioned by oil wealth will have the hardest landing. Riots have broken out in Yemen and Egypt, two of the countries –- which also include Morocco, Jordan, Syria and the Palestinian territories –- which are not propped up by vast oil and gas revenues. In these countries, governments have to balance the need for social stability against the burden of subsidies on budgets. Others are luckier. Algeria announced last week that the cost of its grain, flour and semolina imports almost doubled in the first quarter due to soaring world prices. The country is actually better off than many in that it has vast fiscal resources to bring to bear, thanks to its oil and gas revenues.

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Renewables key to Soft Landing
Government intervention in the case of energy must begin immediately in order to prevent a hard landing Church, Independent Energy Analyst for Counter Currents, 06 (Norman, Powerswitch, "Major Problems of Surviving Peak Oil," 10-23-6, http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2026&It emid=2, 7-2-8)
The thing that needs to be understood is that the scale of the anticipated turbulence and its effects will be literally imposable to estimate. Firstly, the energy problem will not appear one day and be critical the next, but will build up over time. Government efforts to cope with the problem and its effects will bring ever more severe restrictions on energy use by individuals, reserving what is available for the high priority items that make civilisation possible. Mass transport, heating and, of course, the production and distribution of food. These factors have to be taken into account in drawing up a schedule for implementation of the plans discussed below, since the inevitable restrictions on movement will hamper the effort. The worsening situation and official attempts to cope will have to be evaluated closer to the time and suitable measures taken to adjust the schedule and the plan.

Development of renewable energy alternatives will promote stability and decrease the likelihood of a hard landing Andrews, Co-founder of the Association for the Study of Peak Oil US affiliate, 08 (Steve, Energy Bulletin, "Rejecting the real snake oil," 6-27-7, http://www.energybulletin.net/node/31362, 6-30-8)
Participation in faster development and construction of non-oil, non-gas renewable energy alternatives to fossil fuels, and especially substitutes for oil, will therefore reduce invasion risks for oil and gas exporter countries. The same effort will also reduce ‘threats to economic security’ of the large oil importer nations and groups of nations. As noted above, current and future oil and gas ‘supply gaps’, causing undersupply to markets, will become structural. This will raise the risks from failed attempts at obtaining oil reserves or production capacity through military invasion, as in Iraq. Logically, this should lead to renouncement of the ‘military option’ for obtaining oil and gas production capacities. The non-option of military invasion as a ‘respose’ to declining supply and rising prices should urgently be replaced by international cooperation and action for energy transition, featuring concerted near-term multilateral action to first limit growth, then reduce world total oil and gas utilisation, while rapidly developing larger-scale renewable energy systems. The double-edged sword of oil and energy prices On the one hand higher oil prices increase world oil demand until very high prices are attained, as is very simply verified by checking world oil demand growth, and growth of oil prices through 1999-2004. On the other hand, much higher oil and energy prices are obligatory for rationalizing and justifying replacement and substitute energy sources, systems and strategies in the energy economy. Neither of these two propositions are accepted. The so-called financial community, notably the presidents of the US, European and Japanese central banks, and the IMF’s Chief economist have in 2004 repeatedly claimed, without presenting any coherent evidence, that high or ‘extreme’ oil prices can only depress economic growth. If this happened, it would lead to a fall in world oil demand growth, or even to zero growth of world oil demand, with actual contraction of demand being possible if the ‘hard landing’ continued. In fact the real world, real economy does not operate this way. Increasing oil prices tend to reinforce and increase economic growth at the world level, leading to further oil and energy demand growth. Through the period 1999-2004, as oil prices have increased, world oil demand growth rates have consistently increased – not decreased. To accommodate this distressing ‘reality gap’ between official mythology, and measurable economic reality, so-called ‘experts’ now add that ‘extreme priced oil’ will not hurt economic growth until about 12 months have elapsed, enabling the ‘real but delayed action’ negative impacts of high priced oil to work through the economy. This fantasy economics is unlikely to translate to reality unless interest rates in OECD countries are hiked to double-digit rates. Higher priced oil will almost certainly continue to drive world economic growth until oil prices attain at least 75 USD/bbl. In addition, the first slowing impacts on economic growth of much higher oil and energy prices will occur not in low income oil-importing countries, as repeatedly claimed by official economic mythology, but in the most oil-intensive economies and societies of the OECD group of countries. Oil saving is therefore of basic interest, concern and utility to the most oil-intensive, oil-wasteful economies and societies.

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Soft Landing Key
Oil supply will never again catch up to demand; the only hope is creating a soft landing to avoid wars as oil dwindles Woodard, Executive Editor of AskQuestions.org, 05 (Cheryl, Ask Questions, "Facing the End of Oil," 2-16-5, http://www.askquestions.org/articles/oil/oil.pdf, 7-2-8)
The Peak Oil Case: The Oil Depletion Analysis Center, a British non-profit group independently studies the activities of oil producers and their reserves. Their November 2004 study reports that all of the major new oil-recovery projects scheduled to come on stream over the next six years are unlikely to boost supplies enough to meet the world’s growing needs. The report says, “Even with relatively low demand growth, we see an unbridgeable supply/demand gap opening up after 2007.” Geologist Colin Campbell agrees that the peak will occur in 2007, according to data he published in February 2005 at www.peakoil.net. Working with other European scientists, Campbell founded the Association for the Study of Peak Oil and Gas (ASPO) and the group is proposing that the world community should develop an equitable ‘soft landing’ strategy to avoid conflicts as the oil runs out.

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Soft Landing is Linear – each step improves our landing
The Sooner We Act, The Smaller The Crash Robert C. Morris, PHD, science education, Chair of the Board QEI Management Training and Development Institute, The Environmental Case for Nuclear Power: Economic, Medical and Political Considerations, 2000, p.
112 However, this is one situation in which it could be very dangerous to be an optimist. This is one time that we'd better believe the pessimists, and act accordingly. If we run out of oil and don’t have an alternative source of energy in place, ready to use, we'll be in serious trouble, the like of which most of us can’t even begin to imagine. If we are foolish enough to believe the optimists, and it turns out that they are wrong, we might get caught without enough time to develop an alternate source of energy and build the massive facilities which would be needed to process and utilize this new source of energy. Even if we were in complete agreement as to which source of energy to use as a substitute for oil, and embarked on a crash program to build the facilities necessary for the utilization of this fuel, it could take 10 or even 20 years to carry out this massive task. The huge facilities needed to mine, refine, and process the great quantities of raw materials which will be needed for the switch from oil simply can’t be built overnight. On the other hand, if we believe the pessimists and get started on the job today, the worst that could happen is that we'll be ready for the day when we run out of oil before it happens. This wouldn't be bad, because the leftover oil certainly wouldn’t go to waste. On the contrary, it would be used more intelligently; oil is needed as a raw material for the production of tens of thousands of useful chemicals which are used to make a variety of finished products ranging from plastic bags to some of our most valuable medicines. For over 100 years, some of our best minds have expressed the opinion that oil is too valuable a natural resource to bum frivolously as we now do. To paraphrase one scientist, "Burning oil for heat is comparable to burning dollar bills to keep warm."

Its linear, every reduction buys time Richard Heinberg, New College of California Core Faculty, Power Down: Options and Actions For A PostCarbon World, 2004, p. 183
The situation is not cut-and-dried, however. Many people will be drawn in more than one direction - seeing evidence that our cur- rent brand of industrialism is unsustainable, but recoiling at the thought that it cannot be salvaged in some form. These folks will likely be drawn toward some combination of lifeboatbuilding and Powerdown - working for change within the system while also making other plans. I personally am drawn to this combined strategy for the following reasons. I believe that the building of cultural lifeboats is essen- tial if there is even a moderate likelihood of the collapse of industrial civilization. And, as should be clear by now, it seems to me that the likelihood of this is more than moderate. However, if any shred of the Powerdown strategy succeeds, it will help make the collapse slower and gentler, thus reducing suffering and environmental damage, and buying time for more lifeboat .building.

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18 Oil Toolkit

***High Oil Prices Bad***

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19 Oil Toolkit

High Oil Prices Now (1/5)
Oil prices reach new high because of the weak dollar, rates predicted to increase $11 within 24 hours Gorondi, staff writer,08 (Pablo, Associated Press, July 3, Oil hits new record above $145,
http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD91ME1O80f, 7/3/08) Oil prices briefly soared to a record near $146 a barrel Thursday, then eased when the European Central Bank did not signal more rate hikes and a report showed unemployment in the United States has continued to climb. Earlier in the session, prices were lifted to new highs by concerns over a larger-thanexpected drop in U.S. oil stockpiles, the threat of violent conflict with Iran and comments by Saudi Arabia's oil minister suggesting his country would not boost production. Light, sweet crude for August delivery
rose 2 cents to $143.59 on the New York Mercantile Exchange. Earlier in the session, it rose as high as $145.85 a barrel, a new trading record. On Wednesday, the contract set a new closing record for floor trade at $143.57 — a full $2.60 above the previous close. With the latest spike, the price of crude has risen more than 50 percent since the end of last year, when oil was going

for $96 a barrel. In London, Brent crude futures rose to a trading record of $146.69 a barrel on the ICE Futures exchange before retreating to $144.68, up 42 cents. The push above $145 a barrel was seen as the last technical barrier to prices hitting $150, in what analyst Olivier Jakob of Petromatrix in Switzerland called "the Morgan Stanley self fulfilling prophecy." In early June, Morgan Stanley analyst Ole Slorer predicted oil prices could reach $150 by the July 4 weekend, preceding a nearly $11 one-day jump in the Nymex contract. U.S. employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, underscoring the economy's fragile state. The unemployment rate held steady at 5.5 percent. The weak economy has U.S. consumers cutting back on driving and paring other energy related costs. The nation's services sector declined unexpectedly in June after two months of growth, as new orders fell sharply and oil prices took their toll on businesses. The Institute for Supply Management said
Thursday that the services sector reading fell to 48.2 in June from 51.7 in May. It missed economists' prediction of a reading of 51.0, according to the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR. A reading above 50 signals growth. Thursday's ECB decision to raise interest rates in the 15-nation euro zone by a quarter percentage point to 4.25 percent already had been priced in by the markets. Comments by ECB president Jean-Claude Trichet suggesting that further rate cuts — also expected

by the market — were far from certain helped strengthen the dollar. When the dollar weakens, it usually drives oil prices higher as investors turn to commodities as a hedge against a falling greenback. After Trichet's comments, the euro sank to $1.5754, from 1.5885 on Wednesday. The U.S. currency also rose to 106.64 Japanese yen, from 106.01 yen the day before. Speaking Thursday in Madrid, Saudi Arabia's oil minister, Ali Naimi, left the door open for increased output, but said the kingdom's oil customers were satisfied and that no production growth was planned for now. The Energy Department's Energy Information Administration said Wednesday crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts had predicted. However, the report offered a mixed picture of energy use by the world's thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide — suggesting record fuel prices are prompting a shift in American driving habits. Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, also left the market jittery. Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the United States. About 40 percent of the world's tanker traffic passes through the Middle Eastern choke-point. Iran's foreign minister did not rule the possibility that Iran could try to restrict oil traffic in the strait if the country was attacked. "In Iran we must defend our national security, our country and our revolutionary system and we will continue to do so," Foreign Minister Manouchehr Mottaki said in an interview with The Associated Press in New York. Mottaki said he does not believe Israel or the United States will attack, however, calling the prospect of another war in the Middle East "craziness."A senior U.S. military commander vowed to ensure that the strait remains open. "We will not allow Iran to close it," said Vice Adm. Kevin Cosgriff, commander of the 5th Fleet based in Bahrain, after talks with naval commanders of Persian Gulf countries in the United Arab Emirates. The saber-rattling has left energy traders on edge as they try to ascertain the likelihood of a Middle East flare-up and the effect it could have on the world's already tight supply of oil. In other Nymex trading, heating oil futures added 0.3 cent to $4.1062 a gallon (3.8 liters), while gasoline futures rose 1.96 cents to $3.5690 a gallon. Natural gas futures gained 0.1 cent to $13.39 per 1,000 cubic feet.

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20 Oil Toolkit

High Oil Prices Now (2/5)
Oil prices are likely to remain high now. AP, 08
(Associated Press, “OPEC chief: Strong demand will keep oil prices up,” 6/7, http://ap.google.com/article/ALeqM5gTcDs13S5QC9EVMb2-ItHqRlN3fgD91OG2R80, date accessed: 6/7/08) ALGIERS, Algeria (AP) — OPEC chief Chakib Khelil says the world's surging oil prices are not likely to fall. He says strong market demand, especially from China and India, is one reason prices will stay as high as they are. But Khelil told a conference on energy in Algiers on Sunday that the steady increases of late "have nothing to do with supply and demand." Khelil, who serves as Algeria's energy minister, blames the rise on the weak U.S. dollar, the currency that oil is sold in. He says he believes the reason the dollar has fallen against other currencies is the U.S. decision to lower interest rates in an effort to boost the American economy. Oil prices hit a record of nearly $146 last week.

Oil producers are at record highs in production and prices are still likely to remain high. Simpson, Staff Writer, 08
(Scott, The Vancouver Sun, “Oil shock looms as prices stay high,” 7/2, http://www.canada.com/vancouversun/news/story.html?id=7325c853-fbef-49c2-b714-3fb72eac145f, date accessed: 7/6/08 Oil producers around the world are working flat out, but still can't get far enough ahead of demand to cause prices to fall, the International Energy Agency said Tuesday in a study of oil price trends through 2013. That means consumers hoping for a drop in gasoline prices to dampen some of the impact of the B.C. carbon tax that came into effect on Tuesday should stop holding their breath. The agency, which analyses national and international energy supply trends for countries including Canada, says market fundamentals are behind the doubling of oil prices over the past 12 months. "OPEC [the Organization of the Petroleum Exporting Countries] production is at record highs and non-OPEC producers are working at full throttle, but stocks show no unusual build [of supply]," the report said.

Oil prices will remain high at least for the next five years. Simpson, Staff Writer, 08
(Scott, The Vancouver Sun, “Oil shock looms as prices stay high,” 7/2, http://www.canada.com/vancouversun/news/story.html?id=7325c853-fbef-49c2-b714-3fb72eac145f, date accessed: 7/6/08 Speculation by commodity traders is dismissed as the main reason oil prices are up. "Fundamentals are setting the level of oil prices. . . . Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis or perhaps confront difficult decisions," the report says. "History has generally shown that speculative bubbles occur when speculators cause or facilitate speculative physical stockbuilding -- look at past bubbles in tulip bulbs, silver or even housing. A check on oil stocks does not indicate this is happening." Instead, the report offers several reasons which acted in combination to push prices up -- and will keep them above $110 a barrel for at least the next five years.

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High Oil Prices Now (3/5)
Senior EU officals have acknowledged that high oil prices are here to stay. CNN, 08
(“Oil execs: Costly crude here to stay for years,” 7/1, http://edition.cnn.com/2008/BUSINESS/07/01/oil.congress.ap/, date accessed: 7/6/08) As oil set a new record, top industry executives and a senior EU official on Monday urged the world to pull together in the face of skyrocketing energy prices, while acknowledging that -- even if it does -- costly crude is here to stay for years. The comments to the World Petroleum Congress by EU Energy Commissioner Andris Piebalgs and the heads of Shell, BP and Spanish Repsol reflected a key theme of the four-day meeting -- how to bring order into volatile and ever pricier oil and related energy markets. Underlining their concerns, oil rose to a new record high above $143 a barrel on Monday, as expectations of a weaker dollar spurred investors to buy dollar-denominated oil futures as a hedge. While light sweet crude for August delivery was trading at near Friday's settlement levels it rose earlier in electronic trading to a new record high of $143.67.

The era of cheap oil is over CNN, 08
(“Oil execs: Costly crude here to stay for years,” 7/1, http://edition.cnn.com/2008/BUSINESS/07/01/oil.congress.ap/, date accessed: 7/6/08) "The era of cheap energy is probably over at least for the medium term," he said. "The last time oil prices surged to this level, new production from the North Sea and Alaska helped bring prices down," but now there are no new sources of "easy oil" to compensate, he said. Instead, said Hayward, OPEC production fell by 350,000 barrels a day last year -- although demand has grown for five consecutive years -and in Russia, "production has started to decline." While agreeing with Hayward that there was enough crude in the ground, Shell chief Jeroen van der Veer acknowledged it was time to focus more on "difficult oil" -- unconventional methods of recovery that are costlier and more complicated than the normal drilling process -- to meet growing demand.

Prices have no sign of declining for the next five years. Reuters, 08
(“IEA sees world oil supplies staying tight,” 7/1, http://uk.reuters.com/article/businessNews/idUKL0171879020080701, date accessed: 7/6/08 LONDON (Reuters) - World oil supply will rise more slowly than expected by 2013, leaving little spare capacity on the market despite weaker demand growth, the International Energy Agency said on Tuesday. In its Medium-Term Oil Market Report, the Paris-based agency said global supply capacity will reach 95.33 million barrels per day (bpd) by 2012, some 2.7 million bpd less than its previous forecast a year ago. The outlook signals little relief from high oil prices, which have hit record peaks above $140 a barrel on supply concerns and robust demand in Asia and the Middle East, adding a strain to the world economy

Oil prices and supplies are expected to remain tight over the next five years. Carlisle, Staff writer for New York Times, 08
(Tamsin, The National, “Oil prices will stay high for 5 years: IEA,” 7/1, http://www.thenational.ae/article/20080701/BUSINESS/665181424/1041/NEWS, date accessed: 7/6/08) Oil markets would remain tight and prices high for the next five years, hurting global economic growth as Opec’s cushion of spare production capacity diminished, the energy watchdog for the world’s industrialised nations warned today. In its medium-term outlook, the International Energy Agency (IEA) cut its forecast for both world oil supply and demand, while predicting that Opec’s spare production capacity would contract almost 50 per cent in five years.

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22 Oil Toolkit

High Oil Prices Now (4/5)
Market constraints and fundamentals will keep oil prices at a steady high Carlisle, Staff writer for New York Times, 08
(Tamsin, The National, “Oil prices will stay high for 5 years: IEA,” 7/1, http://www.thenational.ae/article/20080701/BUSINESS/665181424/1041/NEWS, date accessed: 7/6/08) Parting ways with Opec officials who had consistently blamed recent high oil prices on market speculation, the IEA emphasised the role of market fundamentals in driving crude to a record $143.67 per barrel on Monday. “Opec production is at record highs and non-Opec producers are working at full throttle, but [oil] stocks show no unusual build. These factors demonstrate that it is mainly fundamentals pushing up the price,” Mr Tanaka said. The agency predicted that oil markets would remain tight over the medium term due to demand growth in emerging markets combined with supply constraints within and outside Opec.

There is deep pessimism over whether or not OPEC can actually control high oil prices Chazan, International Energy Correspondent, 08
(Guy, Business, “IEA warns of five-year oil supply squeeze,” 7/3, http://www.theaustralian.news.com.au/story/0,25197,23958878-36375,00.html, date accessed: 7/6/08 GLOBAL oil markets will remain tight over the next five years, the International Energy Agency has warned, in a gloomy assessment that offers little respite for consumers battered by record high oil prices. The view of the Paris-based energy watchdog, which is funded by the world's biggest oil consuming nations, helped push oil
prices to near record levels. Benchmark crude oil rose US97c a barrel, or 0.7 per cent, to settle at $US140.97 yesterday in New York, a Nymex closing record. US oil futures set a new intraday high of $US143.67 a barrel on Tuesday. The IEA

predicted global oil supply capacity would rise to just 96.2 million barrels a day in 2013 from 90.4 million barrels a day this year, including crude production from the Organisation of Petroleum Exporting Countries, OPEC natural gas liquids and non-OPEC production. Most of that growth would come early before sharply tapering off,
the IEA said. Between 2011 and 2013, capacity would grow by less than 1 million barrels a day annually, the IEA said. The IEA's outlook resonated with the views of oil company executives at an industry conference in Madrid, who

said the red-hot oil market reflected deep-seated pessimism about the industry's ability to open the spigot to satisfy rising demand.

Despite efforts to ameliorate them, petrol prices are at a record high Al Jazeera ‘08 “Oil Prices Surges to New High” 7/1/08 http://english.aljazeera.net/business/2008/06/2008630173746124585.html Accessed: 7/6/08
Oil prices have surged to a new high of nearly $144 a barrel amid reports of reduced demand in the United States, the world's biggest consumer. The latest price rise came as leading figures from the energy industry gathered in Madrid on Monday with public anger growing at the high cost of fuel and increasing concerns about inflation. Delegates gathered at the World Petroleum Congress (WPC) to renew their search for ways of calming the tense markets.

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High Oil Prices Now (5/5)
Fears over Iran attack has spiked prices of crude Reuters ‘08 “Diplomats Play Down Fear of Israeli Attack on Iran” 7/1/08 http://www.alertnet.org/thenews/newsdesk/N01291857.htm Accessed: 7/6/08
WASHINGTON, July 1 (Reuters) - U.S., Iranian and Western diplomats played down worries about a looming Israeli military attack on Iran's nuclear facilities on Tuesday after reports of heightened tensions rattled nerves and helped drive oil prices near record highs. "The military option is the last thing that we need to do and it will not be used easily," said a Western diplomat in Tel Aviv. "I don't think there will be an attack in the next six months." Efforts to ease public fears of a possible confrontation between Israel and Iran followed more than a week of speculation touched off by a New York Times report that U.S. officials believed Israel had practiced for a possible military strike against the Islamic Republic. Concern about a confrontation flared again on Tuesday when ABC News reported that an unnamed senior U.S. defense official said there was an increasing likelihood that Israel would attack Iran over its nuclear program, which could prompt Tehran to retaliate against both Israel and the United States. The news jangled nerves and helped push oil prices up $2 a barrel, near the record $143.67 hit on Monday, on worries Tehran could move to halt shipments through the Strait of Hormuz. About 40 percent of all seaborne oil trade passes through that Gulf choke point. Iran is the world's fourthbiggest oil producer.

The decline in US petroleum reserves are fueling a steep climb in crude oil prices BBC ‘08 “Oil Prices Hit Yet Another Record” 7/3/08 http://news.bbc.co.uk/2/hi/business/7486764.stm Accessed: 7/6/08
The price of oil has continued to climb with US light, sweet crude reaching a record closing price and London Brent rising above $146 a barrel. Oil prices have risen significantly since the US government announced on Wednesday that its crude stockpiles had fallen by more than expected last week. Brent peaked at $146.69 before falling back $146.08, while US crude added $1.72 to $145.29, having hit $145.85. Motoring organisation the AA called the rate of increases "eye watering".

Petrol prices will rise to above $150 – multiple factors BBC ‘08 “Oil Prices Hit Yet Another Record” 7/3/08 http://news.bbc.co.uk/2/hi/business/7486764.stm Accessed: 7/6/08
Oil prices are expected to rise even further. Russian President Dmitry Medvedev, speaking ahead of next week's G8 meeting of leading industrialised nations, predicted that prices would climb to $150 a barrel. "Unfortunately, rising oil prices create problems for the world's economy," he said. Companies across the world have been suffering under the strain. Air New Zealand has become the latest airline to say it cannot continue to absorb the rising cost of jet fuel, which is now more than $170 a barrel. The carrier announced on Thursday that domestic fares would rise by 3% and international fares by 5%. That followed a profit warning from Hong-Kong based airline Cathay Pacific on Wednesday. Some observers have blamed speculators for pushing oil prices higher. However, Prime Minister Gordon Brown, speaking to a committee of MPs, said he thought an imbalance in supply and demand was the primary reason for the spike in prices. "You can't put down to speculation the whole of the problem we are dealing with at the moment," Mr Brown said. The president of oil group Opec has blamed the weakening of the dollar, which makes oil a more attractive investment. There had been fears that a rise in eurozone interest rates - which went from 4% to 4.25% on Thursday - would weaken the dollar further and could cause oil prices to rise more as investors turned to commodities rather than the US currency. But European Central Bank bosses held back from signalling further rate hikes, limiting the damage to the dollar.

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High Oil Prices Now – $200/barrel soon
$200 A Barrel In Near Future Transition Culture 2008 (“Why Planning for $200 Barrel Oil is so Important, or, Why Government is
Failing Us In Times of Transition”, TRANSITION CULTURE: an evolving exploration into the heads, hearts and hands of energy descent, http://transitionculture.org/2008/05/20/why-planning-for-200-barrel-oil-is-soimportant-or-why-government-is-failing-us-in-times-of-transition/, May 20, 2008) Strikes me that at this point in time, in terms of our future forecasting, we need to be seriously planning for a $200 a barrel world, and that planning for anything less is criminally negligent. Whether it is a year away or 3 years away, fact is we have left ourselves virtually no time to prepare for it at all. At $200 a barrel, expansions to airports cease to be worth the investment, and one would have to question whether anyone has questioned how viable it is to build new nuclear power plants at that cost (given the high amount of embodied energy in the materials). Indeed, planning for $200 a barrel will lead to the asking of some very hard questions, questions which business as usual will really struggle to answer. $200 a barrel should become the equivalent to peak oil of what 350ppm is to the climate change campaigners, ie. the line in the sand. Anything less (or in the case of 350ppm, more) is not acceptable as it condemns us to breakdown and chaos, to lurching into an avoidable but entirely predictable mess.

Conservative estimates suggest $170 to $200 a barrel by the years end Bonorchis, 2008 (Renee, “Opec chief warns of oil spiking at $170,” Business Day (South Africa), June 27)
BRENT crude oil traded at a fresh high of more than $138 a barrel yesterday after the head of the Organisation of Petroleum Exporting Countries (Opec) said oil prices could rise to $150-$170 in the next few months. Petrol prices are set to increase about 8% in SA next week. Bloomberg reported that Libya, Africa's third-largest oil producer, said yesterday it might cut its oil production because the market was oversupplied. "An increase in US inventories last week vindicates Libya's view that there is no shortage of supplies in the market, and that speculators and political tensions in the Middle East are behind the oil rally," a Libyan official said. Saudi Arabia said last week it planned to increase production, but this news did little to tamp down the oil price. Some estimates suggest oil may go as high as $200 a barrel by year-end, but Opec disagreed with this yesterday.

Oil prices will continue to rise Mapahosa, 2008 (Tendai, News VOA, “Analysts: End to Rising Oil Prices Not in Sight,” http://www.voanews.com/english/2008-07-03-voa70.cfm?renderforprint=1, 07-03-08, access 07-06-08)
The prices of crude have reached record levels, but the bad news, analysts say, is they have not peaked yet. John Mitchell, an energy analyst at the London research center Chatham House, tells VOA prices will keep rising unless there is a sharp drop in demand.
"This has been building up quite slowly, but now it is very serious and therefore people are responding to it. It takes time for that response to take effect but people are already ... you have seen car sales in the United States go down very drastically and the switch from big cars to small cars that will take an effect over the next year or two, so I would certainly be very surprised if we saw prices anything like this high in one year or two years time," he said. U.S. Treasury Secretary Henry Paulson, who is visiting London, also says there are no quick fixes and prices would keep rising. He met with British Chancellor of the Exchequer Alistair Darling to discuss oil prices and other economic issues. Darling said there is a need for a global response. "The problems that our economies face today are very much international in nature.

Whether it is the credit crunch which is now affecting every country in the world or the huge threat posed by very high oil prices and the inflationary effect that can have or rising food prices. These are
international problems that will need countries to work together and the United States and the United Kingdom share a common interest and we have a shared commitment." Mitchell says while high prices are causing difficulties in rich countries, they wreak havoc in the developing nations. "I think we will see it in the developing countries because there the price shock is much more severe where they have been protected by subsidies from the price so far but governments cannot continue to subsidize at these prices so there is real problems there and it is difficult for them to switch or to economize transport the basic need and I think we will see trouble, riots, protests, great political difficulties for the importing countries." The plain facts of supply and demand are widely blamed for the rising prices. But, some reports are also blaming market

speculators for driving prices higher, as well growing tension in the Middle East, especially the continuing speculation that Israel might attack Iran's nuclear facilities.

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High Oil Prices Now – A2: New Oil Fields
Even with increased oil field construction, oil prices will still remain high. Simpson, Staff Writer, 08
(Scott, The Vancouver Sun, “Oil shock looms as prices stay high,” 7/2, http://www.canada.com/vancouversun/news/story.html?id=7325c853-fbef-49c2-b714-3fb72eac145f, date accessed: 7/6/08 Nonetheless, the IEA expects competition for oil will continue to increase, with Asia, the Middle East and Latin America accounting for more than 90 per cent of demand growth by 2013. In spite of ongoing development of Alberta's oilsands, oil production by countries outside of OPEC is projected to decline over the next five years -- and new production projects are not expected to be as robust or long-lived as the previous generation of oilfields. Those new projects won't push prices down -- the cost to develop new oilfields has doubled in the past couple of years, and it's similarly costly to develop new refineries, says the report. OPEC is expected to add new production in the next two years, but spare capacity -- the amount of surplus oil in storage -- is still expected to remain "comparatively tight," below five per cent, and "is likely to dwindle to minimal levels by 2013."

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High Oil Prices Now – Production Delays
Even mega-oilfield or Russia is expected to have oil prices go down due to delays and output disruption Carlisle, Staff writer for New York Times, 08
(Tamsin, The National, “Oil prices will stay high for 5 years: IEA,” 7/1, http://www.thenational.ae/article/20080701/BUSINESS/665181424/1041/NEWS, date accessed: 7/6/08) Delays averaging 12 months coupled with a projected doubling of costs for oil projects were expected to be a major factor limiting supply. Because of delays a number of ongoing megaprojects, such as the development of Kazakhstan’s giant Kashagan field and of ultra-deep-water oil projects in the Gulf of Mexico, would “either make a limited contribution, or no contribution at all” to global supply by 2013, the report said. The IEA also predicted an “abrupt slowdown” in Russian oil production over the next few years, as the country with the world’s largest oil reserves outside Opec “grapples with an unattractive tax structure” blamed for holding back investment in its oil sector.

Oil prices are expected to remain tight to due western countries growth JAHN, Associated Press Writer, 08
(GEORGE, Associated Press, “Oil supplies will remain tight, says IEA,” 7/1, http://ap.google.com/article/ALeqM5iD3FfO1RtoD7wE-Os7-j4SK8SKqAD91L8TIG2, date accessed; 7/6/08) MADRID, Spain (AP) — Oil supplies will remain tight despite record prices that have reduced demand, according to the International Energy Agency, and its executive director said Tuesday that the world is in the grip of its third "oil shock." Downsizing its estimate of how much oil will reach the market, the IEA predicted supply will exceed projected demand only by 2 million barrels a day — a thin cushion. The IEA is the energy watchdog for the Organization for Economic Cooperation and Development, a grouping of the world's most industrialized countries. In its annual Medium Term Report, it said the world's estimated daily oil needs would rise from 86.87 million barrels this year to 94.14 million barrels in 2013 — less than it anticipated last year, because of skyrocketing prices. The agency said there will be 1.4 percent less demand this year and 3.43 percent less in 2012, the last year for which the report gave figures. As Western nations cut back, China and other emerging economies will consume more crude, the IEA said.

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High Oil Prices Bad – Global Depression
High Prices Cause Global Depression Sato and Okada 2008 (Shigeru and Yuji, Bloomberg News Analysts, “Oil at US$200 Would Trigger Global
Recession, Deutsche Bank Warns”, FINANCIAL POST, http://www.financialpost.com/most_popular/story.html?id=612878, June 25, 2008) The global economy would collapse if oil hit US$200 a barrel, said the top energy analyst at Germany's largest bank. "Two-hundred dollar oil would break the back of the global economy," Deutsche Bank AG's chief energy economist Adam Sieminski said in an interview on Wednesday in Tokyo. "Next step after US$200 would be global recession and bad news for everybody." Mr. Sieminski's comments come after Goldman Sachs Group Inc. forecast oil may rise to between US$150 and US$200 within two years as supply growth, especially from producers outside the Organization of Petroleum Exporting Countries, fails to keep pace with demand. Deutsche Bank is due to release its oil-price forecast on June 27. Oil doubled in the past year, touching a record US$139.89 a barrel on June 16. Crude oil for August delivery was at US$136.84 a barrel, down 16 cents, at 7:08 p.m. Tokyo time in after-hours trading on the New York Mercantile Exchange. Russia, a non-OPEC producer and the world's biggest oil exporter after Saudi Arabia, faces its first annual decline in production in a decade. Prime Minister Vladimir Putin pledged to reduce taxation on the industry to stimulate investment in aging fields and new regions. Output fell 0.9% to 9.76 million barrels a day in the first five months of the year. "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," Mr. Sieminski said. "This made it difficult for foreign capital to come in. "If Russia could reverse some of these policies and get their own oil industry back on, this will help very much."

A global economic downturn is the most likely result of the current oil shock AFP, 08
(Associated Foreign Press/ The Phnom Penh Press, May 29, Surging oil prices could hurt world economy, http://www.phnompenhpost.com/index.php/200805294748/-Special-Supplements/Surging-oil-prices-could-hurtworld-economy.html, 7/6/08) The feared super-spike in crude oil prices that appears to be underway could deal a crippling blow to a global economy already reeling from the US housing slump and tight credit, analysts say. Yet some argue that the surge may be a speculative bubble, and could end up self-correcting as demand softens from weaker economic growth and energy efficiency measures. Crude futures in May soared past the level of $130 a barrel for the first time, having more than doubled in the past year. The jump appeared to fulfill predictions from some analysts of a super-spike that could take oil up as far as $200 a barrel. Goldman Sachs analyst Arjun Murti added to the speculative fever earlier this month with a dire prediction of higher prices, citing “a lack of adequate supply growth” and still-strong demand. “The possibility of $150 to $200 per barrel seems increasingly likely over the next six to 24 months,” he said in a research note. The reality of sky-high energy costs could mean a darker outlook for the US and global economy, by raising the price of a variety of goods and services. The notion of a quick recovery in the struggling US economy would likely be put in doubt, and the rest of the world would suffer as well. “A super-super spike would most likely put a stake in the heart of global economic growth,” says Ed Yardeni, economist at Yardeni Research. “A global economic downturn would be the most likely outcome, led by a longer and deeper recession in the US.” The airline industry, already reeling from the surge in the past year, is feeling even more pain. Several small US carriers have filed for bankruptcy and American for bankruptcy and American Airlines, the nation’s largest, announced a capacity reduction of 11 to 12 percent and other steps to deal with soaring energy costs.

High oil prices affect the world economy Oxford Analytica, 08
(Forbes, “Saudis’ Oil Meeting Produces Few Results,” 07-02-08, http://www.forbes.com/2008/06/23/saudi-arabiaoil-cx_0624oxford_print.html, access 06-24-08) The rise of crude oil prices to nearly $140 per barrel has triggered concern that the world economy can no longer sustain such prices without a serious recessionary impact. This would affect not just consuming countries but also producers through demand destruction and product substitution. This combination appears to have sparked a high-level meeting of oil producers and consumers hosted by Saudi Arabia in Jeddah on June 22.

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High Oil Prices Bad – Hurts Growth (1/3)
Increasing oil prices lead to increased unemployment and perpetual slowing of economic growth EIA, Energy Information Administration, 08 (Official Energy Statistics from the US Government, Annual Energy
Outlook Analyses/EIA, January 15, Economic Effects of High Oil Prices, http://www.eia.doe.gov/oiaf/aeo/otheranalysis/aeo_2006analysispapers/efhop.html, 7/1/08) To portray the short-term dynamics of the economy as it reacts to oil price changes, Table 12 shows 5-year average annual growth rates for U.S. oil prices (the imported refiners acquisition cost of crude oil), real GDP, potential GDP, and the consumer price index (CPI), as well as 5-year averages for the Federal funds rate and unemployment rate, over the 2005-2030 period. Higher oil prices in the short term feed through the economy and reduce aggregate expenditures on goods and services. As aggregate demand is less than aggregate supply, unemployment increases. With higher prices there would also be a tendency for interest rates to rise. In the high price case, real GDP growth averages 3 percent per year over the 2005-2010 period, CPI inflation averages 2.3 percent per year, and the average unemployment rate for the 5-year period is 5 percent. In the reference case, the comparable rates are 3.2 percent (average annual real GDP growth), 2 percent (average annual CPI inflation), and 4.8 percent (unemployment). Potential GDP growth and the Federal funds rate are not significantly different in the two cases over the 2005-2010 period. The impacts of high prices on real GDP shown in Table 12 are in agreement with the average results shown in Table 9. In the high price case, as unemployment increases, the Federal Reserve lowers the Federal funds rate from its projected level in the reference case. At the same time, total employment costs are lower, which tends to slow price growth in the economy. Over the 2010-2015 period, even though oil prices continue to grow by 4.1 percent annually in the high price case (as opposed to declining by 0.5 percent annually in the reference case), real GDP growth is about the same in the two cases, although it is increasing from a lower base in the high price case. The Federal funds rate is lower in the high price case than in the reference case, and the unemployment and CPI inflation rates are higher. After 2015, as the differential in the oil price growth rates between the high price and reference cases shrinks, rebound effects from the lower employment costs and lower Federal funds rate in the high price case are stronger than the contractionary impacts of higher oil prices, leading to higher real GDP growth and lower CPI inflation than in the reference case. As a result, in 2030, the real GDP growth rate and unemployment rate in the high price case are nearly the same as in the reference case, but the Federal funds rate is lower. The assumptions behind the oil price cases are that: the price changes do not come as a shock and come to be expected over time; the Federal Reserve is able to carry out an activist monetary policy effectively, because core inflation remains low; exchange rates do not change from those in the reference case; and other countries experience impacts similar to those in the United States. Changes in any of these assumptions could increase the projected impacts on the U.S. economy. The economic impact of oil price changes is an issue that continues to attract considerable attention, especially at this time, when oil prices have continued to rise over the past 3 years. Over the past 30 years, much has been learned about the nature of the economic impacts and the extent of damage possible. Empirical estimates based on history provide two sets of results. In the 1970s and 1980s the damages were substantial, and it is believed that recession followed—and may have been caused by—the oil price increases. Current literature suggests that, in today’s U.S. economy, sustained higher oil prices can slow short-term growth but are not likely to cause a recession unless other factors are present that shock economic decisionmakers or lead to inappropriate economic policies. The AEO2006 high and low price cases provide estimates of the economic impacts on such an economy, and the projections in the price cases are within the range that other macroeconomic models predict.

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High Oil Prices Bad – Hurts Growth (2/4)
High oil and food prices will derail the global economy, G8 agrees AFP, 08
(Associated Foreign Press/Google News, July 6, US, Japan call for action on oil, food prices ahead of G8 meet, http://afp.google.com/article/ALeqM5inyZ8pEpiHMv89ctDOummBhHvhRw, 7/6/08) TOYAKO, Japan (AFP) — The United States and Japan called Sunday for urgent action on red-hot oil and food prices that could derail the global economy on the eve of a summit of the world's richest nations. As US President George W. Bush arrived at this mountain resort, authorities sealed off Japan's northern island of Hokkaido, with demonstrations relegated to its largest city, Sapporo. Group of Eight leaders will hold three days of talks in the resort town of Toyako that will be dominated by the fragile world economy, global warming and problems ranging from Zimbabwe to North Korea and Iran's nuclear ambitions. In pre-summit talks, Japanese Prime Minister Yasuo Fukuda said he and Bush had agreed that urgent efforts are needed to tackle surging oil and food prices. The dual crises "are having a negative impact on the world economy," Fukuda told a joint press conference. "We agreed there's a need for swift efforts on these fronts." The leaders of the world's two largest economies also touched on climate change, North Korea's nuclear programme and aid to Africa. Security was formidable across picturesque Hokkaido, with around 21,000 police deployed to protect the leaders as they huddle in a luxury hilltop hotel. The leaders of the G8 -- Britain, Canada, France, Germany, Japan, Italy, Russia and the United States -- will be joined by those of some 15 other countries including China, India, Brazil, Australia and eight African states for expanded sessions on global warming and poverty alleviation. German Chancellor Angela Merkel said the G8 leaders would agree on steps to fight the soaring price of food and to guarantee supplies. The steps will provide short-term relief to the crisis and a long-term strategy to increase world agricultural production. Rising food prices have pushed 100 million people below the poverty line, the World Bank estimates, and have sparked street riots around the world. Japanese press reports have said the G8 will agree to set up a task force on the food crisis or create a system of food reserves much like oil stockpiles. But aid groups warned that record food and oil prices should not be allowed to derail the leaders' talks on Africa on Monday as the crisis had simply worsened the plight of the poor. On Wednesday, climate change will top the agenda when an expanded group of nations meets. The leaders are expected to pledge to spearhead efforts to halve emissions of greenhouse gases by 2050 after agreeing a year ago to "consider seriously" that goal. The Yomiuri Shimbun newspaper said negotiations were in the final stages for a leaders' declaration, saying "the G8 will take the lead in making efforts to halve" emissions or something similar. Bush, who has argued that the summit is not the right forum to make hard decisions on climate change, said Sunday he would play a "constructive" role in efforts to curb carbon emissions. But he warned that India and China must be part of any long-term agreement, a long-standing sticking point that renewed pessimism that there would be any breakthrough.

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High Oil Prices Bad – Hurts Growth (3/4)
High oil prices stump global growth and impact every aspect of the economy negatively Bergsten, Peterson Institute, 04 (Peter C. Peterson Institute for International Economics, September 9, The Risks
Ahead for the World Economy, http://www.iie.com/publications/papers/paper.cfm?researchid=222, 7/2/08) The fifth is that oil prices could rise to $60 to $70 per barrel even without a major political or terrorist disruption, and much higher with one. Most of these risks reinforce each other. A further oil shock, a dollar collapse, and a soaring American budget deficit would all generate much higher inflation and interest rates. A sharp dollar decline would increase the likelihood of further oil price rises. Larger budget deficits will produce larger American trade deficits, and thus more protectionism and dollar vulnerability. Realization of any one of the five risks could substantially reduce world growth. If two or three, let alone all five, were to occur in combination then they would radically reverse the global outlook. There is still time to head off each of these risks. Decisions made in America immediately after this year's elections will be pivotal. China, the new growth locomotive, is key to resolving the global trade imbalances and must play a central role in future. Action by a number of other countries will be essential to maintain global growth and to avoid deeper oil shocks and new trade restrictions. The most alarming new prospect is another sharp deterioration in America's current account deficit. It has already reached an annual rate of $600 billion, well above 5 percent of the economy. New projections by my colleague Catherine Mann suggest it will now be rising again by a full percentage point of GDP per year, as actually occurred in 1997-2000. On such a trajectory, the deficit would exceed $1 trillion per year by 2010. There are three reasons for this dismal prospect. First, American merchandise imports are now almost twice as large as exports; hence exports would have to grow twice as fast as imports merely to halt the deterioration. (In the past, such a relationship occurred only after the massive fall experienced by the dollar in 1985-87.) Second, economic growth is likely to remain faster in America than in its major markets and higher incomes there increase demand for imports much faster than income growth elsewhere increases demand for American exports. Third, America's large debtor position (it currently is in the red by more than $2.5 trillion) means that its net investment income payments to foreigners will escalate steadily, especially as interest rates rise. Of course, it is virtually inconceivable that the markets will permit such deficits to eventuate. The only issue is how they are to be averted. An immediate resumption of the gradual decline of the dollar, as in the period 2002-03, cumulating in a fall of at least another 20 percent, is needed to reduce the deficits to sustainable levels. If delayed much longer, the dollar's inevitable fall is likely to be much larger and much faster. Moreover, much of the slack in America's product and labor markets will probably have disappeared in a year or so. Sharp dollar depreciation at that stage would push up inflation and macroeconomic models suggest that American interest rates could even hit double digits. The situation would be still worse if future increases in energy prices and the budget deficit compound such developments, as they surely could. The negative impact would also be much greater in other countries because of their need to generate larger and faster domestic demand increases in order to offset declining trade surpluses. Fears of a hard landing for the dollar and the world economy are of course not new. The situation is much more ominous today, however, because of the record current account deficits and international debt, and the high probability of further rapid increases in both. The potential escalation of oil prices suggests a parallel with the dollar declines of the 1970s, which were associated with stagflation, rather than the 1980s, when a sharp fall in energy costs and inflation cushioned dollar depreciation (but still produced higher interest rates and Black Monday for the stock market). Paul Volcker, former chairman of the Federal Reserve, predicts with 75 percent probability a sharp fall in the dollar within five years. The prospects for the budget deficit and trade protectionism further darken the picture. Official projections score the fiscal imbalance at a cumulative $5 trillion over the next decade but exclude probable increases in overseas military and homeland-security expenditures, extension of the recent tax cuts and new entitlement increases proposed by both presidential candidates. This deficit could also approach $1 trillion per year, yet there is no serious discussion of how to restore fiscal responsibility, let alone an agreed strategy for reining in runaway entitlement programs (especially Medicare).

↓ Continued ↓

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31 Oil Toolkit

High Oil Prices Bad – Hurts Growth (4/4) ↑ Continued ↑
The budget and current account deficits are not “twin”. The budget in fact moved from large deficit in the early 1990s into surplus in 1999-2001, while the external imbalance soared anew. But increased fiscal shortfalls, especially with the economy nearing full employment, will intensify the need for foreign capital. The external deficit would almost certainly rise further as a result. Robert Rubin, former secretary of the Treasury, also stresses the psychological importance for financial markets of expectations concerning the American budget position. If that deficit is viewed as likely to rise substantially, without any correction in sight, confidence in America's financial instruments and currency could crack. The dollar could fall sharply as it did in 1971-73, 1978-79, 1985-87, and 1994-95. Market interest rates would rise substantially, and the Federal Reserve would probably have to push them still higher to limit the acceleration of inflation. These risks could be intensified by the change in leadership that will presumably take place at the Federal Reserve Board in less than two years, inevitably creating new uncertainties after 25 years of superb stewardship by Mr. Volcker and Alan Greenspan. A very hard landing is not inevitable but neither is it unlikely. The third component of the “America problem” is trade protectionism. The leading indicator of American protection is not the unemployment rate, but rather overvaluation of the dollar and its attendant external deficits, which sharply alter the politics of trade policy. It was domestic political, rather than international financial, pressure that forced previous administrations (Nixon in 1971, Reagan in 1985) aggressively to seek dollar depreciation. The hubbub over outsourcing and the launching of a spate of trade actions against China are the latest cases in point. The current account and related budget imbalances may not be sustainable for much longer, even if foreign investors and central banks prove willing to continue funding them for a while. The fourth big risk centers on China, which has accounted for over 20 percent of world trade growth for the past three years. Fuelled by runaway credit expansion and unsustainable levels of investment, which recently approached half of GDP, Chinese growth must slow. The leadership that took office in early 2003 ignored the problem for a year. It has finally adopted a peculiar mix of market-related policies, such as higher reserve requirements for the banks, and traditional command-and-control directives, such as cessation of lending to certain sectors. The ultimate success of these measures is highly uncertain. Under the best of circumstances, China's expansion will decelerate gradually but substantially from its recent 9 to 10 percent pace. When the country cooled its last excessive boom after 1992, growth declined for seven straight years. A truly hard landing could be much more abrupt and severe. Either outcome will, to a degree, counter the inflationary and interest-rate consequences of the other global risks. But a slowdown, and especially a hard landing, in China would sharply reinforce their dampening effects on world growth. The fifth threat is energy prices. In the short run, the rapid growth of world demand, low private inventories, shortages of refining and other infrastructure (particularly in America), continued American purchases for its strategic reserve and fears of supply disruptions have outstripped the possibilities for increased production. Hence prices have recently hit record highs in nominal terms. The impact is extremely significant since every sustained rise of $10 per barrel in the world price takes $250 billion to $300 billion (equivalent to about half a percentage point) off annual global growth for several years. Mr. Greenspan frequently notes that all three major postwar recessions have been triggered by sharp increases in the price of oil. My colleague Philip Verleger concludes that this lethal combination could push the price to $60 to $70 per barrel over the next year or two, perhaps exceeding the record high of 1980 in real terms. Gasoline prices per gallon in America would rise from under $2 now to $2.60 in 2006. Prices would climb even more if political or terrorist events were further to unsettle production in the Middle East, the former Soviet Union or elsewhere.

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32 Oil Toolkit

High Oil Prices Bad – Inflation
High oil prices will lead to inflation, unemployment, and degradation of living standards Hirsch, Senior energy program adviser for Science Applications International Corporation and Senior Energy Advisor at MISI, 05 (Robert L., Minnesotans for Sustainability, "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management," 2-5, http://www.mnforsustain.org/oil_peaking_of_world_oil_production_study_hirsch.htm, 7-2-8)
A shortfall of oil supplies caused by world conventional oil production peaking will sharply increase oil prices and oil price volatility. As oil peaking is approached, relatively minor events will likely have more pronounced impacts on oil prices and futures markets. Oil prices remain a key determinant of global economic performance, and world economic growth over the past 50 years has been negatively impacted in the wake of increased oil prices. The greater the supply shortfall, the higher the price increases; the longer the shortfall, the greater will be the adverse economic affects. The long-run impact of sustained, significantly increased oil prices associated with oil peaking will be severe. Virtually certain are increases in inflation and unemployment, declines in the output of goods and services, and a degradation of living standards. Without timely mitigation, the long-run impact on the developed economies will almost certainly be extremely damaging, while many developing nations will likely be even worse off.44 The impact of oil price changes will likely be asymmetric. The negative economic effects of oil price increases are usually not offset by the economic stimulus resulting from a fall in oil prices. The increase in economic growth in oil exporting countries provided by higher oil prices has been less than the loss of economic growth in importing countries, and these effects will likely continue in the future.

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33 Oil Toolkit

High Oil Prices Bad – Transportation Sector
Current demand exceeds supply, this hurts the transportation industry AFP, 08
(Associated Foreign Press/ The Phnom Penh Press, May 29, Surging oil prices could hurt world economy, http://www.phnompenhpost.com/index.php/200805294748/-Special-Supplements/Surging-oil-prices-could-hurtworld-economy.html, 7/6/08) Airlines, the nation’s largest, announced a capacity reduction of 11 to 12 percent and other steps to deal with soaring energy costs. “The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak US economy,” said AMR Corporation chairman and chief executive Gerard Arpey. AMR is American’s parent. John Kilduff, analyst at MF Global, said the world is consuming 87 million barrels per day of oil while producing only 82.6 million barrels. “This is a compelling fundamental factor,” Kilduff said. But some say oil is a bubble waiting to burst and that prices could fall sharply as supply and demand come into balance. “We see many of the essential ingredients for a classic asset bubble,” said Edward Morse at Lehman Brothers. Myles Zyblock of RBC Capital Markets argues that oil could be ready for a classic boom-and-bust cycle. “I am concerned about the possibility that a euphoric investment mentality is beginning to overtake the oil market,” he said. Even so, Zyblock said the spike could do considerable damage. “An oil price mania is a particularly dangerous type of excess since it has the potential to generate severe economic, inflationary and/or political dislocation,” he said. Oil prices will eventually retreat, analysts say, as the United States and other big consumers curb demand – either by voluntary means or because of an economic slump. “What should matter and what will matter eventually is the fact that US oil imports are on a downward slope,” said Phil Flynn at Alaron Trading, who notes that more fuel-efficient cars and alternative energy are finally denting demand from the world’s biggest oil consuming country. “The strain on global energy supply appears to be moderating, albeit ever so slightly,” adds Zyblock. Zyblock said that other commodities such as gold have come off their peaks as the dollar has bounced back, but that oil’s inexorable rise is more difficult to explain. “Based on our analysis, it seems reasonable to conclude that a speculative psychology is beginning to overtake fundamentals in dictating oil price dynamics,” he said. “While all manias are incredibly profitable, they are just as dangerous because their inevitable demise – characterized by a price crash – is always a surprise.”

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34 Oil Toolkit

High Oil Prices Bad – Hurts Oil Refining
The lowering of oil prices crushes the development of consumption habits Maugeri, Group Senior Vice President for Corporate Strategies and Planning for the Italian energy company ENI
and the author of the forthcoming book The Age of Oil: The Mythology, History and the Future of the World’s Most Controversial Resource, 2006 (Leonardo, Foreign Affairs, “Two Cheers for Expensive Oil,” Vol. 85 Iss. 2, Mar/Apr 2006, p. 149-161) WIDESPREAD FEARS of waning oil reserves are obscuring the real reasons for the cost of crude oil today. The truth behind high prices is mundane: they are the result of extreme economic processes, not geological limitations. The current "crisis" is being driven by the reduced availability of crude on the world market and the inadequacy of the oil industry's refining capacity. Both conditions were brought on by years of low oil prices, inadequate investment in infrastructure, and producers' fears of surpluses. Since 2003, the situation has been exacerbated by an unexpected increase in the global consumption of crude. As market forces have kicked in, high prices have already started to generate more investment, which will boost both production and refining capacity in the future. In other words, high oil prices are a painful but necessary cure for the disease that has affected the oil market for about 20 years. Still, the danger remains that prices could stay too high for too long, provoking a drop in demand just when new production and refining capacity start to come on-stream. This, in turn, could send prices spiraling downward and put an end to the current move toward greater investment, leaving the fundamental problems of the oil market unsolved. Such a development would delay needed changes in the consumption habits of industrialized societies and set them up for another crisis in the future.

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35 Oil Toolkit

High Oil Prices Bad – Global Poverty
Oil shocks will perpetuate a cycle of global poverty Manglik, Crude Oil correspondent, 08
(Jayant, NDTV Profit, June 19, If crude races to $200 per barrel…, http://www.ndtvprofit.com/2008/06/19120920/Ifcrude-races-to-200-per-bar.html, 7/6/08) It must also be acknowledged that high crude prices can lead to global inflation, degrowth and even stagflation. In fact, if China slowed down, it would change forever the economic and geo-political situation in the world today—because Chinese dominance on the world stage is underpinned by its strong economy which till now seems immune to such price shocks. Besides, many oil-importing countries would see changes in their currency valuation. Another macro effect would be the concentration of wealth in the hands of oil-exporting countries. Of the 85 million barrels produced and consumed every day, about 30 million are from OPEC countries. In other words, a $60 per barrel price increase from here on means an additional $1.8 billion added to the oil nations’ kitty daily—over and above the equivalent profits already being made! (OPEC members also have two-thirds of the world’s proven oil reserves.) Of course, they would then invest the money in certain commodities like gold and real estate, since the dollar would depreciate further, leading to increase in prices of certain assets. Gold would be a major beneficiary with all investment funds parking money in gold to hedge against oil-led inflation. Such a situation would hurt the poor and the poor counties the most, leading to increase in global poverty. The very poor will end up funding the very rich; indeed that process is already in motion. The political effects cannot be ignored because governments will be under pressure from the populace to control inflation, but since crude oil pricing is an issue out of their control, sustained increase could even lead to civil war in economically weaker countries.

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36 Oil Toolkit

High Oil Prices Bad – Props up dictators
High oil prices prop up despots who fund terrorist groups, oppress women and violate human rights
Akst, business staff writer for The New York Times, 06. [Daniel, “The Good News About Oil Prices Is the Bad News,” New York Times, September 17, 2006, section 3 pg3. Accessed 7/11/08 from Lexis] Of course, it would be nice not to have to rely on cartels and circumstances to make us moderate our consumption. Hefty taxes on carbon-based energy, the proceeds of which could fuel research into nonfossil alternatives, would be a much better approach, since then at least we'd be paying ourselves instead of our friends at the Organization of the Petroleum Exporting Countries. As a bonus for saving the planet, we might even undermine the intolerance and autocracy that are abetted in many places by oil money. The sad fact is that just as oil is the lifeblood of Western economies, oil revenue often is the lifeblood of tyranny. Oil-rich regimes that trample the rights of women, finance terrorism and preach intolerance are sustained by what we spend on gasoline and heating oil. The unfortunate paradox is that moderating oil prices, while they may reduce the earnings of despots in the short run, will only support our harmful addiction -- and the power of those same despots -- in the long run.

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37 Oil Toolkit

High Oil Prices Bad – Disease, Poverty
High oil prices threaten new debt crises in developing world which increases poverty and disease
Watkins, National coordinator of Jubilee USA Network, a network of 80 faith-based, development, environment and human rights organizations working for definitive debt cancellation and economic justice for countries in Asia, Africa and Latin America, 2007 (Neil, “Oil: Fueling Another Debt Crisis?”, Multinational Monitor, Vol. 28, Iss. 4; Sep/Oct 2007 pg.15) ONE HUNDRED DOLLAR-A-BARREL PRICES FOR OIL have shaken the U.S. and global economies. But as much as rising gasoline and heating oil prices hurt U.S. consumers, the impact is far more dire in the developing world. High oil prices hit poor people in impoverished, heavily indebted countries hard as individuals and families must pay more to meet their personal energy needs, and businesses must pay more to keep operating. They also batter the national economies of poor countries without oil resources; they must spend scarce foreign currency on increasingly expensive oil imports. There is growing evidence that impoverished nations are paying a large price both in financial terms and in social and ecological costs for the world's addiction to oil. "In sub-Saharan Africa, in particular, the oil crisis is not a vexing cost crunch," wrote Abdoulaye Wade,
president of the West African nation of Senegal, in an October 2006 column in the Washington Post. "It is an unfolding catastrophe that could set back efforts to reduce poverty and promote economic development for years." BLOTTING OUT DEBT RELIEF In 2005, world leaders, under pressure from campaigners, announced a new deal to fight global poverty by agreeing to expanded international debt relief - promising more than $40 billion in debt cancellation to eligible poor nations. This debt relief - while limited to a select number of countries that comply with International Monetary Fund (IMF) economic policies - was made on the basis that it would free up financial space for poor countries to spend money on education, health care, environmental protection and clean water. And in many nations, debt relief works.

But more than two years after the deal was struck, it is clear that soaring oil prices are undermining the benefits of debt cancellation in some countries, especially poor oilimporting nations.
Take the case of Tanzania. Tanzania has invested resources freed up by debt relief to alleviate poverty. The 2005 UK Africa Commission Report found that Tanzania increased funding for poverty reduction by 130 percent between 1999 and 2005, thanks in part to debt relief. But with the rise in the price of oil, according to figures from the Washington, D.C.-based Center for American Progress, the cost of Tanzania's oil imports rose from $190 million in 2002 to about $480 million in 2006, representing an additional $290 million in payments each year for about the same amount of oil. Conversely, debt cancellation freed up roughly $140 million in 2006 in Tanzania, less than half of the additional amount that the country is paying for oil imports each year. Nicaraguan economists have also raised serious concerns about oil price increases. The Nicaraguan Central Bank estimated that the government would spend $717 million on oil imports in 2006 - a whopping 66 percent of income generated by all of the country's exports. This means that Nicaragua spent about $180 million more for oil in 2006 than it did in 2005 (for roughly the same amount of oil). This additional $180 million is more than three times the $49 million that was freed up by Nicaraguan debt cancellation in 2006. Nicaraguan economists have issued warnings about the impending collapse of the national energy sector and the "imminent economic collapse of several sectors of Nicaraguan industry as well as some sectors of tourism and trade" as a result of historically high oil prices. Nicaragua and Tanzania are not exceptional cases. In 2005, the International Energy Agency (IEA) predicted that the cost of sub-Saharan Africa's oil imports would roughly double to about $20 billion a year if oil prices stayed about $55 a barrel (and they have since soared into the $90-a-barrel region). This would represent an additional $10.5 billion per year in oil payments, which is more than 10 times the amount that all 16 African countries combined received after the debt cancellation under the G-8 debt deal.

High oil prices are undermining the economies of impoverished oil importers in a range of ways, and could force countries to take on more loans to pay for their higher energy bills, thereby creating more debt. They could also stop countries from enjoying much-needed benefits from debt cancellation. Additional resources to fight HIV/AIDS, to provide support for small-scale formers, and to improve primary education are at risk of disappearing as increasing oil bills continue to eat away at impoverished countries' limited resources. High oil prices threaten a new debt crisis, just as progress was finally being made to erase the debts of the most impoverished countries in the world.

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38 Oil Toolkit

High Oil Prices Bad – Chinese Economic Collapse
China’s economy will collapse because of rising oil prices. Their economy is not created for high prices Pritchard, 2008 (Ambrose, July 8, Oil price shock means China is at risk of blowing up, accessed July 11, 2008)
The great oil shock of 2008 is bad enough for us. It poses a mortal threat to the whole economic strategy of emerging Asia. The manufacturing revolution of China and her satellites has been built on cheap transport over the past decade. At a stroke, the trade model looks obsolete. No surprise that Shanghai's bourse is down 56pc since October, one of the world's most spectacular bear markets in half a century. Asia's intra-trade model is a Ricardian network where goods are shipped in a criss-cross pattern to exploit comparative advantage. Profit margins are wafer-thin. Products are sent to China for final assembly, then shipped again to Western markets. The snag is obvious. The cost of a 40ft container from Shanghai to Rotterdam has risen threefold since the price of oil exploded. "The monumental energy price increases will be a 'game-changer' for Asia," said Stephen Jen, currency chief at Morgan Stanley. The region's trade model is about to be "stress-tested". Energy subsidies have disguised the damage. China has held down electricity prices, though global coal costs have tripled since early 2007. Loss-making industries are being propped up. This merely delays trouble. "The true impact of the shock will only be revealed over time, as subsidies are gradually rolled back," he said. Last week, China raised internal rail freight rates by 17pc. BP 's Statistical Review says China's use of energy per unit of gross domestic product is three times that of the US, five times Japan's, and eight times Britain's. China's factories "were not built with current energy levels in mind", said Mr Jen. The outcome

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39 Oil Toolkit

A2: Oil Prices declines hurt the Economy
Prices declines don’t hurt economies OECD 05+ (Economic Outlook No. 76[http://www.oecd.org/dataoecd/19/6/34080955.pdf] Oil Price
Developments: Drivers, Economic Consequences and Policy Responses/ No Date) The quantitative relationship between oil prices, economic activity and inflation is complex (Box IV.3) but seems to have weakened over time for a number of reasons. First, the weight of oil and oil products in price indices has fallen. Second, many economies have raised specific taxes on gasoline, which reduces the impact of a per-barrel rise in the oil price. Third, the wage formation process has become less responsive to fluctuations in oil prices. Fourth, heightened competition has helped to reduce the secondary impact on core inflation from changes in oil prices. In this context, the impact of oil prices on headline inflation expectations also appears to have become smaller over time, indicating that these tend to be formed from extrapolations of core rather than headline inflation.

Falling oil prices have minimal impact on economic activity OECD 05+ (Economic Outlook No. 76[http://www.oecd.org/dataoecd/19/6/34080955.pdf] Oil Price
Developments: Drivers, Economic Consequences and Policy Responses/ No Date) These impacts would tend to be amplified if supply-side channels were to be taken into account and would not necessarily apply where the oil price were to fall. Reduced-form econometric evidence points to more powerful links between oil prices and economic activity and to non-linear reactions which are conditional on the recent history of oil price shocks. Price increases appear to have a larger impact on activity than oil price declines. The relatively high estimated impact from reduced-form macroeconomic models may be due to the inclusion of supply-side channels that can have slower-acting effects on potential output.

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40 Oil Toolkit

***Oil Shocks***

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41 Oil Toolkit

Oil Shocks Brink (1/2)
We are entering the 3rd great oil shock – prices have potential to skyrocket Porter Political editor at the ‘Telegraph’ ‘08
Andrew, The Telegraph “Gordon Brown Says Oil Prices Will Remain High” 5/19/08. http://www.telegraph.co.uk/news/newstopics/fair_deal_for_drivers/2045624/Gordon-Brown-says-oil-priceswill-remain-high.html Accessed: 7/2/08 The Prime Minister said the cost of oil was likely to remain high "in the long term". His warning came as Alistair Darling, the Chancellor, indicated that – following a campaign by The Telegraph – a 2p increase in fuel duty was unlikely to be introduced in October. But after a meeting with oil industry chiefs in Scotland, the Prime Minister offered little further comfort to motorists, who are facing mounting costs under plans to introduce new higher rates of car tax. Mr Brown, who described recent price rises as the "third great oil shock in decades", said that while he wanted to help the "hardest-hit" families, the problem of global demand outstripping supply was not easily fixed. He said: "This is not just a national problem. It is a global problem of supply and demand, not just in the short term but the medium term and long term."

Oil production will plateau within 12 years due to US action Jahn, Associated Press Writer, 08 (George, The Associated Press/Business Week, July 1, Oil Supples Will Remain
Tight, says IEA, http://www.businessweek.com/ap/financialnews/D91L6KEO1.htm, 7/1/08) He expects oil production will plateau in just 12 years at 94 million barrels a day -- less then 10 million barrels more than available now. He called that forecast optimistic. Publicly, Western leaders and the Organization of Petroleum Exporting Countries are split over the cause of record oil prices. OPEC blames the weak U.S. currency and speculators. The West says its a supply issue. "Day-to-day market noise can be driven by speculators," Tanaka told reporters. "High oil prices are driven by fundamentals." In its report, the IEA said "oil demand remains concentrated in developing economies, with 90 percent of the growth spread between Asia, South America and the Middle East." The IEA warned against seeking a "simplistic explanation," for record oil prices, and took a swipe at U.S. lawmakers pushing for curbs on speculative investments in oil. "Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis or perhaps confront difficult decisions," the IEA said. Among the factors listed by the report as leading to price spikes were: --low spare capacity from OPEC --geopolitical concerns, including unrest in oil-producer Nigeria and tensions over the nuclear ambitions of Iran, OPEC's second-largest producer --possible excess stockpiling by refiners and tight refining capacity --expectations that prices will rise due to fears that supply might have peaked and recognition of powerful economic growth by developing countries --strong forward refining margins, which may have encouraged stockbuilding by refiners looking to make profits. The report also predicted that underproduction from non-OPEC producers will continue over the next five years -- a trend that may additionally act to lift prices. Summing up, the report said that "strong underlying demand growth" from developing nations, "poor supply growth, low spare capacity, a weaker dollar and a mismatch between refinery capacity and the structural growth in product demand" have all contributed to oil's meteoric price rise.

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42 Oil Toolkit

Oil Shocks Brink (2/2)
The world is on the brink of an oil shock, supply is almost exceeded by the demand in the squo, effects are seen worldwide Jahn, Associated Press Writer, 08 (George, The Associated Press/Business Week, July 1, Oil Supples Will Remain
Tight, says IEA, http://www.businessweek.com/ap/financialnews/D91L6KEO1.htm, 7/1/08) Oil supplies will remain tight despite record prices that have reduced demand, according to the International Energy Agency, and its executive director said Tuesday that the world is in the grip of its third "oil shock." Downsizing its estimate of how much oil will reach the market, the IEA predicted supply will exceed projected demand only by 2 million barrels a day -- a thin cushion. The IEA is the energy watchdog for the Organization for Economic Cooperation and Development, a grouping of the world's most industrialized countries. In its annual Medium Term Report, it said the world's estimated daily oil needs would rise from 86.87 million barrels this year to 94.14 million barrels in 2013 -- less than it anticipated last year, because of skyrocketing prices. The agency said there will be 1.4 percent less demand this year and 3.43 percent less in 2012, the last year for which the report gave figures. As Western nations cut back, China and other emerging economies will consume more crude, the IEA said. "We are clearly in the third oil price shock," said IEA Executive Director Nobuo Tanaka. The first oil crisis struck in 1973 when Arab states declared an oil embargo. The second began in 1979 following the Iranian Revolution. This crisis is different, however, Tanaka said. "Those price peaks forced consumers into saving oil" and oil companies to look for new wells, he said, but now "the biggest energy savings have been made (and) ... the easy oil outside (of) a few countries has been found." Tanaka expressed surprise that record prices had not curtailed demand. The price for a barrel of oil surged past $143 for the first time ever Monday. After falling Monday afternoon, prices again jumped to $143 Tuesday. Since the IEA's 2007 report "which forecast severe supply tightness emerging ... oil prices have doubled and we have seen the start of economic slowdown spreading throughout the world," Tanaka said. "The shock was that ... while demand was revised down ... supplies have also been revised down sharply." Speaking at the 19th World Petroleum conference in Madrid, the CEO of French energy giant Total SA said the world should brace for a " big reshuffle" in energy, and made some dire predictions. "We will have to fight against the natural decline of (present) oil fields," said Christophe de Margerie. "It will not go smoothly."

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43 Oil Toolkit

Consensus Agrees: Shock timeframe < 10 years
Consensus of experts agrees oil shock is coming in 10 years or less Huntington, Executive Director of Stanford’s Energy Modeling Program, 08 (Hillard, Weekly Policy
Analysis/Resources for the Future, Mar 24, The Oil Security Problem: “Déjà vu all over again”, http://www.rff.org/Publications/WPC/Pages/03_24_08_DejaVu_OilSecurity_Huntington.aspx, 7/2/08) In the first effort, a working group of geopolitical and oil-market experts assembled to provide expert judgment on the risks of one or more disruptions at some point over the next 10 years. The experts identified specific disruption events and the conditions that could make them more or less likely. From there, they evaluated the probability that a certain set of events could happen and the amount of oil removed from the market in each case. Four separate oil-producing regions were considered: Saudi Arabia, other Persian Gulf nations, Russia and the Caspian states, and a set of heterogeneous countries including Libya, Nigeria, and Venezuela. The experts concluded that another disruption, given today's conditions, is very likely. At some point over the next 10 years, there is an 80 percent chance that at least one disruption of 2 million barrels per day (MMBD, or 2.4 percent of the total market) or more would last one month or longer. Those familiar with playing with a well-shuffled deck of cards will immediately recognize this probability as exceeding the chances that you would draw a club or a red suit. Compared to previous periods, the risks today are greater for disruptions below 7 MMBD. Not only are there more insecure regions today than in the past, but fewer opportunities exist to reduce the size of any disruption with offsets from excess oil production capacity in undisrupted regions. These offsets tend to be highly concentrated in Saudi Arabia and hence are unlikely to be available if oil is disrupted in that country. In the second study, macroeconomic experts gathered to discuss the likely economic impacts resulting from oil price shocks. An important distinction concerns the nature of an oil price increase. During the 1970s and early 1990s, oil supply disruptions caused prices to rise suddenly and sharply. These price shocks were fundamentally different from the price elevation occurring over recent months, when oil prices have been rising more gradually than during the 1970s. Price shocks are likely to create great uncertainty, forcing firms and households to delay their investment, producing spillover effects throughout the economy. Price elevation, on the other hand, may anger the car owner who fills his gasoline tank, but it is unlikely to delay investment and lead to a recession. The other unknown is how economic policymakers will respond to disruptions. Over the last few years, inflationary fears around the world have been very low, which has allowed monetary authorities to ease the money supply to offset lost economic output without creating additional inflationary pressures. In recent months, however, inflationary fears have grown and may become more intense yet. These developments would make it much more difficult for governments to intervene and offset lost output without exacerbating future inflation.

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44 Oil Toolkit

Recession causes the Oil Speculation Bubble to burst
Speculators are to blame for Oil Price bubble, the burst will come after recession Conway, Economics editor for Telegraph.co.uk, 08 (Edmund, Telegraph.co.uk/Telegraph Media Group, April 6,
Geroge Soros: Rocketing Oil Price is a Bubble, http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnsoros126.xml, 7/2/08) Speculators are largely responsible for driving crude prices to their peaks in recent weeks and the record oil price now looks like a bubble, George Soros has warned. The billionaire investor's comments came only days after the oil price soared to a record high of $135 a barrel amid speculation that crude could soon be catapulted towards the $200 mark. In an interview with The Daily Telegraph, Mr Soros said that although the weak dollar, ebbing Middle Eastern supply and record Chinese demand could explain some of the increase in energy prices, the crude oil market had been significantly affected by speculation. "Speculation... is increasingly affecting the price," he said. "The price has this parabolic shape which is characteristic of bubbles," he said. 'We face the most serious recession of our lifetime' The comments are significant, not only because Mr Soros is the world's most prominent hedge fund investor but also because many experts have claimed speculation is only a minor factor affecting crude prices. Oil prices stalled on Friday after their biggest one-day jump since the first Gulf War earlier in the week. At just over $130 a barrel, the price has doubled in around a year, causing misery for motorists and businesses. However, Mr Soros warned that the oil bubble would not burst until both the US and Britain were in recession, after which prices could fall dramatically. "You can also anticipate that [the bubble] will eventually correct but that is unlikely to happen before the recession actually reduces the demand. "The rise in the price of oil and food is going to weigh and aggravate the recession." The Bank of England recently warned that soaring energy and food costs would push inflation above its target range for most of the next 18 months, making it more unlikely that it will cut borrowing costs soon. Mr Soros, who lays out his thoughts on the current crisis in his new book 'The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means', warns Britain is facing its worst economic storm in living memory, dwarfing those of the 1970s and early 1990s, with a housing slump and serious recession. He said: "The dislocations will be greater [than in the 1970s] because you also have the implications of the house price decline, which you didn't have in the 1970s." The warning undermines predictions that Britain will suffer only a brief and relatively painless recession, unlike the precipitous dives of previous years. Mr Soros also warned that the Bank's inflation report represents a "Faustian pact", obliging it to keep interest rates high to control inflation, even as the economy is starting to slump. "You had the nice decade," he said. "Now that is over and you are in a straitjacket."

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45 Oil Toolkit

Oil Shocks cause Recession
Based on empirical evidence, US economy is on the path to a guaranteed recession due to the coming oil shock Hamilton, Professor of Economics at University of California San Diego,08 (James, Econbrowswer: Analysis of
Current Economic Conditions and Policy, June 5, http://www.econbrowser.com/archives/2008/06/the_oil_shock_o.html, 7/1/08) Time to reassess the potential for recent oil price increases to contribute to an economic downturn. The sharp spikes in oil prices associated with the 1973-74 oil embargo, the 1978 Iranian Revolution, the Iran-Iraq War in 1980, and the first Persian Gulf War in 1990 were each followed by an economic recession. However, when oil prices started to rise again five years ago, many of us suggested that things would be different this time, in part because the price was rising much more gradually and so should be less disruptive of consumer spending patterns. Others emphasized that, despite the price increases, oil was still cheaper than it had been historically if you took into account inflation. However, once you include the most recent data, neither of those claims would still be true. Another reason consumers had been largely shrugging off the oil price increases of the last few years is that they could afford to do so, since energy expenditures had fallen so significantly as a fraction of total income. However, as a result of rising oil prices, that, too, is no longer the case. The graph below shows a rough estimate of the dollar value of U.S. crude oil consumed as a fraction of GDP. This ratio fell as low as 1.1% in 1998, but is up to 5.2% so far in the first quarter of 2008. And that's on the basis of the average 2008:Q1 oil price of $98 a barrel-- you'd pay $128 as of today. We've reached the point where American businesses and consumers simply can no longer afford to ignore the price of fuel, and we're getting clear indications of real changes in behavior. Counts of the number of cars on the roads suggest that U.S. vehicle miles traveled fell 4.3% in March. U.S. gasoline consumption so far in 2008 has been 70,000 barrels/day lower than in the first five months of 2007. And sales of SUVs are crashing. Sales of light trucks manufactured in North America last month were 26% below the level of May 2007. How do the challenges this poses for domestic automakers compare what we observed in the 1990 oil price shock? BEA Table 1.2.6 indicates that the real value of U.S. motor vehicle production fell by $44 billion between 2007:Q3 and 2008:Q1, almost as large as the $49 billion drop between 1990:Q3 and 1991:Q1 following the oil shock associated with the first Persian Gulf War. Granted, autos were more important for the U.S. economy then than they are now, with $49 billion representing 0.7% of GDP in 1990 (or a 1.4% hit to the annual growth rate), whereas the $43 billion drop between 2007:Q3 and 2008:Q1 is little more than half the size of the 1990-91 shock relative to GDP. On the other hand, the monthly auto sales data graphed above show that April and May marked a significant deterioration relative to 2008:Q1. BLS seasonally unadjusted establishment data indicate that the number of Americans employed in motor vehicles and parts manufacturing fell by 107,000 between April 2007 and April 2008, which is bigger than the 88,000 decline between April 1990 and April 1991. GM this week announced plans to close 4 North American plants, idling an additional estimated 8,000 workers. Ford plans a 15% cut in its 24,000 salaried employees. Continental Airlines announced plans to cut 3,000 jobs in response to higher fuel prices, following similar announcements from United, Delta, and American Airlines. Based on the experience in earlier oil shocks, we can anticipate that there will be broad changes in many other categories of business and consumer spending that will pose challenges to a number of affected industries. We dodged a recession (at least through most of 2007) despite a dramatic housing downturn. The modern American economy could perhaps also continue to grow through the kind of effects we saw from the oil price spike of 1990. But what if we have to deal with both sets of problems at the same time? I'm afraid we're about to find out.

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Oil Shocks cause Depression (1/2)
Oil shocks cause a depression that’s as bad as a terrorist attack Clayton, Staff Writer, 08 (Mark, The Christian Science Monitor, May 12, With prices at $120 a barrel, Americans
are facing an oil adjustment, http://www.csmonitor.com/2008/0512/p13s01-wmgn.html, 7/5/08) Two years ago a leading economist published a study provocatively titled: "What would $120 oil mean for the global economy?" Answer: a global recession, if the price stayed there for a year. Now the future has arrived, with the United States and other nations getting a double whammy from both the mortgage crisis and oil futures hovering at $120 per barrel. If oil prices stay stratospheric, the cost of fueling cars and planes could slash US economic growth up to 2.3 percent and global growth by 3.6 percent, says Robert Wescott, former chief economist of the president's council of economic advisers and author of the $120 oil report. While many energy-security experts worry about a terrorist attack that suddenly crimps global oil supplies and hammers the US economy, Dr. Wescott and other experts say a terror attack is hardly the only, or even the worst, oil threat the nation now faces. "What we are seeing today is more of a slow-motion, rolling oil crisis rather than a sharp shock, yet ultimately we end up with the same sorts of impacts [as a terror attack]," says Wescott, now president of Keybridge Research, a Washington economic-consulting firm. Unlike the 1970s, when an oil embargo left Americans waiting in long lines at gasoline stations and paying higher prices, today's oil crisis has been stealthy. Its economic impact has been masked by consumers tapping credit cards and home equity to cover the rising cost of energy and some consumer goods. "We're having a replay of the 1970s without the Arab oil embargo part, so it's been hard for many people
to see," says Amy Myers Jaffe, an energy scholar at the Baker Institute at Rice University in Houston. Even with US airlines cutting flights and SUV sales now tanking, the effects of expensive oil on the American family could be stark, Wescott's report says. In 2003, with oil approaching $40 per barrel, the average US family spent about $1,900 (4.8 percent of its income) on natural gas, heating oil, and gasoline. But today at the $120 per barrel level, a family will spend about $6,000 a year or about 15 percent of total annual income, Wescott's report predicts. Compared with the oil crises of the 1970s, the US paradoxically is in a bit better, yet also worse, position. The good news is the US economy is less energy intensive – using only about half the energy it did in the 1980s to produce a dollar of economic growth. That should make it more resilient. But the bad news is that imported oil has risen to about 12 million barrels a day, about 60 percent of the 21 million barrels

the US consumes daily. That financial drain at $120 per barrel is jamming the brakes on the US economy and inflating the trade deficit, economists agree. "The question now isn't whether we're going into recession, it's whether there will be a soft landing ... or we have a hard landing," Ms. Jaffe says. Nariman Behravesh, chief economist at Global Insight, Lexington, Mass., has done economic projections with oil at even higher prices. While oil at $120 a barrel "makes a mild recession a little deeper," the results of oil at $150 would be much worse with the nation "looking at a fairly serious recession." But where there is awareness of the problem there is hope. Perhaps nobody knows better what the
nation could do – but mostly has not yet done – than Amory Lovins. An American energy guru since the gas lines of the 1970s, he has focused like a laser beam on how the nation can save energy. "What we need to do to cut oil consumption is quite

clear," says the cofounder of the Rocky Mountain Institute, an energy think tank in Snowmass, Colo. "But attention keeps getting focused on the wrong things – like subsidies for the oil industry to find more oil. That's the wrong way to go." Congress's move last year to raise vehicle fuel-economy standards to 35 miles per gallon by 2020
was a good first step – but not enough, he says. In today's slowly unfolding yet serious oil crisis, Mr. Lovins would slash 9 percent of the nation's oil demand in one year with more than 30 fuel-saving measures. Among them: •Reduce speed limits to 60 miles per hour for light vehicles, 55 m.p.h. for heavy trucks. Expand HOV-lane use to include alternative fuel vehicles (AFVs), hybrids, and all-electric vehicles. •Encourage mass-transit use by letting all citizens deduct the cost from their taxes. Require "parking cash-out" so employees can take cash instead of free parking at work. •Extend federal tax credits for AFV, hybrid, and electric vehicles to many more than the current 60,000 vehicles per manufacturer limit. •Require one-engine-only idling for jet aircraft waiting to take off. Offer US loan guarantees to airlines upgrading to efficient aircraft and tax credits for replacing heavy interior parts with lightweight materials. One measure Lovins and Ann Korin, chairman of Set America Free, an energy-security coalition, agree on is for the government to mandate that all vehicles be "flex fuel" burning so Americans can choose alternatives to gasoline. The move, she says, would reduce the nation's exposure to a terrorist attack. "There's not much we can do today if an attack occurs other than band-aid responses like tapping into the strategic petroleum reserve," Ms. Korin says. "If every garage had a plug-in [hybrid gas-electric] or flex-fuel vehicle, you could still get around. Oil goes up, but we're not held hostage." The US already has "solutions that can take away the strategic

power of oil," adds Robert "Bud" McFarlane, national security adviser to President Reagan in the mid-1980s, referring to ethanol, methanol, biodiesel, and electricity for vehicle propulsion. Dennis McGinn agrees. A retired vice admiral of the Navy and a national-security expert, he is acutely aware of the fragile oil-supply line and many energy choke points around the globe. Still, he, too, sees a silver lining in this crisis if Americans can wake up and respond to it. "Our nation has met a whole lot of crises in our history," he says. "This energy and climate-change challenge is perfect for the American public, industry, and government to really do something about. We just need to be honest with ourselves that business as usual can't continue."

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Oil Shocks cause Depression (2/2)
Oil shocks cost countries billions to trillions of dollars in GDP- empirically proven Hirsch, Senior energy program adviser for Science Applications International Corporation and Senior Energy Advisor at MISI, 05 (Robert L., Minnesotans for Sustainability, "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management," 2-5, http://www.mnforsustain.org/oil_peaking_of_world_oil_production_study_hirsch.htm, 7-2-8)
Estimates of the damage caused by past oil price disruptions vary substantially, but without a doubt, the effects were significant. Economic growth decreased in most oil importing countries following the disruptions of 1973-74 and 1979-80, and the impact of the first oil shock was accentuated by inappropriate policy responses. Despite a decline in the ratio of oil consumption to GDP over the past three decades, oil remains vital, and there is considerable empirical evidence regarding the effects of oil price shocks: The loss suffered by the OECD countries in the 1974/-75 recession amounted to $350 billion (current dollars) / $1.1 trillion 2003 dollars, although part of this loss was related to factors other than oil price. The loss resulting from the 1979 oil disruption was about three percent of GDP ($350 billion in current dollars) in 1980 rising to 4.25 percent ($570 billion) in 1981, and accounted for much of the decline in economic growth and the increase in inflation and unemployment in the OECD in 1981-82. The effect of the 1990-91 oil price upsurge was more modest, because price increases were smaller; they did not persist; and oil intensity in OECD countries had declined. Although oil intensity and the share of oil in total imports have declined in recent years, OECD economies remain vulnerable to higher oil prices, because of the “life blood” nature of liquid fuel use.

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Oil Shocks hurt US transportation sector
Transportation sector affects all other sectors of the economy and is hurt hardest by high oil prices Peterson, CBO’s Macroeconomic Analysis Division Chair, 06 (John, Congressional
Budget Office, July, The Economic Effects of Recent Increases in Energy Prices, http://www.cbo.gov/ftpdocs/74xx/doc7420/07-21-Energy%20DIST.pdf, Pg 7, 7/2/08)
The model is based on a standard model with price and nominal wage adjustment costs. I extend the standard sticky-price model to include the role of oil prices into the economy in two ways. As in Finn (2000), variable capital utilization tied to petroleum consumption is introduced in the intermediate-good production process. Another extension is to include a transportation sector as an additional sector in the economy. It is assumed that all produced intermediate products must be delivered to customers by using transportation services. Including transportation firms amplifies the effects of the oil-price shock, because, as will be described in Section 2, transportation firms had significant market power before the deregulation. It should be noted that, although there are empirical studies documenting possible asymmetric effects on the economic activity (see, for example, Davis and Haltiwanger, 2001; Hamilton, 2003)4, like other existing models, the structure of the model considered here implies that increases and decreases in the price of oil would have symmetric effects. However, the focus of this paper is on the recessionary consequences following a large increase in the price of oil and on accounting for the changes in the economy over time.

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Oil Shocks hurt US consumer confidence (1/2)
The current oil crisis affects every step of manufacturing and distribution and is significantly worse than the 1997 crisis Wiriyapong, Staff writer, 08(Nareeerat, Bangkok Post, July 1,
http://www.bangkokpost.com/300608_Business/30Jun2008_biz008.php, 7/01/08) Thai businesses are being hit harder by the current oil crisis than the financial crisis in 1997 as global oil prices have hit all-time highs while consumer purchasing power is dropping sharply, according to the Saha Group, the country's biggest consumer goods conglomerate. "Compared to the crisis 12 years ago, what we are facing now is tougher because oil prices were not this high," said Vathit Chokwatana, executive director of Saha Pathanapibul Plc. "Both manufacturing and distribution activities have been seriously affected by high oil prices. Some raw materials, especially for detergents, are extremely expensive but we have to buy them in order to keep the plants running." Even though some consumers have received salary or cost-of-living increases, the amount isn't enough to offset the rising cost of living. Initially, high oil prices psychologically force consumers to cut their spending, Mr Vathit said. In the area of logistics, manufacturers have to shoulder the high cost for transporting goods from factories. Some are in distant provinces and goods must go to distribution centres before reaching wholesalers and shops, said Mr Vathit. To cope with skyrocketing prices, Mr Vathit said Saha is working with some other large businesses including Charoen Pokphand (CP), Siam Cement Group (SCG), and the sugar group Mitr Phol on logistics improvements to cut costs.

Oil price shocks cause a crash in the economy, and abnormally low fiscal spending only worsens their effect EIA, Energy Information Administration, 08 (Official Energy Statistics from the US Government, Annual Energy
Outlook Analyses/EIA, January 15, Economic Effects of High Oil Prices, http://www.eia.doe.gov/oiaf/aeo/otheranalysis/aeo_2006analysispapers/efhop.html, 7/1/08) On the potential output side, sudden large price increases create widespread uncertainty about appropriate production techniques, purchases of new equipment and consumer durable goods like automobiles, and wage and price negotiations. As firms and households adjust to the new conditions, some plant and equipment will remain idle, some workers will be temporarily unemployed, and the economy may no longer operate along its long-run production-possibility frontier. Although it is easy to differentiate gradual from rapid price increases on a conceptual basis, empirical differentiation is more difficult. In terms of the state of the economy, if the economy is already suffering from high inflation and unemployment, as in the late 1970s, then the oil price increases have the potential to cause severe damage by limiting economic policy options. Many analysts assert that it was the monetary policy undertaken in the 1970s that really damaged the U.S. economy. The economic policies that are followed in response to a combination of higher inflation, higher unemployment, lower exchange rates, and lower real output also affect the overall economic impact of higher oil prices over the longer term. Sound economic policies may not completely eliminate the adverse impacts of high oil prices described above, but they can moderate them. Conversely, inappropriate economic policies can exacerbate the adverse impacts. Overly contractionary monetary and fiscal policies to contain inflationary pressures can worsen the recessionary effects on income and unemployment; expansionary monetary and fiscal policies may simply delay the fall in real income necessitated by the increase in oil prices, stoke inflationary pressures, and worsen the impact of higher prices in the long run.

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50 Oil Toolkit

Oil Shocks hurt US consumer confidence (2/2)
Oil price shocks will have a substantially large impact due to our already low economy EIA, Energy Information Administration, 08 (Official Energy Statistics from the US Government, Annual Energy
Outlook Analyses/EIA, January 15, Economic Effects of High Oil Prices, http://www.eia.doe.gov/oiaf/aeo/otheranalysis/aeo_2006analysispapers/efhop.html, 7/1/08) The larger impacts calculated from direct statistical estimations often are attributed to a range of macroeconomic frictions that could make the economy’s response to an oil price shock fundamentally different from its response to a smaller increase in oil prices. Large macroeconomic models do not differentiate between oil price increases and decreases, or between surprise events and more gradual price adjustments. The larger estimates from time-series models may also reflect baseline economic conditions before an oil price disruption that are fundamentally different from today’s economic environment. For example, the oil price shocks of the 1970s hit the U.S. economy when it already was experiencing inflationary pressures. Historical oil price shocks reduced not only aggregate output but also the country’s purchasing power. Real national income fell as the costs of buying international goods (including oil) increased more than income from exports. The higher prices made the country poorer by requiring more exports to balance each barrel of imported oil, leaving less aggregate output for domestic consumption.

Rising energy costs impact household spending and saving habits Peterson, CBO’s Macroeconomic Analysis Division Chair, 06 (John, Congressional

Budget Office, July, The Economic Effects of Recent Increases in Energy Prices, http://www.cbo.gov/ftpdocs/74xx/doc7420/07-21-Energy%20DIST.pdf, Pg 7, 7/2/08) Households’ income and spending were both affected by the rise in energy prices. The growth of real hourly compensation slowed (the result of a slowdown in nominal wage growth combined with the increase in inflation). At the same time, the average household’s annual
spending on energy goods and services rose by about $1,700 between 2003 and mid-2006, and their saving rate dropped sharply. The fall in the saving rate helped dampen the negative effects that higher prices would ordinarily have had on the economy in the short run. If households try to rebuild their savings, however, consumer spending may be diminished slightly over the next few years.

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***Peak Oil***

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Peak Now (1/2)
Global trends show that worldwide production of oil is declining with many countries reaching or past their peak Andrews, Co-founder of the Association for the Study of Peak Oil US affiliate, 08 (Steve, Energy Bulletin, "World oil reserves and future production," 6-30-8, http://www.energybulletin.net/node/31362, 6-30-8)
OPEC: The limitation on production from the Arabian Gulf is mostly due to politics, lack of motivation, investment level, and type of crude, not shortages of reserves. A rapid increase in production is not physically possible at this time. However, an additional five million barrels/day of production is possible within a decade. (In his further responses, Leonard seemed to indicate that 5 million additional barrels was more “technically possible” than likely.) Saudi Arabia’s stated 260 billion barrels of reserves is based on a 65% recovery factor. This recovery factor would involve unreasonably high levels of water cut. FSU production increased from 7.5 million b/day in 1999 to 13 million b/day last year, providing 60% of world oil production growth during that period. Russian reserves were sufficient to continue growing Russian production (alone) to 14 million b/day by 2010 (117 billion barrels from the author’s study vs. 79.8 billion from BP); however, politics and tax regimes initiated during 2003 have halted growth. Russia has simply decided that they will control production growth at 10 million b/day; they may well both be able to and decide to produce close to that level for a decade. Kazakhstan reserves are sufficient to double production, but increases have been slowed by pipeline constraints and mismanagement of development of the Kashagan field. Azerbaijan has had no recent exploration success, and its reserves are insufficient to increase beyond a 1.2 million b/day plateau. In Rest of World (excluding tar sands), the decline rate in existing fields is estimated at 7%/year. With the exception of Brazil (ultradeep water), major producing countries are at or past peak. Rapid declines in recent years from the North Sea, Mexico and USA have been temporarily halted by additions from the deepwater Gulf of Mexico. Overall ROW production peaked in 2003; an intensive effort is needed to minimize decline rates. New production from ultradeep development has masked decline of ROW, but within the next decade, this welcome new addition will pass and the subsequent decline will accelerate.

Predictions of 2020 or later wishful thinking; Peak oil is now Lundberg, Former analyst for the petroleum industries and founder of the Alliance for a Paving Moratorium and the Auto-Free Times magazine, 04
(Jan, Blue, "Here comes the nutcracker: Peak oil in a nutshell," 9-20-4, http://www.energybulletin.net/node/4404, 73-8) Despite the need to be prepared for imminent, final energy shortage - which could happen now or in several years at the latest - people persist in focusing too much on the likely date of the passing of the peak. It is already clear that the oil industry and OPEC numbers on oil reserves are suspect. So we can simply offer a range of oft-quoted peak-oil arrival times: 2005-2012. Some more distant figures such as 2020 are based on infinite technological improvements on extraction and removing the problematic sulfur, for example. Factoring in the "irregular" petroleum sources, the peak year of world oil extraction is to be 2007, according to the Association for the Study of Peak Oil and Gas.

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53 Oil Toolkit

Peak Now (2/2)
The world's oil production has flat-lined and geopolitical circumstances decrease the security of a long-term supply, driving up prices Andrews, Co-founder of the Association for the Study of Peak Oil US affiliate, 08 (Steve, Energy Bulletin, "Rejecting the real snake oil," 6-27-7, http://www.energybulletin.net/node/31362, 6-30-8)
Except for those in extreme denial about our oil problems, even casual observers looking at the facts and trends listed below should see that we're on the front edge of an enormously challenging energy transition: 1. Some 20 nations around the world produce 83% of the world's oil. In half of those, production is either flat (Iran, Iraq, Venezuela) or permanently declining (the USA, Mexico, the UK, Norway and Indonesia, among others). 2. World oil production outside of OPEC and the former Soviet Union (FSU) grew for many decades until 2002. Since then, it has declined slightly for four straight years, during an era of unprecedented high oil prices. 3. Oil production in the FSU collapsed from 1990-96, then rocketed back and should match their previous high oil mark (1987) this year. But Russia's production growth trend has slowed dramatically and will probably peak soon. 4. Roughly two-thirds of the world's oil lies in the Middle East -- a cauldron for geopolitical, religious, cultural and military conflict. This obviously reduces the security of long-term supply, which drives up prices. 5. Over 90% of the world's oil is owned by government-controlled oil companies. ExxonMobil only ranks #13 in size, dwarfed by Saudi Aramco. On a daily basis, the Saudis produce much more oil from the world's largest single oil field -- Ghawar -- than ExxonMobil produces from its many multi-billion-dollar projects scattered worldwide. As a retiree from Saudi Aramco wrote recently, those government-controlled oil producers "are no longer inclined to rapidly exhaust their resource for the sake of accelerating the misuse of a precious and finite commodity." That's our new reality, Mr. Learsy. 6. Resource nationalism is rearing its ugly head around the world, especially in Russia and Venezuela. During the last 12 months, Russia and Venezuela expropriated oil producing assets developed and paid for by the world's major investor-owned oil companies. Expect slightly tighter supply and higher prices from this trend. 7. New oil discoveries listed by Mr. Learsy are fine and dandy for both oil companies and consumers, but new discoveries peaked during the 1960s and are down substantially since that oil heyday. Further, those new discoveries are increasingly located in deeper water and colder climates that add to cost and are prone to delays and weather-related shut-downs.

Peak Oil has already come, we will not be able to produce at a higher rate Elliott, economics editor, 2008
(Larry, The Guardian, “$135 and rising ... has cheap oil gone for ever?” May 24, http://www.guardian.co.uk/business/2008/may/24/oil.commodities, Accessed on 7/11/08) Economic theory suggests that rising prices encourage rising supplies, but investment in the oil industry is expensive and takes a long time to bear fruit. In the past, oil companies have had their fingers badly burned when prices have crashed and they are wary of over-committing. The International Monetary Fund said the boom has led to higher investment but much of it has been soaked up by shortages of equipment and skilled personnel. "Oil will increasingly come from unconventional sources, because output has declined from peak levels at conventional fields in many countries, and the size of oilfields is getting smaller on average. This does not mean that the world is about to run out of oil, but it suggests that higher oil prices are needed to induce the additional investment required to balance the market over the medium term."

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Must Act Now to avoid the Peak
The issue of peak oil must be faced immediately in order to avoid devastating economic, social, and political costs Rapier, staff writer, 08 (Miles, Omninerd, "What You Need to Know about Peak Oil," 5-17-6, http://www.omninerd.com/articles/What_You_Need_to_Know_about_Peak_Oil, 6-30-8)
In 2005, the Department of Energy commissioned a report from Science Applications International Corporation (SAIC) on the risks we face due to Peak Oil. Commonly referred to as "The Hirsch Report," after principal author Dr. Robert L. Hirsch, it warns of the potential consequences of approaching Peak Oil unprepared. The report emphasizes the seriousness of the problem we are facing, and indicates that mitigation efforts should begin immediately. In the executive summary, the report states:25 "The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking." Furthermore, the report warns: "The problems associated with world oil production peaking will not be temporary, and past 'energy crisis' experience will provide relatively little guidance. The challenge of oil peaking deserves immediate, serious attention, if risks are to be fully understood and mitigation begun on a timely basis."

Preparing for peak oil will require at least a decade in order to avoid complete devastation; action must be taken now Hirsch, Senior energy program adviser for Science Applications International Corporation and Senior Energy Advisor at MISI, 05 (Robert L., Minnesotans for Sustainability, "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management," 2-5, http://www.mnforsustain.org/oil_peaking_of_world_oil_production_study_hirsch.htm, 7-2-8)
The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking. In 2003, the world consumed just under 80 million barrels per day (MM bpd) of oil. U.S. consumption was almost 20 MM bpd, two-thirds of which was in the transportation sector. The U.S. has a fleet of about 210 million automobiles and light trucks (vans, pick-ups, and SUVs). The average age of U.S. automobiles is nine years. Under normal conditions, replacement of only half the automobile fleet will require 10-15 years. The average age of light trucks is seven years. Under normal conditions, replacement of one-half of the stock of light trucks will require 9-14 years. While significant improvements in fuel efficiency are possible in automobiles and light trucks, any affordable approach to upgrading will be inherently timeconsuming, requiring more than a decade to achieve significant overall fuel efficiency improvement.

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Quick Action Saves Money
Preventative efforts will be less expensive than delayed mitigation once oil production collapses Hirsch, Senior energy program adviser for Science Applications International Corporation and Senior Energy Advisor at MISI, 05 (Robert L., Minnesotans for Sustainability, "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management," 2-5, http://www.mnforsustain.org/oil_peaking_of_world_oil_production_study_hirsch.htm, 7-2-8)
Prudent risk management requires the planning and implementation of mitigation well before peaking. Early mitigation will almost certainly be less expensive than delayed mitigation. A unique aspect of the world oil peaking problem is that its timing is uncertain, because of inadequate and potentially biased reserves data from elsewhere around the world. In addition, the onset of peaking may be obscured by the volatile nature of oil prices. Since the potential economic impact of peaking is immense and the uncertainties relating to all facets of the problem are large, detailed quantitative studies to address the uncertainties and to explore mitigation strategies are a critical need.

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Peak Oil Coming
Consensus agrees Peak Oil will hit in 10 years or less Souder, Staff Writer, 08 (Elizabeth, The Dallas Morning News, "T. Boone Pickens' prediction: Oil production is reaching its peak," 5-25-8, http://www.dallasnews.com/sharedcontent/dws/bus/industries/energy/stories/050508dnbusoilside bar.3b519e7.html, 6-30-08)
When T. Boone Pickens talks, oil traders listen. The legendary oilman, who runs a multibillion-dollar commodities hedge fund in Dallas, appears frequently on CNBC to predict oil prices. He's often correct. Also Online Oil insiders say investors using fear of low supply to drive up prices Download: Factors in the high cost of oil (.pdf) So nearly every time he makes a new prediction, the market moves that very day in the direction he forecasts. "I think you're going to see $150 before the end of the year," Mr. Pickens told CNBC viewers Tuesday. Sure enough, oil futures ended the day 1.6 percent higher at $129.07 a barrel, another record. Mr. Pickens is one of several Texans who are pushing the Peak Oil theory of oil scarcity into the mainstream. He believes humans will soon use up half the oil they can extract, and oil production rates will drop, never to recover. The controversial theory gives oil investors reason to bid prices to record levels and has prompted some local officials to create contingency plans. Oil company executives try to assure investors and consumers that there will be plenty of oil for many decades to come, so there's no reason for oil prices to have doubled during the last year. Oil traders don't seem to be listening. The peakers M. King Hubbert, a Shell geophysicist from San Saba, Texas, came up with the Peak Oil theory in the 1950s. He studied the way an oil field's production declines as the field matures, until it's barely a trickle. He correctly predicted that U.S. production rates would peak around 1970. But current Peak Oil theorists disagree on when global production will peak. Some say it's already happened; others give it another decade. Part of the problem is that it's impossible to find accurate information on exactly how much oil lies underground. Some countries, such as Saudi Arabia, keep their reserve data a state secret. Matthew Simmons tried to break through the Saudi silence. Mr. Simmons, who owns an investment bank and an oil field services company in Houston, pored over hundreds of technical reports about Saudi fields. He concluded that Saudi production will soon wane, and the country will no longer be able to turn on the taps anytime humans face an oil shortage.

Our oil will be depleted within our lifetimes according to the most optimistic projections, and problems will start far before then Woodard, Executive Editor of AskQuestions.org, 05 (Cheryl, Ask Questions, "Facing the End of Oil," 2-16-5, http://www.askquestions.org/articles/oil/oil.pdf, 7-2-8)
The world’s oil supplies could last 40 years or more, according to some projections. But serious trouble starts when ready supplies begin to decline, long before we get to the last drop. And many experts believe that we’re already there. Best Case Scenario: The 2004 British Petroleum Statistical Review of World Energy gave the most optimistic projection we could find, predicting that global oil reserves will be gone in 2045, based on known reserves and current rates of consumption, called the R/P ratio. By the same measure, US reserves will be exhausted in 2015. Optimists sometimes extend the 41 years by including 'unconventional' oil supplies, like the oil tar sands in Canada, even though getting at that oil sometimes causes more trouble than it's worth. The US Department of Energy offers a fairly pessimistic assessment of Canadian oil supplies for instance, noting the Canadian political will to protect the environment, the inefficiency of extraction methods, and the hazards of extraction, "Oil sands projects are large, use considerable amounts of energy, particularly natural gas, and release both gaseous and particulate emissions into the atmosphere. Although the oil sands processes have become more efficient and have reduced greenhouse gas (GHG) emissions per unit of production, an increase in output could lead to an increase in total emissions. Other environmental challenges associated with oil sands processing are disposing of tailings, wastewater management, and land reclamation." We dare not count on Canadian oil sands to replace dwindling supplies in other parts of the world. Forty-one years doesn’t seem like a very long time before the world’s oil completely runs out. And yet, outside of the oil industry, many believe the end will come much sooner.

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A2: New Discoveries solve Peak Oil
New discoveries or alternative energies will not solve; peak oil is inevitable Lundberg, Former analyst for the petroleum industries and founder of the Alliance for a Paving Moratorium and the Auto-Free Times magazine, 04
(Jan, Blue, "Here comes the nutcracker: Peak oil in a nutshell," 9-20-4, http://www.energybulletin.net/node/4404, 73-8) The end of abundant, affordable oil is in sight, and the implications are colossal. About now in our hydrocarbon phase of human history, we have pulled out of the Earth approximately half of the available petroleum (crude oil and natural gas). The other half still in the ground is harder to extract and may not - as assumed - fuel the global economy or even provide a transition to another phase. To hope for an increase in discoveries is to turn a blind eye to the world trend in declining oil extraction which has been relentless for the past four decades. The approximate bell curve of petroleum extraction cannot be changed by any one big new discovery. Yet, the idea of "the Caspian" or any other mega-field du jour is an example of the constant hope for perpetual energy for high living in contradiction with nature. The same can be said of the dominant assumption that petroleum will be replaced by other "technologies." This ignores the overwhelming petroleum-based infrastructure we have, and neglects to account for the lesser return on energy from non-petroleum sources of energy. But, "they" (scientists, leaders, corporations) will "think of something." Another common assumption popular among "radicals" is that "the ruling elite will refuse" to allow the global economy or the lucrative capitalist system to collapse.

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A2: Technology solves Peak Oil
Technology does not solve the unpredictable nature of earth Maass, Contributing writer, 05
(Peter, New York Times, “The Breaking Point,” 08-21-05, http://query.nytimes.com/gst/fullpage.html?res=9904E6D7123EF932A1575BC0A9639C8B63&sec=&spon=&page wanted=all, access 07-02-08) Most experts do not share Simmons's concerns about the imminence of peak oil. One of the industry's most prominent consultants, Daniel Yergin, author of a Pulitzer Prize-winning book about petroleum, dismisses the doomsday visions. ''This is not the first time that the world has 'run out of oil,''' he wrote in a recent Washington Post opinion essay. ''It's more like the fifth. Cycles of shortage and surplus characterize the entire history of the oil industry.'' Yergin says that a number of oil projects that are under construction will increase the supply by 20 percent in five years and that technological advances will increase the amount of oil that can be recovered from existing reservoirs. (Typically, with today's technology, only about 40 percent of a reservoir's oil can be pumped to the surface.) Yergin's bullish view has something in common with the views of the pessimists -- it rests on unknowns. Will the new projects that are under way yield as much oil as their financial backers hope? Will new technologies increase recovery rates as much as he expects? These questions are next to impossible to answer because coaxing oil out of the ground is an extraordinarily complex undertaking. The popular notion of reservoirs as underground lakes, from which wells extract oil like straws sucking a milkshake from a glass, is incorrect. Oil exists in drops between and inside porous rocks. A new reservoir may contain sufficient pressure to make these drops of oil flow to the surface in a gusher, but after a while -usually within a few years and often sooner than that -- natural pressure lets up and is no longer sufficient to push oil to the surface. At that point, ''secondary'' recovery efforts are begun, like pumping water or gas into the reservoirs to increase the pressure. This process is unpredictable; reservoirs are extremely temperamental. If too much oil is extracted too quickly or if the wrong types or amounts of secondary efforts are employed, the amount of oil that can be recovered from a field can be greatly reduced; this is known in the oil world as ''damaging a reservoir.'' A widely cited example is Oman: in 2001, its daily production reached more than 960,000 barrels, but then suddenly declined, despite the use of advanced technologies. Today, Oman produces 785,000 barrels of oil a day. Herman Franssen, a consultant who worked in Oman for a decade, sees that country's experience as a possible lesson in the limits of technology for other producers that try to increase or maintain high levels of output. ''They reached a million barrels a day, and then a few years later production collapsed,'' Franssen said in a phone interview. ''They used all these new technologies, but they haven't been able to stop the decline yet.'' the vague production and reserve data that gets published does not begin to tell the whole story of an oil field's health, production potential or even its size. For a clear-as-possible picture of a country's oil situation, you need to know what is happening in each field -- how many wells it has, how much oil each well is producing, what recovery methods are being used and how long they've been used and the trend line since the field went into production. Data of that sort are typically not released by stateowned companies like Saudi Aramco.

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Peak Oil will cause Oil Price Spikes
26-39% shortfall in crude oil supply is projected by 2025, hiking prices by over 550% Stanton, Editor of Motor Transport, 08 (Justin, Road Transport, "Worried about oil shortage?" 1-31-8, http://www.roadtransport.com/Articles/2008/01/31/129670/worried-about-oil-shortage.html, 7-18)
2025 is as far into the future as 1991 is in the past. In that context, 17 years isn't a long time. So, when presented with a shortfall in the supply of crude oil by 2025, will we be ready? Transport and energy consultant Richard Gilbert's presentation to the All Party Parliamentary Group on Peak Oil this week was both frightening and stimulating - in that order. The context is horrific: oil production will peak in 2010 at more than 30 billion barrels a year and then drop rapidly as resources dwindle, resulting in production falling by one-third by 2025. However, oil consumption, if left unchecked, will grow by more than onethird by 2025 to more than 40 billion barrels a year. The worst-case scenario is a 39% shortfall in crude supply the best case scenario is a 26% shortfall. Balance those two figures in the air and then contemplate these stats from the Brookings Institution: a 5% shortfall in the supply of crude increases the cost of a barrel by 30% a 10% shortfall means a 200% hike and a 15% shortfall will see crude surge by 550%. Those stats are based on the 2002 barrel of crude price of just $50... Gilbert acknowledges that there is controversy: there are those who insist oil supply is sufficient, that demand will not increase and that prices will not rise. On the other hand, there are those, oil companies included, who believe the crisis will come sooner and hit harder.

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Peak Oil causes Price Spikes in All Sectors
Once peak oil is upon us, the era of cheap oil will be a thing of the past as prices soar across multiple economic sectors Rapier, staff writer, 08 (Miles, Omninerd, "What You Need to Know about Peak Oil," 5-17-6, http://www.omninerd.com/articles/What_You_Need_to_Know_about_Peak_Oil, 6-30-8)
Even as the debate over the timing and implications of Peak Oil rages, a more immediate issue appears to be at hand. That is the end of the era of "cheap" oil. Supply and demand are in such tight balance that it is putting steady upward pressure on world oil prices.33 The announced projects for expanding oil capacity over the next few years will be hard-pressed to keep up with demand, maintaining the pressure on oil prices.34,35 Some oil companies are even beginning to publicly acknowledge that "the era of easy oil is over."36 The escalation in oil and gas prices after Hurricane Katrina in 2005 is probably a good preview of what life will be like when Peak Oil is upon us. Prices will spiral higher and higher, and people will be forced to spend more of their budgets on gasoline, natural gas, and heating oil. Higher energy costs may lead to higher costs throughout the economy, leading to higher prices across many sectors. Blame will be cast in many directions. Currently, oil company greed, supply and demand imbalances, the transition to ethanol as an oxygenate, government policies, and speculation are all being blamed on rising energy prices.37,38

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Peak Oil causes Global Depression (1/2)
Peak oil will cause an instant global depression, violence, and general chaos Lundberg, Founder of the Alliance for a Paving Moratorium and the Auto-Free Times magazine, 04
(Jan, Blue, "Here comes the nutcracker: Peak oil in a nutshell," 9-20-4, http://www.energybulletin.net/node/4404, 7-3-8) The scenario I foresee is that market-based panic will, within a few days, drive prices up skyward. And as supplies can no longer slake daily world demand of over 80 million barrels a day, the market will become paralyzed at prices too high for the wheels of commerce and even daily living in "advanced" societies. There may be an event that appears to trigger this final energy crash, but the overall cause will be the huge consumption on a finite planet. The trucks will no longer pull into Wal-Mart. Or Safeway or other food stores. The freighters bringing packaged techno-toys and whatnot from China will have no fuel. There will be fuel in many places, but hoarding and uncertainty will trigger outages, violence and chaos. For only a short time will the police and military be able to maintain order, if at all. The damage that several days' oil shortage and outage will do will soon wreak permanent damage that starts with companies and consumers not paying their bills and not going to work. After an almost instant depression seizes the modern industrialized world, and nation-states break down, the frantic attempts of people to feed themselves, stay warm and obtain fresh water (pumped presently via petroleum to a great extent), there will be no rescue. Die-off begins. The least petroleumdependent communities will survive best. These "backward" nations will be emulated by the scrounging survivors of the U.S. and the rest of the "developed" world, as far as local food production will be tried - in a paved-over, toxic landscape by people who have lost touch with the land.

Peak oil will devastate global economies; the oil crisis will be exacerbated by the everdiminishing supply Lundberg, Former analyst for the petroleum industries and founder of the Alliance for a Paving Moratorium and the Auto-Free Times magazine, 04
(Jan, Blue, "Here comes the nutcracker: Peak oil in a nutshell," 9-20-4, http://www.energybulletin.net/node/4404, 73-8) If peak oil means we are at a half-way point, does this mean we now have years to either plan energy use or get used to recession, as claimed by many a writer on peak oil? Before the reader makes assumptions on how society may utilize the remaining store of petroleum, let me repeat what I told The Institute of Petroleum in London two years ago (on February 17, 2003): "What the world went through in 1979’s oil crisis, which my former company warned of in the U.S., based on our projection of a 9% shortfall in gasoline deliveries, can happen again. The difference will be that global production of oil will be falling instead of increasing." This means that the next tough oil shortage, even if it is not acknowledged as a post-peak oil extraction phenomenon of diminishing supply, will cripple the globalized economy. Understanding of both the economics and social dynamics of collapse is rare, and even when it is present there is an absence of taking into account the "market factor" in ushering in collapse.

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Peak Oil causes Global Depression (2/2)
Oil will inevitably peak and decline, inflicting damage upon every country upon Earth Hirsch, Senior energy program adviser for Science Applications International Corporation and Senior Energy Advisor at MISI, 05 (Robert L., Minnesotans for Sustainability, "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management," 2-5, http://www.mnforsustain.org/oil_peaking_of_world_oil_production_study_hirsch.htm, 7-2-8)
Oil is the lifeblood of modern civilization. It fuels the vast majority of the world’s mechanized transportation equipment – Automobiles, trucks, airplanes, trains, ships, farm equipment, the military, etc. Oil is also the primary feedstock for many of the chemicals that are essential to modern life. This study deals with the upcoming physical shortage of world conventional oil —an event that has the potential to inflict disruptions and hardships on the economies of every country. The earth’s endowment of oil is finite and demand for oil continues to increase with time. Accordingly, geologists know that at some future date, conventional oil supply will no longer be capable of satisfying world demand. At that point world conventional oil production will have peaked and begin to decline.

Transition now is critical to the economy and international security Pimental, professor of ecology and agriculture at Cornell University, 02
(David, “Renewable Energy: Current and Potential Issues,” BioScience, Vol. 52, December, p. 1120) The immediate priority of the United States should be to speed the transition from the reliance on nonrenewable fossil energy resources to reliance on renewable energy technologies. Various combinations of renewable technologies should be developed, consistent with the characteristics of the different geographic regions in the United States. A combination of the renewable technologies listed in table 3 should provide the United States with an estimated 45 quads of renewable energy by 2050. These technologies should be able to provide this much energy without interfering with required food and forest production. If the United States does not commit itself to the transition from fossil to renewable energy during the next decade or two, the economy and national security will be at risk. It is of paramount importance that US residents work together to conserve energy, land, water, and biological resources. To en- sure a reasonable standard of living in the future, there must be a fair balance between human population density and use of energy, land, water, and biological resources

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Peak Oil causes Economic Downturn in Developing Countries
Developing nations suffer the most under oil shocks due to less efficient use and lack of alternative resources Hirsch, Senior energy program adviser for Science Applications International Corporation and Senior Energy Advisor at MISI, 05 (Robert L., Minnesotans for Sustainability, "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management," 2-5, http://www.mnforsustain.org/oil_peaking_of_world_oil_production_study_hirsch.htm, 7-2-8)
Developing countries suffer more than the developed countries from oil price increases because they generally use energy less efficiently and because energy-intensive manufacturing accounts for a larger share of their GDP. On average, developing countries use more than twice as much oil to produce a unit of output as developed countries, and oil intensity is increasing in developing countries as commercial fuels replace traditional fuels and industrialization/urbanization continues.43 The vulnerability of developing countries is exacerbated by their limited ability to switch to alternative fuels. In addition, an increase in oil import costs also can destabilize trade balances and increase inflation more in developing countries, where financial institutions and monetary authorities are often relatively unsophisticated. This problem is most pronounced for the poorest developing countries.

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Peak Oil causes instability
Peak oil will spread instability Rapier, staff writer, 08 (Miles, Omninerd, "What You Need to Know about Peak Oil," 5-17-6, http://www.omninerd.com/articles/What_You_Need_to_Know_about_Peak_Oil, 6-30-8)
Peak Oil promises profound geopolitical implications. Much of the remaining oil reserves are in countries unfriendly to the United States. As oil demand begins to outstrip supply, this will give those countries increasing influence on the world stage. Cash will flow into these nations as it flows out of consuming nations like the United States. Countries like Venezuela, Iran, and the former Soviet Union have the potential to benefit from Peak Oil, as they will hold significant leverage over the consuming nations. Michael Klare, author of the book Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on Imported Petroleum was asked in a 2001 interview about the potential for conflict over access to oil. Klare stated: "The greatest potential conflict remains the Persian Gulf area, because this is where the greatest concentrations of oil are located and where we also see considerable discord and instability. Right now, the United States has about 25,000 troops in the Persian Gulf, and many more are available in the United States for rapid deployment to this area. We have also stockpiled vast supplies of armaments in the region. So this is the area where U.S. troops are most likely to become involved in conflict over oil. But there are other areas where we might become involved. For example, the United States could become involved in future conflicts in the Caspian Sea basin, as that area becomes more important as a source of energy. Conflict could also erupt in the South China Sea, as a result of a struggle between China and its neighbors (some allied with the United States) over the control of offshore oilfields. Indeed, the recent collision between a Chinese fighter jet and a U.S. reconnaissance plane is a possible harbinger of such conflict."39 When asked what he expected the world to look like in 2050, Klare answered: "I would expect a much higher level of international conflict over access to critical sources of oil and water, such as the Persian Gulf area, the Nile River basin, the Jordan and so on. Conflict will also erupt within many countries, as various groups (whether defined by class, ethnicity, tribe or religion) fight over the control of arable land, energy supplies, water and so forth. We could also see unprecedented levels of international migration, as people move from overpopulated and drought-stricken areas to countries with adequate supplies of land and water. In many cases, these migrations would spark violent resistance from those already living in the more desirable areas."40

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Peak Oil Causes Extinction (1/6)
The inevitable oil collapse will affect and damage every corner of life as we know it Church, Independent Energy Analyst for Counter Currents, 06 (Norman, Powerswitch, "Major Problems of Surviving Peak Oil," 10-23-6, http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2026&It emid=2, 7-2-8)
Many of the things that we take for granted -- food, water, heat, electricity, waste removal, medical care, and police protection -- will evaporate as the collapse accelerates. Riots will probably begin as food and water becomes scarce. Governments will attempt to take control of the situation and restore order, but it will become so widespread that it will be impossible. The primary killers will then become disease, starvation, dehydration, and suicide. Of course once the fossil fuels run out, or become too expensive and/or problematic to extract then there will be no way to rebuild. There will be no energy source that can power a civilization like this ever again. We will have used it, squandered it and it can not be replaced. Full stop! There may be pockets of survivors who will be able to harness wind, water and sun using civilized technology for a while, but eventually the machines will wear out. Where do you buy replacement parts, how do you make parts without plastic or wires? How do you refine the metals needed to make circuits and transistors? Those who know, no longer do; those who do, no longer know. How much knowledge will manage to survive the post collapse period, for the time that comes after when it may become useful again? The problem is that all the technology upon which we have come to depend requires a complete and sophisticated infrastructure to produce and maintain it, and that infrastructure is based on fossil fuels. Take that away, and the rest is all but impossible.

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Peak Oil Causes Extinction (2/6)
The current United States energy policy is on a path towards destruction—demand is drastically overshooting supply, which is decreasing yearly, and the United States does not have an adequate production rate to suffice it’s energy needs Freeman, Writer specializing in economics, 2004
(Robert, Common Dreams.org, “Will The End of Oil Mean The End of America?”, 3-1-2004, http://www.commondreams.org/views04/0301-12.htm, July 1, 2008) To date, we have chosen the second alternative: to secure oil by force. The evidence of its consequences are all around us. They include the titanic US budget and trade deficits funding a gargantuan, globally-deployed military and the Patriot Act and its starkly anti-democratic rescissions of civil liberties. There is little time left to change this choice before its consequences become irreversible. The world is quickly running out of oil. In the year 2000, global production stood at 76 Million Barrels per Day (MBD). By 2020, demand is forecast to reach 112 MBD, an increase of 47%. But additions to proven reserves have virtually stopped and it is clear that pumping at present rates is unsustainable. Estimates of the date of “peak global production” vary with some experts saying it already may have occurred as early as the year 2000. New Scientist magazine recently placed the year of peak production in 2004. Virtually all experts believe it will almost certainly occur before the end of this decade. And the rate of depletion is accelerating. Imagine a production curve that rises slowly over 145 years—the time since oil was discovered in Pennsylvania in 1859. Over this time, the entire world shifted to oil as the foundation of industrial civilization. It invested over one hundreds trillion dollars in a physical infrastructure and an economic system run entirely on oil. But oil production is now at its peak and the right hand side of the curve is a virtual drop off. Known reserves are being drawn down at 4 times the rate of new discoveries. The reason for the drop off is that not only have all the “big” discoveries already been made, the rate of consumption is increasing dramatically. Annual world energy use is up five times since 1945. Increases are now driven by massive developing countries—China, India, Brazil—growing and emulating first or at least second world consumption standards. Fixed supply. Stalled discoveries. Sharply increased consumption. This is the formula for global oil depletion within the next few decades. The situation is especially critical in the US. With barely 4% of the world’s population, the US consumes 26% of the world’s energy. But the US produced only 9 MBD in 2000 while consuming 19 MBD. It made up the difference by importing 10 MBD, or 53% of its needs. By 2020, the US Department of Energy forecasts domestic demand will grow to 25 MBD but production will be down to 7 MBD. The daily shortfall of 18 MBD or 72% of needs, will all need to be imported. Perhaps it goes without saying but it deserves repeating anyway: oil is the sine qua non of “industrial” civilization—the one thing without which such civilization cannot exist. All of the world’s 600 million automobiles depend on oil. So do virtually all other commodities and critical processes: airlines, chemicals, plastics, medicines, agriculture, heating, etc. Almost all of the increase in world food productivity over the past 50 years is attributable to increases in the use of oil-derived additives: pesticides; herbicides; fungicides; fertilizers; and machinery. When oil is gone, civilization will be stupendously different. The onset of rapid depletion will trigger convulsions on a global scale, including, likely, global pandemics and die-offs of significant portions of the world’s human population. The “have” countries will face the necessity kicking the “havenots” out of the global lifeboat in order to assure their own survival. Even before such conditions are reached, inelastic supply interacting with inelastic demand will drive the price of oil and oil-derived commodities through the stratosphere, effecting by market forces alone massive shifts in the current distribution of global wealth.

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Peak Oil Causes Extinction (3/6)
An energy crisis is inevitable unless we act. Most of the planet will die. Robert C. Morris, PHD, science education, Chair of the Board QEI Management Training and Development Institute, The Environmental Case for Nuclear Power: Economic, Medical and Political Considerations, 2000, p.
115-23 Suppose that the dreaded day arrives when we run out of oil, and we still have nothing to meet this shortage except coal. In this case, the following events are nearly certain to occur.
As we increase our coal burning to compensate for the loss of oil, the first problem to arise will be air pollution. From the standpoint of air pollution, coal is by far our poorest fuel. It produces large quantities of sulfur dioxide, and this air pollutant is currently linked to 50,000 deaths yearly. So, when we increase coal burning to make up for the loss of our oil reserves, air pollution-related deaths will also increase. With a sixfold increase in coal burning, air pollution-related deaths in the U.S. could easily reach 300,000 per year. The New Killer Fogs As coal burning increased, it wouldn’t be long before we were experiencing "killer fogs" periodically in all of our industrial cities. You may recall that one such killer fog killed approximately 8,000 people in London during December of 1952 and the first months of 1953.

As the air quality worsened, and killer fogs became more common, the government would have no choice but to order a cutback in coal burning. This would cripple our industrial production and throw the economy into a severe economic depression. Perhaps, it would take less than five years for these developments to take place.
Coming: The World's Last Great Depression Some readers may be old enough to remember the terrible worldwide depression of 1929 to 1940. During this depression, our energy production was diminished by only about 8.5 percent. Millions of people were out of work, and there were hundreds of applicants for even the worst jobs. People lost their homes, and farmers lost their farms. Soup kitchens appeared in every major city, and homeless, out-of-work people moved about the country looking for a job of any kind. As air pollution worsened and further production cuts were made, more and more people would become jobless. Soon, a domino effect would set in which would make even more people jobless. For example, when automobile production is cut, not only are automobile workers thrown out of work, but so are steel, glass, rubber, carpet, and plastic workers. Large quantities of these materials are used by the automobile industry. When factory workers are unemployed, they have no money to spend, so movie theaters, taverns, fast food restaurants, and shopping malls would close, and still more workers would be laid off. Unemployed workers pay no taxes, so cities would be forced to cut back on teachers, policemen, garbage collectors, and other public employees. Streets would go unpatched, criminals would not be apprehended and would become more aggressive, and students would go untaught.

These effects would be felt very quickly, and within 10 or 15 years many cities might become virtually uninhabitable. For example, when a water main broke, it might go unrepaired, and the people served by this main would then be
without water. Without drinking water, and unable to flush toilets, there would be little choice but to abandon the area. And, without jobs, there would be nothing to keep people in the city except for their homes or apartments. Of course, with few people working, the cities would become increasingly dangerous places to live. From an ecological standpoint, any increase in coal burning would be a complete disaster. Acid rain produced by burning coal would damage our forests at an increasing rate, denying us the use of wood in the future when it would be needed most. And, the huge quantities of carbon dioxide produced by this increased coal burning would increase the risk of setting the greenhouse effect in action, possibly flooding many of the world's coastal cities and inundating much of our most fertile farmland. A large percentage of the world's people farm the lands formed where rivers empty into oceans, probably because these are among the most fertile of all lands. Unfortunately, these lands would be the first to flood if the greenhouse effect melted huge ice sheets and raised the level of the world's oceans. Food Production Plummets As serious as these problems would be, they can’t begin to compare with the effect that the loss of oil would have on our food production. The first aspect of this problem would involve our inability to produce enough synthetic liquid fuel from coal to power farm machinery. Farming generally requires more gasoline and diesel fuel than any other industry. For example, it takes the energy produced by burning a half a glass of diesel fuel just to-put one glass of milk on the table. Without the use of gasoline or diesel powered farm machinery, the American farmer would lose his present high productivity and would be unable to work the big acreages he now does. How soon this problem surfaced would depend on how successful we were in producing large quantities of liquid fuel from coal. Millions of gallons of this synthetic fuel would have to be used to transport food from the farms to the cities, so only part of the synthetic fuel produced would be available for use in farm machinery. In any event, this problem would certainly become acute as soon as people realized how fast our coal supplies were being depleted and coal rationing was instituted. This could occur within 15 or 20 years after we ran out of oil. And, if we were unsuccessful in mass-producing synthetic fuel from coal, it could happen a whole lot faster than that.

↓ Morris Continued ↓

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Peak Oil Causes Extinction (4/6) ↑ Morris Continued ↑
A second aspect of the loss of oil might hurt the farmer's productivity even more. The American farmer presently uses large quantities of synthetic fertilizers, insecticides, weed killers, and rodent poisons to increase and protect his crop. All of these things are presently produced from the petrochemicals which come from oil. In some instances, these things can be made from coal, but this would place an even greater strain on our coal reserves, which would then dwindle even more rapidly. They might be completely exhausted in 40 years or even less. Today, in countries too poor to afford them, insecticides and rodent poisons are not used, and as a result these pests often claim over 50 percent of the food crop. Nor can these countries afford to purchase synthetic fertilizers. This inability further decreases their food production from 10 to 50 percent. With the help of gasoline and diesel powered farming machinery, synthetic fertilizers, chemical insecticides, weed killers, and rodent poisons, one American farmer is presently capable of feeding 50 people. It wasn’t always like this, however. In the 1800s, before the advent of diesel powered machinery and oil-based insecticides, weed killers, rodent poisons, and synthetic fertilizers, 9 out of 10 Americans were farmers and were forced to work long hours to keep everyone fed. Then, in more recent times, diesel powered machinery and the chemical products the farmer presently relies on came into common use. 'Me American farmer's productivity increased spectacularly with the addition of each new chemical tool. As each individual farmer's productivity increased, fewer and fewer people were needed as farmers, and tens of millions of people left the farm and headed for the city. Most of these people became factory workers, but some became scientists, teachers, sanitation technicians, doctors, and nurses. We Become a Nation of Farmers Again When our oil is exhausted and the farmer's productivity has dropped, it will once again be necessary for most of us to become farmers. Although each American farmer was able to feed 50 people in 1986, after the loss of our oil he'll be lucky to produce enough food to be able to feed his immediate family. This was the way it was before oil-based chemical products and fuels came into use, and we have no reason to believe that it'll be any different after we've lost them. The only way to compensate for this loss of individual productivity would be to drastically increase the number of farmers. Otherwise, not enough food will be produced to keep people fed. This would necessitate a massive relocation from city to farm for over 240 million Americans. As you might expect, the relocation of over 240 million people to areas having little or no housing surplus would be a tremendous problem, and it would put a severe stress on the nations home building industry. With electrical production, sawmills, and roofing manufacturers virtually out of business, it would be impossible to build even enough sheds to house this many people. And, with no diesel powered equipment, it would be next to impossible to dig the millions of septic systems and wells needed. Nor would it be easy to supply this many new "homes" with electricity. With our factories shut down and no fuel available to operate heavy mining equipment, where would the thousands of miles of copper or aluminum wire come from? Plainly, most Americans would be forced to live in sheds having no heat, electricity, running water, or bathrooms. But, at least they would be close enough to the land to plant the food they would need to survive. As doctors, sanitation workers, plant and animal pathologists, teachers, and research scientists were forced to become farmers, we'd lose the services of these highly specialized, valuable people. In only a short time, the age old diseases such as malaria, cholera, typhoid fever, tuberculosis, bubonic plague, and hookworm would rise from the backwaters of civili zation where they have been lurking, to once again threaten mankind with great epidemics. There simply wouldrA be enough sanitation workers and medical personnel to keep these diseases in check. And, chances are that the thousands of medicines once manufactured from oil would no longer be available. Within 35 or 40 years after we lose our oil, coal rationing will probably be necessary. By then, most people in the industrialized nations win have made the painful relocation from urban to rural areas where there is land, and where they can again become farmers. There will be severe shortages of everything, including housing, food, clothing, and medicine. People will have lived through one terrible hardship or tragedy after another, and they'll believe that nothing worse can happen. But, they will be in for a shock, because now civilizatiori!s last and greatest catastrophe will begin.

The Great Die-Off-. Two Billion People Must Perish In the late 1800s and early 1900s, the world's farmers fed 1.6 billion people without the use of diesel powered farm machinery, oil based synthetic fertilizers, weed killers, insecticides, and rodent poisons. And, except for China and India, where famine killed 23 million people between 1876 and 1899, there was little famine. But, today, the world's population isn’t 1.6 billion. It had shot up to six billion by 1999 and is expected to top nine billion by 2050.
During the 1950s and 1960s, the use of DDT and improved sanitation in the underdeveloped countries cut the death rate and led to rapid growth of the world's population. Soon, many dire predictions were heard regarding the world's inability to feed itself in the face of what many termed a "population explosion." But, the world's scientists went to work on the problem and succeeded in developing such highyielding food crops that their success became known as the "Green Revolution." Worldwide, famine decreased to all-time lows except in war torn countries such as Ethiopia, where a communist dictator prevented the distribution of food to drought-stricken areas of his country unfriendly to his regime.

The surprisingly high crop yields were due not only to the geneticists' development of exceptional new strains of old crops such as wheat and rice, but also to the use of modem high-yield farming techniques which called for lots of fertilizer and the abundant use of chemicals to protect the crop from insect pests, weeds, and disease.

↓ Morris Continued ↓

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Peak Oil Causes Extinction (5/6) ↑ Morris Continued ↑
Unfortunately, many of these agricultural chemicals are made from coal, natural gas, or crude oil. Of course, once we run out of oil, all of these raw materials, including coal, either will be gone or in increasingly short supply. When the world's farmers are denied these valuable tools, their ability to produce food will undoubtedly plummet. It win probably be a little better than that of the farmers of the early 1900s, but not
much. One scientist estimates that we'll have to farm three times as much land as we now do to produce the same amount of food without the tools of high-yield agriculture.' If this is correct, we will have to increase the land under cultivation by 10 million square miles, an acreage roughly equivalent to the entire land mass of North America. But, will this be possible? By 1967, most of the best, most fertile land had already been cleared and placed in cultivation in Asia and Europe. Table 6.4 shows the figures for the various continents. As much as 88 percent of the potentially farmable land was already being cultivated in Europe as early as 1967. Much the same was true of Asia. In the 1980s and 1990s, much of the South American rain forest was cut down so this land could be used to produce food. Of course, not all land is suitable for growing food. Some land is too far north or south and has too short a growing season. Some land is too wet, or too dry. A lot of land lacks the humus or necessary minerals needed by crops. Little grows in the desert, or on a mountaintop. Only 8 percent of the land in Russia is considered farmable. In China, where one-fifth of the world's people live, only ten percent of the land is farmable. Further, since it wont be possible to use coal or oil to produce synthetic fibers such as Orlon and Dacron, much of the arable land remaining will have to be used to grow fibers such as cotton and flax for clothing. More land will have to be provided as pasture for draft animals-unless we plan to pull the plows ourselves. And, of course, if we plan on eating meat, making shoes out of leather, or wearing wool, pastureland must be pro vided for cattle, pigs, and sheep. We'll also have to keep some land in trees if we want to be able to repair any wooden structures or build any new ones. And, presumably, we'll need some paper, which means more land in trees. Of course, wood will probably be the most widely used fuel except for coal, and as our coal runs out we'll have to rely more and more on wood. Finally, without the insecticides and medicines now produced from fossil fuels, larger acreages will have to be used to grow crops such as the flower from which the insecticide pyrethrum can be obtained. Plainly, we're going to have to use the land to produce a lot of things besides food. Let's make -the very optimistic assumption that each one of us will require an acre of land under cultivation to survive. Only about half of this acre will be used to raise food; the other half acre will be used as previously described. Of course, insects, rodents, and plant and animal diseases will take a significant toll on whatever is raised on this acre. How many countries have enough land to meet this one acre per person minimum? Even today most of the industrialized countries have far more people than they have farmable acres. Japan has 10 people per farmable acre, South Korea, eight people per acre, and China, four people per acre. In Europe, the Netherlands has 5.5 people per acre, followed by Belgium4.94, West Germany-3.3, and Britain7-3.1. (Fortunately, the U.S. has only 0.5 person per acre.) The grim implication in these figures is that much of Asia and Europe are simply too densely populated and have too little farmable land to support all of their people by bare subsistence farming.

With the loss of oil and worsening shortages of coal, the production of industrial goods would be virtually halted. Yet, without these goods to sell, these nations would lack the cash needed to buy food elsewhere. And, even if they had the cash, there probably would not be any food to buy. Because of the worldwide drop in agricultural productivity, even the nations which formerly exported food would probably be hard pressed to keep their own people well fed. The terrible consequence of this would be a massive "die-off." Any country which exceeded one person per farmable acre would have to watch large numbers of its people starve to death or die of disease until its population was reduced to one person per farmable acre. Combined, Japan and South Korea would have to bury 147 million people, and each survivor would have to dig nine graves using only a shovel. China and India would have to dig over 1. 1 billion graves, and the nations of Europe would have to bury over 150 million victims of famine and disease. Japan would lose 90 percent of its people, and China 75 percent. In Europe, the population of West Germany would decrease by almost 70 percent. Even Britain would lose 68 percent of her people. The total death toll from this great catastrophe could easily exceed two or three billion people worldwide, or from 40 percent to 60 percent of the earth’s population. Table 6.5 shows how some of the nations of the world would be affected by this catastrophe. Of course, not everyone who died would starve to death. As people weakened they would become more susceptible to disease, and great epidemics of the age-old killers of people would sweep over the entire world. And, these horrifying conditions would undoubtedly lead to a complete breakdown of civilization and give birth to incredibly barbaric times, as people looted, stole, and killed in hopes of gaining enough food to survive, rather than starving to death. Starvation would push even ordinary people to incredible savagery.

↓ Morris Continued ↓

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Peak Oil Causes Extinction (6/6) ↑ Morris Continued ↑
There Have Been Other Warnings This is not the first warning of this great catastrophe. In 1954, in The Challenge of Man’s Future, Harrison Brown wrote: If our energy resources dwindle, our industrial technology will dwindle, and life expectancy and population will slowly dwindle with it. Consumption of the earth’s store of fossil fuels has barely started; yet, already we can see the end. The age of fossil fuels will be over, not to be repeated for perhaps another 100 million years. Will its passing mark the end of civilization and perhaps the beginning of the downward path to man’s extinction? Later in the same book, Brown says "[The] collapse of machine civilization would be accompanied by starvation, disease, and death on a scale difficult to comprehend."' Of Harrison Brown’s effort, Albert Einstein said, "We may well be grateful to Harrison Brown," and, "This objective book has high value."9 In 1977, England's honored scientist Sir Fred Hoyle, writing in Energy or Extinction? added his voice to Brown’s: There can be no disagreement with the statement that world reserves of coal, oil, and gas can provide an adequate energy source for only a limited future... Nor can it be contested that most of the world's population, presently 4,000 million, will die in a disastrous catastrophe should an adequate energy source not have been developed by the time that reserves of coal, oil, and gas become exhausted.

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Overpopulation puts us on the brink of extinction
Overpopulation is pushing humankind beyond carrying capacity despite any net gains in oil and grain Goodchild, Award-winning television producer and the former head of Science and Features at the BBC, 07 (Peter, Counter Currents, "Peak Oil and Famine: Four Billion Deaths," 10-29-7, http://www.countercurrents.org/goodchild291007.htm, 7-2-8)
Even that is an understatement. In the late 20th century we actually went beyond the carrying capacity. No matter how much environmental degradation we created, there was always the sense that we could somehow get by. But in the late 20th century we stopped getting by. It is important to differentiate between production in an "absolute" sense and production "per person." Although oil production, in "absolute" numbers, kept climbing — only to decline around 2000 or 2010 — what was ignored was that although that "absolute" production was climbing, the production "per person" was not. In the year 1990 there were 4.5 barrels of oil per person per year. By the year 2000 there were only about 4.3. The same sort of problem was occurring with world grain supplies: although government sources cheerfully tell us that grain production in absolute terms is still increasing every year, what they are not telling us is that because of overpopulation the amount of grain per person is actually declining [5]. There is more grain, but there are more mouths to feed. The same problem of resources "per person" can be seen in the world’s fish catches. We are no longer getting by. We have been scraping the edges of the earth’s carrying capacity, and we are now entering a dangerous era. But the main point to keep in mind is that throughout the 20th century, oil production and human population were so closely integrated that every barrel of oil had an effect on human numbers. While population has been going up, so has oil production: from about 0.1 billion barrels in 1900 to about 4.2 in 1950, to about 27.0 in 2000 [1,2]. According to most estimates, the peak was (or will be) around 2000 or 2010. The rest is a steep drop: 20 billion barrels in 2020, 15 in 2030, 9 in 2040, 5 in 2050.

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Peak Oil causes anarchy
Existing social structures will collapse with the loss of oil as a main source of energy, destroying government and education Goodchild, Award-winning television producer and the former head of Science and Features at the BBC, 06 (Peter, Counter Currents, "Peak Oil and the Problem of Infrastructure," 9-29-6, http://www.relocalize.net/node/4815, 7-2-8)
Most schemes for a post-oil technology are based on the misconception that there will be an infrastructure, similar to that of the present day, which could support such future gadgetry. Modern equipment, however, is dependent on specific methods of manufacture, transportation, maintenance, and repair. In less abstract terms, this means machinery, motorized vehicles, and service depots or shops, all of which are generally run by fossil fuels. In addition, one unconsciously assumes the presence of electricity, which energizes the various communications devices, such as telephones and computers; electricity on such a large scale is only possible with fossil fuels. To believe that a non-petroleum infrastructure is possible, one would have to imagine, for example, solar-powered machines creating equipment for the production and storage of electricity by means of solar energy. This equipment would then be loaded on to solar-powered trucks, driven to various locations, and installed with other solar-powered devices, and so on, _ad absurdum_ and _ad infinitum_. Such a scenario might provide material for a work of science fiction, but not for genuine science. The sun simply does not work that way. It is not only oil that will soon be gone. Iron ore of the sort that can be processed with primitive equipment is becoming scarce, and only the less-tractable forms will be available when the oil-powered machinery is no longer available - a chicken-and-egg problem. Copper, aluminum, and other metals are also rapidly vanishing. Metals were useful to mankind only because they could once be found in concentrated pockets in the earth's crust; now they are irretrievably scattered among the world's garbage dumps. The infrastructure will no longer be in place: oil, electricity, and asphalt roads. Partly for that reason, the social structure will also no longer be in place: intricate division of labor, large-scale government, and high-level education. Without the infrastructure and the social structure, it will be impossible to produce the familiar goods of industrial society.

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***Resource Wars***

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Oil Dependence Bad – Terrorism (1/2)
US Oil addiction causes terrorism, which is largely magnified by global warming Hansen, Inside Energy, 2007
(Brian, “Pelosi-inspired panel examines ties between oil, global warming, terrorism”, April 23, pg. 11) The ad-hoc, somewhat controversial global warming committee that House Speaker Nancy Pelosi Enhanced Coverage Linking Nancy Pelosi -Search using: Biographies Plus News News, Most Recent 60 Days created when Democrats took control of Congress held its first formal hearing last week. The panel, dubbed Select Committee on Energy Independence and Global Warming, used its inaugural Tuesday session to examine how the United States' growing dependence on oil is fostering climate change as well as political instability ? including terrorism ? around the world. The panel's chairman, Representative Edward Markey employed his characteristically colorful language to illustrate the links he sees between oil dependency, global warming and political extremism. "It is a double threat, like Orthus, the monstrous two-headed hound of Greek mythology, with one head facing backwards and the other forwards," said the Massachusetts Democrat. "Our ever-rising oil dependence is directly attributable to a backwards-facing energy policy, while looking forward we can see the threat of rising temperatures and the subsequent increasing risk of natural and humanitarian disasters." Several former highranking military officers testified at the hearing and stressed that global warming and oil dependence pose security risks for the United States. "Climate change acts as a threat multiplier in some of the most volatile regions of the world," said Gordon Sullivan, a retired general who served as chief of staff of the U.S. Army from 1991 to 1995. Global warming could cause widespread drought, famine and poverty in Africa and elsewhere, which could make it easier for terrorist groups such as Al Qaeda to recruit disaffected youth, Sullivan said, reiterating points made during an unprecedented United Nations climate debate the same day (story p.4).

Dependence to oil causes massive overreach, and solving for the oil crisis will prevent an economic collapse and terrorism Smith and Kelly, The Washington Post, 2006 (Frederick and P. X., “Are We Ready for the Next Oil Shock?”, August 11, pg A19)
The magnitude of our dependence on oil puts stress on our military, strengthens our strategic adversaries and undermines our efforts to support democratic allies. Each year the United States expends enormous military resources protecting the chronically vulnerable oil production and distribution network while also preparing to guarantee international access to key oil-producing regions. This allocation of forces and dollars diminishes the military's capability for dealing with the war on terrorism and other defense priorities. Considering the potentially devastating impact of an oil crisis, the time has come for new voices, especially those of business leaders and retired national security officials, to join the call for meaningful government action to reduce projected U.S. oil consumption. Our respective personal experiences -- running a global transportation and logistics company and spearheading the establishment of an independent U.S. Central Command in the Middle East -- convince us that America's extreme dependence on oil is an unacceptable threat to national security and prosperity. During the coming months, we will be co-chairing the Energy Security Leadership Council, a new and intensive effort by business executives and retired military officers to advance a national energy strategy for reducing U.S. oil dependence. Although drawn from very different backgrounds, the members of the council are united in the belief that a fundamental shift in energy policy can prevent an unprecedented economic and national security calamity.

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Oil Dependence Bad – Terrorism (2/2)
Hidden oil costs from insecure regions are ruining America’s energy security Huntington, Executive Director of Stanford’s Energy Modeling Program, 08 (Hillard, Weekly Policy
Analysis/Resources for the Future, Mar 24, The Oil Security Problem: “Déjà vu all over again”, http://www.rff.org/Publications/WPC/Pages/03_24_08_DejaVu_OilSecurity_Huntington.aspx, 7/2/08) Today, three of every five barrels sold on the world petroleum market originate from relatively insecure regions: the Persian Gulf, North Africa, Nigeria, Angola, Venezuela, Russia, and the Caspian states. Political, military, or terrorist events could disrupt oil markets and quickly double oil prices. If these events happen at a time when monetary authorities find it difficult to control inflationary expectations, a trend much more likely today than just two months ago, the world could return to the 1970s and stagflation Reducing our vulnerability to such events is the main task for oil security policy. Curtailing imports from our major oil trading partners (Canada and Mexico) is unlikely to benefit us, because these sources are relatively secure. But reducing our imports is important only if we can reduce the market share of vulnerable supplies in the world market. Doing so would mean that disruptions will remove less oil from the market and therefore cause less severe price shocks. Our vulnerability also depends upon how closely our infrastructure is tied to petroleum use. When disruptions cause oil prices to double, the higher price applies to any oil used in the U.S. economy. It does not matter whether we are relying on imports, domestic supplies, or even close substitutes, like ethanol and other bio-fuel options. For this reason, efforts to reduce oil demand may be more valuable than efforts to simply replace vulnerable imported supplies with domestic supplies of oil or ethanol. Pursuing energy security is relatively simple in conceptual terms. The nation is buying an insurance policy against future recessions caused by unanticipated oil price shocks. Today's insurance policy should cost no more than the value of avoiding these possible damages. Higher avoided damages could be due to either a greater probability of a disruption happening somewhere in the oil market or to more serious economic impacts from such a disruption. Since experts disagree on both issues, it is often difficult to implement this principle empirically. For example, a recent Oak Ridge National Laboratory study computed the hidden social costs attributable to oil based upon a range of different views. Their estimates ranged widely from $6 to $23 per barrel, with a mid-point estimate of about $13 per barrel. Stanford University's Energy Modeling Forum recently completed two studies that may help resolve some of the uncertainties related to damage estimates associated with oil insecurity.

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Oil Dependence Bad – Resource wars (1/2)
Without an aggressive approach to solve for oil, the US will continue its militarization and ultimately will end up in unending global conflict. Freeman, Writer specializing in economics, 2004
(Robert, Common Dreams.org, “Will The End of Oil Mean The End of America?”, 3-1-2004, http://www.commondreams.org/views04/0301-12.htm, July 1, 2008) As long as the US chooses the Grab the Oil alternative, the implications for national policy are inescapable. The combination of all these facts—fixed supply, rapid depletion, lack of alternatives, severity of consequences, and hostility of current stockholding countries—drive the US to HAVE to adopt an aggressive (pre-emptive) military posture and to carry out a nakedly colonial expropriation of resources from weaker countries around the world. This is why the US operates some 700 military bases around the world and spends over half a trillion dollars per year on military affairs, more than all the rest of the world—its “allies” included—combined. This is why the Defense Department’s latest Quadrennial Review stated, “The US must retain the capability to send well-armed and logistically supported forces to critical points around the globe, even in the face of enemy opposition.” This is why Pentagon brass say internally that current force levels are inadequate to the strategic challenges they face and that they will have to re-instate the draft after the 2004 elections. But the provocation occasioned by grabbing the oil, especially from nations ideologically hostile to the US, means that military attacks on the US and the recourse to military responses will only intensify until the US is embroiled in unending global conflict. This is the perverse genius of the Grab the Oil strategy: it comes with its own built-in escalation, its own justification for ever more militarization—without limit. It will blithely consume the entire US economy, the entire society, without being sated. It is, in homage to Orwell, Perpetual War for Perpetual Grease.

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Oil Dependence Bad – Resource wars (2/2)
Resource wars will rock the earth without drastic and immediate efforts to decrease oil consumption and pursue alternative energy Woodard, Executive Editor of AskQuestions.org, 05 (Cheryl, Ask Questions, "Facing the End of Oil," 2-16-5, http://www.askquestions.org/articles/oil/oil.pdf, 7-2-8)
The other side paints a different story. Caltech physics professor David Goodstein writes, “As we learned in 1973, the effects of an oil shortage can be immediate and drastic, and it may take years, perhaps decades, to replace the vast infrastructure that supports the manufacture, distribution, and consumption of the 20 million barrels of oil we Americans gobble up each day.” In his book, Out of Gas: The End of the Age of Oil, Goodstein urges that we undertake a massive national commitment to developing alternative energy sources – comparable to the 1960’s race to the moon – because “civilization as we know it will not survive unless we can find a way to live without fossil fuels.” Richard Heinberg, another Peak Oil writer notes that more than 60% of the world’s remaining oil supplies are located in the Middle East - Iraq alone has 11% of the proved reserves – and predicts devastating ‘resource wars’ if the United States cannot immediately reduce our dependence on imported oil.

Global quest for oil causes resource conflicts- Iraq proves Roberts, Author of "The End of Oil: On the Edge of a Perilous New World," 04 (Paul, The Washington Post, "The Undeclared Oil War," 6-27-4, http://www.energybulletin.net/node/842, 7-3-8)
Can you talk about the different options for our future as we pass the peak of the Hubbert curve? Plan A, or what I call Plan War is what we’re pursuing right now in Iraq. Whoever has the most guns and bombs will compete with everyone else for the remaining resources, and use them till they’re gone. Of course, the situation is a bit more complicated than that. Obviously, the U.S. didn’t conquer Iraq so that we could just literally build a pipeline directly from Basra to Houston. It’s more complicated than that. I think the U.S. has economic and geopolitical reasons for wanting to control the price of global oil, and have its hands on the spigot, if you will. Iraq is a pivotal country in terms of the future of oil production. It has the second largest reserves, and it’s sitting right there between Saudi Arabia and Iran. Saudi Arabia has the largest reserves, but it’s politically unstable, and it’s unclear what would happen in Saudi Arabia if the government there were to fall, whether supplies would be cut off at least temporarily. So, having a large military presence next door to Saudi Arabia must make a lot of sense in the minds of the geostrategists. U.S. geopolitics in the Middle East is complex and multi-layered, but it’s not really an oversimplification to say that it’s fundamentally all about oil. The U.S. would not be interested in the Middle East if there weren’t a lot of oil there, and the main reason the U.S. is interested in places like Africa and South America, again, is for the resources.

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Alternate China Resource Wars Scenario (1/2)
Specifically, US and China are already in competition for Saudi Arabian oil, which escalates with China’s energy consumption. At this pace, conflicts are inevitable Roberts, author of "The End of Oil: On the Edge of a Perilous New World.”, 2004
(Paul, The Washington Post, “The Undeclared Oil War”, June 28th, pg. A21) The diplomatic tussles only hint at what we'll see in the Middle East, where most of the world's remaining oil lies. For all the talk of big new oil discoveries in Russia and Africa -- and of how this gush of crude will "free" America and other big importers from the machinations of OPEC -- the geological facts speak otherwise. Even with the new Russian and African oil, worldwide oil production outside the Middle East is barely keeping pace with demand. In the run-up to the Iraq war, Russia and France clashed noisily with the United States over whose companies would have access to the oil in post-Saddam Hussein Iraq. Less well known is the way China has sought to build up its own oil alliances in the Middle East -- often over Washington's objections. In 2000 Chinese oil officials visited Iran, a country U.S. companies are forbidden to deal with; China also has a major interest in Iraqi oil. But China's most controversial oil overture has been made to a country America once regarded as its most trusted oil ally: Saudi Arabia. In recent years, Beijing has been lobbying Riyadh for access to Saudi reserves, the largest in the world. In return, the Chinese have offered the Saudis a foothold in what will be the world's biggest energy market -- and, as a bonus, have thrown in offers of sophisticated Chinese weaponry, including ballistic missiles and other hardware, that the United States and Europe have refused to sell to the Saudis. Granted, the United States, with its vast economic and military power, would probably win any direct "hot" war for oil. The far more worrisome scenario is that an escalating rivalry among other big consumers will spark new conflicts -- conflicts that might require U.S. intervention and could easily destabilize the world economy upon which American power ultimately rests. As demand for oil becomes sharper, as global oil production continues to lag (and as producers such as Saudi Arabia and Nigeria grow more unstable) the struggle to maintain access to adequate energy supplies, always a critical mission for any nation, will become even more challenging and uncertain and take up even more resources and political attention. This escalation will not only drive up the risk of conflict but will make it harder for governments to focus on long-term energy challenges, such as avoiding climate change, developing alternative fuels and alleviating Third World energy poverty -- challenges that are themselves critical to long-term energy security but which, ironically, will be seen as distracting from the current campaign to keep the oil flowing. This, ultimately, is the real energy-security dilemma. The more obvious it becomes that an oil-dominated energy economy is inherently insecure, the harder it becomes to move on to something beyond oil.

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Alternate China Resource Wars Scenario (2/2)
US-China competition over Saudi Oil will trigger World War 3 Luft, Director of the Washington D.C. based Institute for the Analysis of Global Security, 2004
(Gal, Los Angeles Times, “U.S., China on Collision Course Over Oil” February 2, http://articles.latimes.com/2004/feb/02/opinion/oe-luft2, Date accessed: July 2, 2008) Sixty-seven years ago, oil-starved Japan embarked on an aggressive expansionary policy designed to secure its growing energy needs, which eventually led the nation into a world war. Today, another Asian power thirsts for oil: China. While the U.S. is absorbed in fighting the war on terror, the seeds of what could be the next world war are quietly germinating. With 1.3 billion people and an economy growing at a phenomenal 8% to 10% a year, China, already a net oil importer, is growing increasingly dependent on imported oil. Last year, its auto sales grew 70% and its oil imports were up 30% from the previous year, making it the world’s No. 2 petroleum user after the U.S. By 2030, China is expected to have more cars than the U.S. and import as much oil as the U.S. does today. Dependence on oil means dependence on the Middle East, home to 70% of the world’s proven reserves. With 60% of its oil imports coming from the Middle East, China can no longer afford to sit on the sidelines of the tumultuous region. Its way of forming a footprint in the Middle East has been through providing technology and components for weapons of mass destruction and their delivery systems to unsavory regimes in places such as Iran, Iraq and Syria. A report by the U.S.-China Economic and Security Review Commission, a group created by Congress to monitor U.S.-China relations, warned in 2002 that “this arms trafficking to these regimes presents an increasing threat to U.S. security interests in the Middle East.” The report concludes: “A key driver in China’s relations with terrorist-sponsoring governments is its dependence on foreign oil to fuel its economic development. This dependency is expected to increase over the coming decade.” Optimists claim that the world oil market will be able to accommodate China and that, instead of conflict, China’s thirst could create mutual desire for stability in the Middle East and thus actually bring Beijing closer to the U.S. History shows the opposite: Superpowers find it difficult to coexist while competing over scarce resources. The main bone of contention probably will revolve around China’s relations with Saudi Arabia, home to a quarter of the world’s oil. The Chinese have already supplied the Saudis with intermediate-range ballistic missiles, and they played a major role 20 years ago in a Saudifinanced Pakistani nuclear effort that may one day leave a nuclear weapon in the hands of a Taliban-type regime in Riyadh or Islamabad. Since 9/11, a deep tension in U.S.-Saudi relations has provided the Chinese with an opportunity to win the heart of the House of Saud. The Saudis hear the voices in the U.S. denouncing Saudi Arabia as a “kernel of evil” and proposing that the U.S. seize and occupy the kingdom’s oil fields. The Saudis especially fear that if their citizens again perpetrate a terror attack in the U.S., there would be no alternative for the U.S. but to terminate its long-standing commitment to the monarchy – and perhaps even use military force against it. The Saudis realize that to forestall such a scenario they can no longer rely solely on the U.S. to defend the regime and must diversify their security portfolio. In their search for a new patron, they might find China the most fitting and willing candidate. The risk of Beijing’s emerging as a competitor for influence in the Middle East and a Saudi shift of allegiance are things Washington should consider as it defines its objectives and priorities in the 21st century. Without a comprehensive strategy designed to prevent China from becoming an oil consumer on a par with the U.S., a superpower collision is in the cards. The good news is that we are still in a position to halt China’s slide into total dependency.

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Oil Dependence Bad – Resource wars with China (1/7)
China is ever more preparing for a major resource war with the United States—An alliance with Russia, and Iran, as well as other petroleum-exporting nations, and the war would result in damage to the world worse than a major terrorist attack Kurlantzick, Visiting Scholar at the Carnegie Endowment for International Peace and author of "Charm Offensive: How China’s Soft Power is Transforming the World.", 2008 (Joshua, The Boston Globe, “Rearming the world Why nations are suddenly locked in an arms race unseen since the early days of the Cold War”, April 27th, pg. D1)
LAST SUMMER, AS Americans focused on the surge in Iraq, most ignored a military exercise with a potentially more far-reaching impact. In a remote location in the Ural Mountains, Russia, China, and several Central Asian nations gathered for a massive war game, ironically dubbed “Peace Mission 2007.” Thousands of troops, armored vehicles, fighter-bombers, and attack helicopters stormed a town in a mock battle that was supposed to simulate fighting a terrorist takeover. Beneath its antiterror veneer, Peace Mission 2007 was a classic display of military readiness: When it was over, the troops paraded before their assembled defense chiefs, and the whole event laid the groundwork for a closer military alliance among the participating nations. That such an exercise was held at all might seem shocking. Despite the global war on terrorism, and a steady drumbeat of civil conflicts, no war involving a major power like Russia has occurred in decades, and no external enemy threatens any of the Central Asian nations. But the exercise highlighted an alarming new reality. With much less fanfare than the early days of the Cold War, the world is entering a new arms race, and with it, a dangerous new web of military relationships. According to the Stockholm International Peace Research Institute, which tracks international armed forces spending, between 1997 and 2006 global military expenditures jumped by nearly 40 percent. Driven mainly by anxiety over oil and natural resources, countries are building their arsenals of conventional weapons at a rate not seen in decades, beefing up their armies and navies, and forging potential new alliances that could divide up the world in unpredictable ways. Much of this new arms spending is concentrated among the world’s biggest consumers of resources, which are trying to protect their access to energy, and the biggest producers of resources, which are taking advantage of their new wealth to build up their defenses at a rate that would have been unthinkable for a developing country until recently. This power shift comes with enormous implications for the United States and its Western allies. With more military power in the hands of authoritarian and sometimes unstable states, the arms race creates a growing possibility for real state-to-state conflict — a prospect that would dwarf even a major terror attack in its power to disrupt the world’s stability. It also will force the West to change, to make its own plans to shore up resources, and to get used to a world arsenal it can no longer dominate. For much of the past six decades, the world hung in a kind of armed equilibrium, with major powers unchallenged in their military and economic preeminence. During the Cold War, it was ideology that occupied the foreground for strategic thinkers; and even more recently, the idea of a power struggle driven by resources seemed remote. But this situation has changed dramatically in just the past decade. As easily accessible global stocks of oil dwindle, the world supply of oil and gas has been concentrated in a smaller and smaller number of hands over just the past decade. Some 80 percent of all reserves now are concentrated in fewer than 10 nations. The biggest consumers desperately want to protect their secure flows of oil and gas from this handful of key suppliers, while simultaneously preventing their rivals from inking deals with resource-rich nations. The result, in some cases, is alliances between consumers and producers; in others, it is new and unexpected links. Middle East specialist Flynt Leverett calls some of these new relationships the emerging “Axis of Oil,” an informal alliance between oil producers like Venezuela, Kazakhstan, Iran, and Russia, which are increasing state control over their petroleum, and powerful authoritarian developing nations desperately short of resources. The biggest of these nations is China, which will surpass the United States in its petroleum use within the next two decades. And, fittingly, it is China that is driving a great deal of the current arms race. It has been increasing its defense budget by roughly 20 percent annually, and begun transforming the People’s Liberation Army, historically an overpoliticized, undertrained force, into a leaner, truly modern fighting machine. “The pace and scope of China’s military expansion are startling,” says John Tkacik, a China analyst at the Heritage Foundation, a think tank in Washington. Meanwhile, China has also been inking big military deals with new allies across the globe. In 2004, China signed a

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↓ Continued ↓

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Oil Dependence Bad – Resource wars with China (2/7) ↑ Kurlantzick Continued ↑
deal with Iran in which it will spend as much as $100 billion on future supplies of Iranian petroleum, and Iran has become one of China’s biggest arms clients. To keep strong links with Sudan, which sends roughly half of all its oil to China, Beijing has provided weapons to the Khartoum regime, despite international pressure in the wake of the Darfur genocide. Over the past decade, China has been building other types of alliances as well — training other countries’ army officers, for instance, with the kind of education programs once dominated by the Pentagon. In the Philippines, where the military historically had deep ties to America and where China has inked a joint offshore oil exploration deal, one top defense official says many of his leading officers now head to China for short courses. “This is now considered relatively prestigious, to go to China,” agrees Philippine defense analyst Rommel Banlaoi. “That wouldn’t have been true a few years ago.” In oil-rich Venezuela, China has been training defense satellite technicians, elite forces, and other military personnel. China has also helped Hugo Chavez revamp his oil infrastructure, and Venezuela’s president has vowed to roughly triple his shipments to Beijing in the coming years. In Central Asia, Chinese oil companies, aided by large loan and aid packages from Chinese state-linked banks, have helped leading petroleum producers in that region orient new pipelines toward China. And with Central Asian nations that themselves possess aging, post-Soviet armed forces, China has become a major military player.China is only one of the drivers in the new global arms race. Playing off its role as both energy supplier and, in some cases, consumer, Russia has increased its arms sales to border nations in the Caspian region in order to further its energy links. In Central Asia, the Kremlin has stepped up training for local militaries, and in Indonesia, one of the world’s largest gas producers, then-Russian President Vladimir Putin last summer signed a deal to sell some $6 billion in new weapons. Under Putin, the Kremlin also vowed to rebuild its navy. “It’s clear that a new arms race is unfolding in the world,” Putin declared just before leaving office. India has been building its arsenal, too, launching a massive ballistic missile program. Singapore has vastly upgraded its forces, and in the Middle East, Saudi Arabia recently bought billions of dollars’ worth of new fighter jets from Europe, new spending nearly matched by some of the other Gulf states. In part to counter the efforts of Russia and China, Washington and other leading industrialized powers are building their own military links — and again, these have little to do with ideological agreement. With Australia, Singapore, Japan, and India — three democracies and one essentially authoritarian state — Washington has started holding joint military exercises, including a vast war game last summer at virtually the same time as Peace Mission 2007. On a recent visit to India by Secretary of Defense Robert Gates, another top defense official told reporters that the Pentagon was building ties to India “as a hedge” against China. In the Caspian region, the United States is building its own military-energy ties. Over the past decade, it has boosted defense links to nations like Azerbaijan and Georgia critical to petroleum pipelines serving America, while simultaneously offering public White House meetings to Caspian leaders — even to Azeri President Ilham Aliyev, accused of massive fraud in the past election. Across oil-rich Central Asia, the Pentagon has negotiated deals to allow US forces to operate out of bases in many Central Asian states, and is now cultivating Turkmenistan — a major gas producer where, since the death of its long-ruling autocratic leader, the nation has taken some tentative steps to re-engage with the West. In the Middle East, the United States is also building a new alliance to contain Iran’s influence. Over the past year, the Bush administration aggressively pressured Congress to allow Washington to sell some $20 billion worth of arms to Saudi Arabia in order to build up a bulwark against Iran. In many ways, these new deals echo the old “Great Game,” the competition among Western powers for influence in Central Asia. But today the situation is far more complex: With so much money in the hands of resource-rich countries, the line is now much fuzzier between major powers and the developing nations whose resources they are sparring over. It is also risky. Although this new arms race might produce nothing more than bigger toys for the Pentagon and the People’s Liberation Army, many defense and energy experts think this is unlikely. The buildup could push opponents toward damaging standoffs, as in the Cold War, and even escalate into real clashes. In some arenas, the new alliances already seem to be sparking conflict. With China’s more sophisticated submarine fleet increasingly moving into seas claimed by Japan, and Japan’s own self-defense forces becoming more aggressive, Japan publicly exposed Chinese sub incursions, leading to perhaps the worst downturn in Beijing-Tokyo relations in recent memory.

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Oil Dependence Bad – Resource wars with China (3/7)
Oil wars are coming—increased competition between the US and China in Saudi Arabia will lead to competition and clash Bringham Post, 2006
(“US and China are set to clash over dwindling energy reserves”, December 4, pg. 28) Global energy demand is expected to hit 118 million barrels per day by 2030 versus 85 million bpd in 2006, and the United States, China and India will account for half of that growth. While Saudi Arabia will supply many of the extra barrels that China will consume in coming years, officials there seek to play down US worries. US experts say Washington and Beijing have reached a fork in the road which could either lead to long-term cooperation or competition. "The Chinese government is enormously preoccupied with energy security these days," said Paul Saunders, executive director of the Nixon Centre. "It's one of those issues that has great potential to be either a big plus or a big minus in Chinese relations." Kang Wu, a senior fellow at the East-West Center in Honolulu, which studies issues of common concern to Asia and the United States, says: "On the positive side, both are consuming countries - you could do something there. On the other hand they are also competitors for oil. You could potentially clash." But, he said US officials increasingly equate energy security and national security, which emphasises non-economic goals over trade and bilateral cooperation. "National security often means national policy and nationalism," he said. "There may be more competition than cooperation."

China’s aggressive energy policies are leading them into conflict with the US over Oil Mellor and Lim, The International Herald Tribune, 2006
(William and Le-Min, “China Drills Where Others Dare Not Seek Oil”, October 2, pg. 16) China's oil consumption has almost quadrupled to 7.4 million barrels a day, making China the No. 2 consumer, behind the United States and ahead of Japan. As demand soars, production at China's biggest oil field, Daqing, is in decline. ''There's no gentle way of saying this,'' said Han Wenke, deputy director of the Beijing-based Energy-Research Institute, which is linked to the government. ''We need to find oil fast.'' In its search, China is scouring the backwaters of the world, from monsoon-lashed Myanmar to the deserts of Iran, to the deep seas off Sudan and North Korea, cutting deals with governments that the United States and many other countries consider pariahs. China's oil diplomacy is putting the country on a collision course with the United States and Western Europe, which have imposed sanctions on some of the countries where China is doing business. ''China is so desperate for energy resources that they will take the heat from the international community,'' said Mike Green, an analyst at the Center for Strategic and International Studies in Washington. Case in point: Iran. The United States and Europe are pushing the United Nations to impose sanctions because of Tehran's refusal to suspend uranium enrichment programs. Although China, a permanent member of the Security Council, supported the world body's demand that Iran curtail the program, it has threatened to veto any measures imposing sanctions. ''This is the first test of whether the world can influence China, or China influence the world,'' Green said. Around the globe, from Angola to Venezuela, China is locked in competition for oil resources with Western countries and another emerging-market giant, India. China's search for oil is driven by its growing economic might. Over the past 28 years, the Chinese economy has grown at an average of 9.7 percent a year; in the quarter ended in June, it grew at 11.3 percent. In the first half of 2006, China imported 522,000 barrels a day from Angola, its largest supplier; 464,000 barrels from Saudi Arabia; and about 338,000 barrels each from Iran and Russia. ''I see China and the U.S. coming into conflict over energy in the years ahead,'' said Jin Riguang, a Chinese government oil and natural gas adviser and a member of the Standing Committee of the Chinese People's Political Consultative Conference.

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Oil Dependence Bad – Resource wars with China (4/7)
The prospect of a Sino-Russian alliance attacking the US over oil is a real prospect Dyer, South China Morning Post, 2008 (Gwynne “A Credible Threat?” February 14, pg. 13)
So what is all the rest of the money for? According to Michael Klare, defence correspondent for The Nation, the answer is obvious. "The US military posits its future on the China threat," he said. "That is the ultimate justification for a defence budget of $500US billion a year. There is no other plausible threat. If you look at the new budget which came out ... it calls for vast spending on new weapons systems that can only reasonably be justified by what they call a 'peer competitor', a future superpower that could threaten the US, and only China conceivably can fill that bill. Not Iran, not Iraq, or some [other] rogue state. Only China fits that bill." It's obvious, when you think about it. If the US had no present or prospective "peer competitor", how could the Pentagon justify spending huge amounts of money on next-generation weapons? For beating up "rogue states", last-generation-but-one weapons are more than adequate. So there has to be a peer competitor, whether it understands its role in the scheme of things or not. And only China can fill that role. So what is the alleged competition about? Energy, of course, and mostly oil. "The Pentagon and US strategists talk openly about US-China competition for energy in Africa, in the Caspian Sea basin, and in the Persian Gulf, and they talk about the danger of a China-Russia strategic alliance that the US has to be able to counter," Mr Klare said. "This is very much part of US concerns. They talk about the Shanghai Co-operation Organisation [of China and former Soviet states], as a proto-military alliance that threatens America's vital interests. "Terrorist assaults and skirmishes with Iran or some other rogue state are more likely on the curve of probability, and the military is geared to fight these kinds of regional skirmishes ... But when they talk about the greatest threats that they might have to face, for which they have to allocate their largest sums and acquire their most potent weapons, it's the China-Russia alliance that they're preparing for and asking Congress to allocate the largest sums of money for." But the US military is not telling the American public, for the moment, that China is why they want all that money. The amorphous, infinitely expandable "war on terror" can be used to cover all sorts of other expenditure, as well. Nobody is required to prove that China really does pose a strategic threat to America's oil supplies, or to demonstrate that a Chinese-Russian alliance is a serious political possibility.

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Oil Dependence Bad – Resource wars with China (5/7)
China is not only using a substantial amount of oil, but lots of other resources as well; resource war likely and strategic Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) RESOURCE WARS are largely back in vogue within the U.S. threat industry because of China’s spectacular rise. Brazil, India, Malaysia and many others that used to sit on the periphery of the world economy are also arcing upward. This growth is fueling a surge in world demand for raw materials. Inevitably, these countries have looked overseas for what they need, which has animated fears of a coming clash with China and other growing powers over access to natural resources. Within the next three years, China will be the world’s largest consumer of energy. Yet, it’s not just oil wells that are working harder to fuel China, so too are chainsaws. Chinese net imports of timber nearly doubled from 2000 to 2005. The country also uses about one-third of the world’s steel (around 360 million tons), or three times its 2000 consumption. Even in coal resources, in which China is famously well-endowed, China became a net importer in 2007. Across the board, the combination of low efficiency, rapid growth and an emphasis on heavy industry—typical in the early stages of industrial growth—have combined to make the country a voracious consumer and polluter of natural resources. America, England and nearly every other industrialized country went through a similar pattern, though with a human population that was much smaller than today’s resource-hungry developing world. Among the needed resources, oil has been most visible. Indeed, Chinese state-owned oil companies are dotting Africa, Central Asia and the Persian Gulf with projects aimed to export oil back home. The overseas arm of India’s state oil company has followed a similar strategy—unable to compete head-tohead with the major Western companies, it focuses instead on areas where human-rights abuses and bad governance keep the major oil companies at bay and where India’s foreign policy can open doors. To a lesser extent, Malaysia engages in the same behavior. The American threat industry rarely sounds the alarm over Indian and Malaysian efforts, though, in part because those firms have less capital to splash around and mainly because their stories just don’t compare with fear of the rising dragon. These efforts to lock up resources by going out fit well with the standard narrative for resource wars— a zero-sum struggle for vital supplies. But will a struggle over resources actually lead to war and conflict?

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Oil Dependence Bad – Resource wars with China (6/7)
China's overtures to Saudi Arabia mark a rivalry among big consumers over oil that will inevitably draw the US into conflict Roberts, Author of "The End of Oil: On the Edge of a Perilous New World," 04 (Paul, The Washington Post, "The Undeclared Oil War," 6-27-4, http://www.energybulletin.net/node/842, 7-3-8)
But China's most controversial oil overture has been made to a country America once regarded as its most trusted oil ally: Saudi Arabia. In recent years, Beijing has been lobbying Riyadh for access to Saudi reserves, the largest in the world. In return, the Chinese have offered the Saudis a foothold in what will be the world's biggest energy market -- and, as a bonus, have thrown in offers of sophisticated Chinese weaponry, including ballistic missiles and other hardware, that the United States and Europe have refused to sell to the Saudis. Granted, the United States, with its vast economic and military power, would probably win any direct "hot" war for oil. The far more worrisome scenario is that an escalating rivalry among other big consumers will spark new conflicts -- conflicts that might require U.S. intervention and could easily destabilize the world economy upon which American power ultimately rests.

China and the Us will be in direct competition for oil, causing resource wars Ross, Political grass-roots activist, 04 (David, ZNet Venezuela, " Plan War and the Hubbert Oil Curve, An Interview with Richard Heinberg," 4-16-4, http://www.energybulletin.net/node/73, 7-3-8)
So that’s Plan A, and it doesn’t look like it’s going to have a very happy ending because one can foresee more and more armed conflicts between heavily militarized consuming nations and poorer resourcerich producer nations. And eventually, there will be conflicts between competing consuming nations. China, for example, wants to industrialize. China is using more and more oil every year. If the Chinese are going to raise their standard of living and industrialize, they’re going to need lots of oil. But if global oil production peaks, that means the Chinese will be in direct competition for every barrel of oil with the already developed countries like the U.S. So, how are we going to work that out? Using nuclear bombs? I hope not, but right now I don’t see any other thinking going on.

The US is already taking military precautions to secure oil resources against China Roberts, Author of "The End of Oil: On the Edge of a Perilous New World," 04 (Paul, The Washington Post, "The Undeclared Oil War," 6-27-4, http://www.energybulletin.net/node/842, 7-3-8)
In other words, we are on the cusp of a new kind of war -- between those who have enough energy and those who do not but are increasingly willing to go out and get it. While nations have always competed for oil, it seems more and more likely that the race for a piece of the last big reserves of oil and natural gas will be the dominant geopolitical theme of the 21st century. Already we can see the outlines. China and Japan are scrapping over Siberia. In the Caspian Sea region, European, Russian, Chinese and American governments and oil companies are battling for a stake in the big oil fields of Kazakhstan and Azerbaijan. In Africa, the United States is building a network of military bases and diplomatic missions whose main goal is to protect American access to oilfields in volatile places such as Nigeria, Cameroon, Chad and tiny Sao Tome -- and, as important, to deny that access to China and other thirsty superpowers.

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Oil Dependence Bad – Resource wars with China (7/7)
The US and China have had diplomatic conflicts over Middle Eastern oil Roberts, Author of "The End of Oil: On the Edge of a Perilous New World," 04 (Paul, The Washington Post, "The Undeclared Oil War," 6-27-4, http://www.energybulletin.net/node/842, 7-3-8)
In the run-up to the Iraq war, Russia and France clashed noisily with the United States over whose companies would have access to the oil in post-Saddam Hussein Iraq. Less well known is the way China has sought to build up its own oil alliances in the Middle East -- often over Washington's objections. In 2000 Chinese oil officials visited Iran, a country U.S. companies are forbidden to deal with; China also has a major interest in Iraqi oil.

Japan and China are currently waging a diplomatic war over oil resources Roberts, Author of "The End of Oil: On the Edge of a Perilous New World," 04 (Paul, The Washington Post, "The Undeclared Oil War," 6-27-4, http://www.energybulletin.net/node/842, 7-3-8)
While some debate whether the war in Iraq was or was not "about oil," another war, this one involving little but oil, has broken out between two of the world's most powerful nations. For months China and Japan have been locked in a diplomatic battle over access to the big oil fields in Siberia. Japan, which depends entirely on imported oil, is desperately lobbying Moscow for a 2,300mile pipeline from Siberia to coastal Japan. But fast-growing China, now the world's second-largest oil user, after the United States, sees Russian oil as vital for its own "energy security" and is pushing for a 1,400-mile pipeline south to Daqing. The petro-rivalry has become so intense that Japan has offered to finance the $5 billion pipeline, invest $7 billion in development of Siberian oil fields and throw in an additional $2 billion for Russian "social projects" -- this despite the certainty that if Japan does win Russia's oil, relations between Tokyo and Beijing may sink to their lowest, potentially most dangerous, levels since World War II.

Increased demand from China, India, and Brazil complicates the US's quest for energy security Roberts, Author of "The End of Oil: On the Edge of a Perilous New World," 04 (Paul, The Washington Post, "The Undeclared Oil War," 6-27-4, http://www.energybulletin.net/node/842, 7-3-8)
Asia's undeclared oil war is but the latest reminder that in a global economy dependent largely on a single fuel -- oil -- "energy security" means far more than hardening refineries and pipelines against terrorist attack. At its most basic level, energy security is the ability to keep the global machine humming -that is, to produce enough fuels and electricity at affordable prices that every nation can keep its economy running, its people fed and its borders defended. A failure of energy security means that the momentum of industrialization and modernity grinds to a halt. And by that measure, we are failing. In the United States and Europe, new demand for electricity is outpacing the new supply of power and natural gas and raising the specter of more rolling blackouts. In the "emerging" economies, such as Brazil, India and especially China, energy demand is rising so fast it may double by 2020. And this only hints at the energy crisis facing the developing world, where nearly 2 billion people -- a third of the world's population -- have almost no access to electricity or liquid fuels and are thus condemned to a medieval existence that breeds despair, resentment and, ultimately, conflict.

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Oil Dependence Bad – Resource wars with China/India
China and India's pursuit of oil will lead to direct competition with the US and sow the seeds for oil wars Ibrahim, Former Middle East correspondent for the New York Times, Energy Editor of the Wall Street Journal, Managing Director of the Dubai-based Strategic Energy Investment Group, 04 (Youssef M., Axis of Logic, "As prices hit the roof, oil wars will keep burning," 6-1-4, http://www.energybulletin.net/node/443, 7-3-8)
Terrorism aside, the oncoming of two huge new consumers of oil onto world markets - China and India – is a major new development. Last year 40 per cent of the total rise of world oil consumption came from China alone. The world's most populous country is a formidable industrial power with a juggernaut economy growing at rates exceeding nine per cent a year. That could add one per cent or more to world's oil consumption which hovers around 83 million barrels a day. India is close behind as its one billion plus population is growing richer and achieving higher standards of industry and living. That means more cars, more electricity and more oil consumption. In less than 10 years China will surpass the United States as the world's largest consumer of oil. That carries geopolitical consequences. Which raised the question: Who's Afraid of the United States? Already most Gulf oil producers are looking east toward Asia. China, after all is a superpower with weapons and political clout. As is the European Union, another big comer on the energy scene. As the enlarged Union with countries like Poland, the Slav republics and others begin to grow their economies, they will need more oil too. Hence the notion of the new oil wars. There is simply not enough of it. And there is, for the next two decades at least, no substitute to it. Solar power, fuel cells and hybrid engines-all are still in their infancy.

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China/India war will draw in Japan
China, India, and Japan have an intricate relationship that will lead to a global war Emmott, Staff Writer, 08 (Bill, The Australian, June 4, “Power Rises in the East”,
http://www.lexisnexis.com/us/lnacademic/auth/checkbrowser.do?ipcounter=1&cookieState=0&rand=0.9009116 348502815&bhcp=1, 7/10/08) The relationship between China, India and Japan is going to become increasingly difficult during the next decade. An array of disputes, historical bitternesses and regional flashpoints surround or weigh down on all three. Conflict is not inevitable but nor is it inconceivable. If it were to occur -- over Taiwan, say, or the Korean Peninsula, or Tibet or Pakistan -- it would not simply be an intra-Asian affair. The outside world inevitably would be drawn in, and especially the US, given its extensive military deployments and alliances in Asia. Such a conflict could break out very suddenly. Managing the relationship between China, India and Japan promises to be one of the most important tasks in global affairs during the next decade and beyond, comparable to the need to find peaceful ways to manage the relationships between Europe's great powers during the 20th century. The opportunity, in terms of commerce and of human welfare, is tremendous, if the relationship is handled well. But so is the danger if the relationship goes wrong. Managing this relationship will also be difficult because as India and China grow and expand their trade and overseas investment, their economic and political interests are going to overlap more and more, with each encroaching increasingly on what the other considers to be its natural backyard. The overlapping of interests is already happening, as China reaches across to Africa through the Indian Ocean for resources and as India reaches across to East Asia, through the Malacca Strait between Indonesia and Malaysia, for markets and commercial partners. The most basic point, though, is that even without overt hostility the politicians and strategic planners of all three countries will feel obliged, by their sense of national responsibility and of historic opportunity, to compete for advantage, to prepare for the worst, to build alliances and networks against each other, just in case circumstances change. A senior official at India's Ministry of External Affairs, one of the least hostile men possible, put this especially appositely in an interview in March 2007: ``The thing you have to understand is that both of us (India and China) think that the future belongs to us. We can't both be right.''

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Oil Dependence Bad – China War / Spratlys (1/2)
China’s increased oil consumption is leading to conflict over the Spratly islands Bordonaro, PINR Writer, 2006
(Federico, Power and Interest News Report “The Importance of the Spratly Islands”, November 28th, http://www.pinr.com/report.php?ac=view_report&report_id=589&language_id=1, Date accessed: July 6, 2008) The Spratly Islands, located at the southern end of the South China Sea, remain crucial to the region's geostrategic setting. In late October and early November this year, Beijing and the Association of Southeast Asian Nations (A.S.E.A.N.) tried to re-launch friendly talks related to the territorial disputes of the islands. They discussed broad Southeast Asian security issues and opened the way for possibly fruitful, structured, diplomatic dialogue. The context, however, remains extremely complicated. Claimed in their entirety by China, Taiwan and Vietnam, and partially by the Philippines, Malaysia and Brunei, the contested isles and reefs are a potential catalyst for major inter-state conflict in the coming years. In fact, all traditional geopolitical issues are at work in the Spratlys controversy: sovereignty, control of the vital hydrocarbons, control of the Sea Lines of Communication (S.L.O.C.s), and the capability to project power and influence across a broad region. At a time when China is emerging as a political and military -- and not only economic -- power, whose strategic reach expands and involves new maritime ambitions, the South China Sea issue poses a huge challenge to Washington and its Asian allies. Beijing is adopting a complex policy, predicated upon diplomatic openness to enhanced cooperation with A.S.E.A.N. and, at the same time, upon a self-confident, assertive stance on the South China Sea.

China needs to find another source to fill its oil needs other than the Spratly islands, otherwise the US and China will end up in a war Miller, Commander US Navy, 2002
(Mark, “Maintaining Peace in the South China Sea and the Spratly Islands: Are there Acceptable Alternatives to the US Naval Forces Forwad Deployed in the Asia Pacific Region?) One can make an argument that it is not in China's best interest to claim the potential oil and natural gas resources of the Spratlys and their surrounding waters by military force. However, the U.S. must be postured with the capability to dissuade deter and defeat if necessary any seizure by force. Upsetting the regional balance of power by a seizure of the Spratlys does not now seem to be in China's interest but her long term natural resource and energy needs are a growing concern. Additionally any disruption of the shipping lanes in the South China Sea is clearly not in China's interest as it would severely effect her economy which relies heavily on such shipping. However, China has long espoused her territorial claims over the Spratlys which are somewhat similar to claims she makes on Taiwan. It can not be overlooked that China has repeatedly made small scale military incursions into the area to reaffirm her sovereignty claims. Failure of the U.S. to be able to dissuade or deter potential Chinese aggression would lead to a power vacuum in the region with the Chinese being the nation most likely to fill the vacuum.

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Oil Dependence Bad – China War / Spratlys (2/2)
China likely to go to war to ensure oil supply from the Spratly Islands Mallet, contributing editor for Energy Bulletin, 04 (Victor, Energy Bulletin/Financialexpress.com, May 27,
“Asia’s Surging Energy Demand”, http://www.energybulletin.net/node/379) "It's an energy crisis," says Joe Zhang, head of China research at UBS, the investment bank, in Hong Kong. "It's a long-term crisis, and one that will deepen." Andy Xie, Asia-Pacific chief economist for Morgan Stanley, is equally concerned. "The whole system is basically maxed out," he says. "The cities even have to shut down neon lights to give power to the factories operating at night. "China is racing to build the infrastructure to meet energy demand. It plans to install 42 gigawatts of generating plant this year, about the same as the UK's entire installed capacity, and do the same again in 2005. Even before the power stations are built, oil consumption is being boosted by the use of emergency diesel generators and the growing number of cars on the roads. The impact is reverberating across Asia, and is felt in Europe and North America, where drivers are complaining about the high price of fuel. Commodities analysts such as Jeffrey Currie of Goldman Sachs in London say it would be wrong to attribute high oil prices purely to surging Chinese demand. The real problem, he argues, is one of supply. For decades there has been severe under-investment in the global infrastructure to deliver oil due to poor rates of return on energy-related investments, he says. "Essentially demand has caught up with the capacity to produce," Currie says. The quest for oil has been suggested as an-explanation for Bush's obsession with Iraq, for Japan's military presence there as a US ally, and for China's interest in the disputed Spratly islands of the South China Sea, thought to possess substantial natural resources. The tightness of energy supplies in Asia has raised concerns about a possible Islamist terrorist threat to shipping in the narrow Strait of Malacca and the port of Singapore. Already there are visible tensions among east Asian nations over competition for oil and gas, and between the US and Asian governments over the political credentials of Iran (suspected of plans to build nuclear weapons) as a source of additional oil. "We all will struggle for Middle Eastern oil among the three of us -- China, India and Japan," says Yoichi Funabashi, a leading commentator for Japan's Asahi Shimbun newspaper. He argues that China's willingness to sell military hardware, not an option for pacifist Japan, could give Beijing the edge over Tokyo in negotiations with Middle East oil producers. The tortured progress of two oil projects, one in Russia and one in Iran, illustrate how seriously the issue of energy security is taken in Asian capitals. For months Japan and China have been at loggerheads over the destination of a proposed oil pipeline from Angarsk in Siberia. Beijing wants the pipeline to come to Daqing in northern China. Tokyo has vigorously promoted a longer and more costly route to the Russian port of Nakhodka near Vladivostok, from where oil could be shipped to Japan, China or further afield. The latest signs are that Japan has triumphed by offering to help finance the pipeline, although some Japanese officials question the financial viability of a scheme that could cost as much as $10bn. Nor is the battle necessarily over. "The Chinese are not naive," says one government adviser in Tokyo. "They will counterattack."

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China push for the Spratlys is likely
China is eyeing the Spratly islands in an attempt to secure energy resources Thornhill, Financial Times (London), 2002
(John, “As the world's most populous nation emerges as the next Asian superpower, John Thornhill examines the possible repercussions for the security and the economy of the region” December 3, pg 17) China's voracious demand for energy resources has already led it into a contest for the sovereignty of the Spratly Islands in the South China Sea, which are thought to be rich in underwater oil reserves. Although China has agreed with Asean to resolve this dispute by peaceful means, it has not abandoned its claims. Beijing also has outstanding territorial disputes with other neighbours, including Japan over the Senkaku islands.

There is a lack of ability for China to secure energy resources in the Middle East because of the United States increasing dependence gives China no room to enter Blanche, Writer for Global News Wire, 2002 (Ed, Global News Wire; Arabies Trends “China Turns to the Gulf” January 1st, Lexis)
Chinese concerns about energy security have been heightened by the likelihood of a US war against Iraq. This has accelerated efforts to diversify its energy sources away from those in the Middle East. But, as with the Americans who are seeking to do the same thing, the hard fact is that the Middle East, which sits on 65 percent of the world's proven oil reserves, is going to be primary source of energy for decades to come. Even as China seeks to diversify its oil and gas imports in Asia, after 2010 there will be few countries in that region still able to export. Indonesia and Malaysia, long the region's largest exporters, are expected to become net oil importers themselves between 2005 and 2010. For Beijing, the Middle East's remoteness creates strategic vulnerabilities. The prospect of terrorist attacks on oil installations and tanker traffic has only heightened security concerns and caused dilemmas for China. The United States, the main military power in the region, guarantees the security of oil supplies, and Beijing is thus dependent on Washington in this regard. Given the strained relations between them, this is not a position that gives China's leadership much comfort. This rivalry is intensifying as China moves towards becoming East Asia's dominant power, challenging the Americans while increasingly competing for energy supplies. "China's increased dependence on Middle Eastern oil is bound to affect its attitude and behavior in the region, as in East Asia," according to Wu Lei of the School of International Relations at Yunnan University. "However, if the US continues to dominate the Middle East, there may be little room there for the Chinese to gain a political and military foothold. Because its ambitions are more limited than those of the US, Russia, and even Iraq, Iran and Turkey, China has the advantage of a lack of political baggage, which has helped to broaden its involvement with a few oil producers in the Middle East," Wu wrote in a recent paper. "Although concerns about oil security have brought China's interests closer to those of the oildependent West and Japan and Korea, there are many reasons to believe that China will have to take a different tack from them. Firstly, China is a new actor in Middle Eastern and international oil markets. Secondly in the Middle East the influence wielded by Western powers led by the US is so great that there is little room for China to secure a beachhead.

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US/China War over Spratlys = Nuclear War
If the US and China enter a war in the South China Sea, Nuclear Annihilation would become inevitable Straits Times (Singapore), 2000 (Ching Cheong, “No one gains in war over Taiwan”, June 25th, Lexis)
THE high-intensity scenario postulates a cross-strait war escalating into a full-scale war between the US and China. If Washington were to conclude that splitting China would better serve its national interests, then a full-scale war becomes unavoidable. Conflict on such a scale would embroil other countries far and near and -horror of horrors -raise the possibility of a nuclear war. Beijing has already told the US and Japan privately that it considers any country providing bases and logistics support to any US forces attacking China as belligerent parties open to its retaliation. In the region, this means South Korea, Japan, the Philippines and, to a lesser extent, Singapore. If China were to retaliate, east Asia will be set on fire. And the conflagration may not end there as opportunistic powers elsewhere may try to overturn the existing world order. With the US distracted, Russia may seek to redefine Europe's political landscape. The balance of power in the Middle East may be similarly upset by the likes of Iraq. In south Asia, hostilities between India and Pakistan, each armed with its own nuclear arsenal, could enter a new and dangerous phase. Will a full-scale Sino-US war lead to a nuclear war? According to General Matthew Ridgeway, commander of the US Eighth Army which fought against the Chinese in the Korean War, the US had at the time thought of using nuclear weapons against China to save the US from military defeat. In his book The Korean War, a personal account of the military and political aspects of the conflict and its implications on future US foreign policy, Gen Ridgeway said that US was confronted with two choices in Korea -truce or a broadened war, which could have led to the use of nuclear weapons. If the US had to resort to nuclear weaponry to defeat China long before the latter acquired a similar capability, there is little hope of winning a war against China 50 years later, short of using nuclear weapons. The US estimates that China possesses about 20 nuclear warheads that can destroy major American cities. Beijing also seems prepared to go for the nuclear option. A Chinese military officer disclosed recently that Beijing was considering a review of its "non first use" principle regarding nuclear weapons. Major-General Pan Zhangqiang, president of the military-funded Institute for Strategic Studies, told a gathering at the Woodrow Wilson International Centre for Scholars in Washington that although the government still abided by that principle, there were strong pressures from the military to drop it. He said military leaders considered the use of nuclear weapons mandatory if the country risked dismemberment as a result of foreign intervention. Gen Ridgeway said that should that come to pass, we would see the destruction of civilisation.

Spratly Island war will use be a nuclear war The Straits Times, 1995
(“Choose your own style of democracy, Asian nations told”, May 21st, Lexis) In the first -the worst possible scenario -Asian countries would go to war against each other, he said. It might start with clashes between Asian countries over the Spratly Islands because of China's insistence that the South China Sea belonged to it along with all the islands, reefs and seabed minerals. In this scenario, the United States would offer to help and would be welcomed by Asean, he said. The Pacific Fleet begins to patrol the South China Sea. Clashes occur between the Chinese navy and the US Navy. China declares war on the US and a full-scale war breaks out with both sides resorting to nuclear weapons.

A war over the Spratly islands would lead to a US-China Nuclear war The Nikkei Weekly (Japan), 1995
(“Developing Asian nations should be allowed a grace period to allow their economies to grow before being subjected to trade liberalization demands, says Malaysian Prime Minister Mahathir Mohamad”, July 3rd, pg. 15, Lexis) Mahathir sees Asia developing in three possible ways in future. In his worst-case scenario, Asian countries would go to war against each other, possibly over disputes such as their conflicting claims on the Spratly Islands. China might then declare war on the U.S., leading to full-scale, even nuclear, war.

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Oil is Zero-Sum between US & China
Oil is a Zero-Sum game—China’s aggressive oil policies threaten the US Imports Tsuruoka, Investor’s Business Daily, 2005
(Doug, “China's Ever-Growing Oil Needs May Result In A Global Shortage”, January 26th, http://www.globalsecurity.org/org/news/2005/050126-china-oil.htm, date accessed: July 2, 2008) It's nice to have a red-hot economy like China's that's hitting on all cylinders. But where will it keep getting the gas to fill its tank? And will there be enough to go around? On Tuesday, China said its GDP rose a faster-than-expected 9.5% in 2004 to a record $1.65 trillion. China's demand for crude has grown even faster. Its oil imports hit a record 12.1 million tons in December. For 2004, they soared nearly 35% to 122.7 million tons. China will consume 8 million barrels of oil daily by the end of 2006, the U.S. Energy Information Administration estimates. vChinese demand has been a big factor, pushing oil prices to record levels last year. As China guzzles crude to feed its breakneck economy, it could trigger a global shortage. China is striking deals with oil exporters around the world to secure its supply. vThat could leave other nations dry. The U.S., which is the world's largest consumer of oil, would be the most affected. "The Chinese are on an aggressive quest to increase their supply of oil all around the world; whether Iran, Sudan or Venezuela, you name it, they are after it," said James Lilley, an ambassador to China under President George H. W. Bush. Saudi Arabia, Oman, Sudan and Yemen already supply over 39% of China's crude, according to China's Customs General Administration. The Institute for Analysis of Global Security, a Washington think tank, predicts in 20 years China will import as much oil as the U.S., or about 10 million barrels a day

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Chinese Oil Demand Increasing
China’s consumption is increasing—they are starting to increase imports of oil Oil and Gas Journal, 2007 (“China’s Crude Production Rising Slower than Demand”, May, 21st, pg. 31)
The FGE paper reviewed China's petroleum and gas production during the nation's 10th 5-year plan. During the 10th 5-year plan, China's added proved oil reserves increased to 34.8 billion bbl compared with 26.7 billion bbl for the 9th 5-year plan. The Asian giant's proved gas reserves increased to 2.5 trillion cu m by 2005 compared with 1.2 trillion cu m in 2000. During 2000-05, China's oil consumption grew much faster than its oil production. Exports for oil decreased because of domestic oil demand growth. China's crude oil imports increased to 2.54 million b/d in 2005 compared with 1.4 million b/d in 2000. Meanwhile, China's crude oil exports decreased to 161,300 b/d in 2005 compared with 205,600 in 2000. The Middle East has been the largest source for China's import, with the nation receiving more than 50% of its total imports from that region. During the last 5 years, China began to diversify its import sources for crude oil. The share of imports from Africa increased to 30.3% from 22.7%. China's share of imports from Europe increased to 11.5% from 5.6%.

China is starting to communicate with Saudi Arabia over oil Tsuruoka, Investor’s Business Daily, 2008
(Doug, “China And Mideast Expand Ties As Oil, Oil Money Seek Homes”, June 16th, http://www.investors.com/editorial/IBDArticles.asp?artsec=16&issue=20080616, date accessed: July 2, 2008) The Chinese are seeking broader economic ties with the Arab world. This includes expanded trade in construction, telecoms and other areas. They're also selling missiles and other military gear to nations like Saudi Arabia. "China assumes there's going to be a political payoff from these deals as well as an economic one," Cato's Carpenter said. Two-way trade between the six Gulf states and Asia doubled to $240 billion from 2000 to 2005, with a hefty chunk coming from Chinese imports and exports. Underlying China's moves is its ever-growing hunger for oil. It's the No. 2 consumer of crude after the U.S. The Energy Department predicts China's oil imports will catapult by 960% over two decades. Output from Chinese wells is dwindling. About three-quarters of the nation's energy resources come from coal and natural gas. "Even if you added up all of China's energy resources, it still wouldn't be sufficient to meet all its industrial needs," Kuhn said. China's soaring energy demand may be the single biggest reason for oil's multiyear surge, analysts say. China became a net oil importer in 1993. About 58% comes from the Mideast. Saudi Arabia accounted for 21% of oil imports in 2005. China became a net gasoline importer for the first time in five years in May. That reflects a surge in cars hitting the road — and refiners cutting output as they face money-losing state-set prices.

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A2: China wants to cooperate
China is countering America’s interests across the globe Khanna, a senior research fellow in the American Strategy Program of the New America Foundation., 08
(Parag, The New York Times, January 28, “Waving Goodbye to Hegemony”, http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T4139603862&f ormat=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T4139603865&cisb=22_T4139603864&tr eeMax=true&treeWidth=0&csi=6742&docNo=9, 7/10/08) And Europe's influence grows at America's expense. While America fumbles at nation-building, Europe spends its money and political capital on locking peripheral countries into its orbit. Many poor regions of the world have realized that they want the European dream, not the American dream. Africa wants a real African Union like the E.U.; we offer no equivalent. Activists in the Middle East want parliamentary democracy like Europe's, not American-style presidential strongman rule. Many of the foreign students we shunned after 9/11 are now in London and Berlin: twice as many Chinese study in Europe as in the U.S. We didn't educate them, so we have no claims on their brains or loyalties as we have in decades past. More broadly, America controls legacy institutions few seem to want -- like the International Monetary Fund -while Europe excels at building new and sophisticated ones modeled on itself. The U.S. has a hard time getting its way even when it dominates summit meetings -- consider the ill-fated Free Trade Area of the Americas -- let alone when it's not even invited, as with the new East Asian Community, the region's answer to America's Apec. The East Asian Community is but one example of how China is also too busy restoring its place as the world's ''Middle Kingdom'' to be distracted by the Middle Eastern disturbances that so preoccupy the United States. In America's own hemisphere, from Canada to Cuba to Chavez's Venezuela, China is cutting massive resource and investment deals. Across the globe, it is deploying tens of thousands of its own engineers, aid workers, dam-builders and covert military personnel. In Africa, China is not only securing energy supplies; it is also making major strategic investments in the financial sector. The whole world is abetting China's spectacular rise as evidenced by the ballooning share of trade in its gross domestic product -- and China is exporting weapons at a rate reminiscent of the Soviet Union during the cold war, pinning America down while filling whatever power vacuums it can find. Every country in the world currently considered a rogue state by the U.S. now enjoys a diplomatic, economic or strategic lifeline from China, Iran being the most prominent example. Without firing a shot, China is doing on its southern and western peripheries what Europe is achieving to its east and south. Aided by a 35 million-strong ethnic Chinese diaspora well placed around East Asia's rising economies, a Greater Chinese Co-Prosperity Sphere has emerged. Like Europeans, Asians are insulating themselves from America's economic uncertainties. Under Japanese sponsorship, they plan to launch their own regional monetary fund, while China has slashed tariffs and increased loans to its Southeast Asian neighbors. Trade within the India-Japan-Australia triangle -- of which China sits at the center -- has surpassed trade across the Pacific.

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Alternate Russia Resource Wars Scenario
Independently, continued burning of fossil fuels drives oil competition between US and Russia, risking war in the Arctic Circle ABC News, 2008 (“Could Arctic Ice Melt Spawn New Kind of Cold War?”, March 10th, http://www.abc.net.au/news/stories/2008/03/10/2185278.htm, Date Accessed: July 3, 2008)
This prospective scramble for buried Arctic mineral wealth made more accessible by freshly melted seas could bring on a completely different kind of cold war, a scholar and former US Coast Guard officer says. While a US government official questioned the risk of polar conflict, they would still like to join a 25year-old international treaty meant to figure out who owns the rights to the oceans, including the Arctic Ocean. So far, the Senate has not approved it. Unlike the first Cold War, dominated by tensions between the two late-20th century superpowers, this century's model could pit countries that border the Arctic Ocean against each other to claim mineral rights. The Arctic powers include the United States, Russia, Canada, Denmark and Norway. The irony is that the burning of fossil fuels is at least in part responsible for the Arctic melt - due to climate change - and the Arctic melt could pave the way for a 21st century rush to exploit even more fossil fuels. The stakes are enormous, according to Scott Borgerson of the Council on Foreign Relations, a former US Coast Guard lieutenant commander. The Arctic could hold as much as one-quarter of the world's remaining undiscovered oil and gas deposits, Mr Borgerson wrote in the current issue of the journal Foreign Affairs. Russia has claimed 1.191 million square kilometres of Arctic waters, with an eye-catching effort that included planting its flag on the ocean floor at the North Pole last summer. Days later, Moscow sent strategic bomber flights over the Arctic for the first time since the Cold War. "I think you can say planting a flag on the sea bottom and renewing strategic bomber flights is provocative," Mr Borgerson said in a telephone interview.

The conflict could escalate to war. Rayment, Defense Correspondent, 08
(Sean, Telegraph, “Russia accused of annexing the Arctic for oil reserves by Canada,” 5/18, http://www.telegraph.co.uk/news/worldnews/europe/russia/1976314/Russia-accused-of-annexing-the-Arctic-for-oilreserves-by-Canada.html, date accessed: 7/3/08) It has reinforced fears that Moscow intends to annex "unlawfully" a vast portion of the ice-covered Arctic, beneath which scientists believe up to 10 billion tons of gas and oil could be buried. Russian ambition for control of the Arctic has provoked Canada to double to $40 million (£20.5 million) funding for work to map the Arctic seabed in support its claim over the territory. The Russian ice breakers patrol huge areas of the frozen ocean for months on end, cutting through ice up to 8ft thick. There are thought to be eight in the region, dwarfing the British and American fleets, neither of which includes nuclear-powered ships. Canada also plans to open an army training centre for cold-weather fighting at Resolute Bay and a deep-water port on the northern tip of Baffin Island, both of which are close to the disputed region. The country's defence ministry intends to build a special fleet of patrol boats to guard the North West Passage. The crisis has raised the spectre of Russia and the West joining in a new cold war over the Arctic unless the United Nations can resolve the dispute.

A new Russia-US conflict will bring World War 3 Karaganov, Doctor of Science (History), professor, is Dean of the World Economics and International Affairs Faculty of the State University–Higher School of Economics, 2007 (Sergi, “Russia in Global Affairs, October-December, Volume 5 No. 4”, pg. 34,
http://www.globalaffairs.ru/docs/2007_english4.pdf) Global challenges, which are currently not being countered due to the acute competition of the NEC, will require close cooperation. A new round of such cooperation may be more stable than it was in the 1990s. In those years, interaction between states was conducted according to the rules dictated by the victors in the Cold War, which doomed those efforts to failure. But an epoch of closer cooperation will arrive only if the global community, including Russia, avoids a systemic mistake, that is, structuring and militarizing the new competition. Furthermore, there must be no new military confrontation, which would most likely occur in the Greater Middle East. The evolution of the Sergei Karaganov competition to the point of systemic confrontation may ultimately bring about a series of large wars and even a new world war.

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Oil Dependence Bad – Resource wars with Russia (1/2)
Oil revenue makes US-Russia resource wars likely Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) THE SECOND surge in thinking about resource wars comes from all the money that is pulsing into resource-rich countries. There is no question that the revenues are huge. OPEC cashed $650 billion for 11.7 billion barrels of the oil it sold in 2006, compared with $110 billion in 1998, when it sold a similar quantity of oil at much lower prices. Russia’s Central Bank reports that the country earned more than $300 billion selling oil and gas in 2006, about four times its annual haul in the late 1990s. But will this flood in rents cause conflict and war? There is no question that large revenues—regardless of the source—can fund a lot of mischievous behavior. Iran is building a nuclear-weapons program with the revenues from its oil exports. Russia has funded trouble in Chechnya, Georgia and other places with oil and gas rents. Hugo Chávez opened Venezuela’s bulging checkbook to help populists in Bolivia and to poke America in ways that could rekindle smoldering conflicts. Islamic terrorists also have benefited, in part, from oil revenues that leak out of oil-rich societies or are channeled directly from sympathetic governments. But resource-related conflicts are multi-causal. In no case would simply cutting the resources avoid or halt conflict, even if the presence of natural resources can shift the odds. Certainly, oil revenues have advanced Iran’s nuclear program, which is a potential source of hot conflict and could make future conflicts a lot more dangerous. But a steep decline in oil probably wouldn’t strangle the program on its own. Indeed, while Iran still struggles to make a bomb, resource-poor North Korea has already arrived at that goal by starving itself and getting help from friends. Venezuela’s checkbook allows Chávez to be a bigger thorn in the sides of those he dislikes, but there are other thorns that poke without oil money. As we see, what matters is not just money but how it is used. While Al-Qaeda conjures images of an oilfunded network—because it hails from the resource-rich Middle East and its seed capital has oily origins.

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Oil Dependence Bad – Resource wars with Russia (2/2)
Russia is using energy as a mechanism of force to influence other countries, and is building up their military substantially – they’re preparing for a resource war Fox, Shadow Defence Secretary, 07 (Liam, The Sunday Times (London), July 15, “Energy: the new cold war”,
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T4139204894 &format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T4139206700&cisb=22_T41392048 99&treeMax=true&treeWidth=0&csi=332263&docNo=2, 7/10/08) Since the close of the cold war, we have been growing used to threats such as terrorism where the enemy has no state or territory. But soon we will have to get used to new strategic challenges, such as energy security, where fossil fuels will be used as weapons to achieve political ends. Energy security will be synonymous with national security and economic security. Two weeks ago Russia announced its intention to annex a 460,000-square mile portion of ice-covered Arctic. Scientists claim that the area, on which Russia has audaciously set its sights, may contain an estimated 10 billion tonnes of gas and oil deposits. While this ridiculous claim has no legitimate legal basis, the West must take threats like this from Russia seriously. Russia is rivalling Saudi Arabia as the world's largest oil producer and is estimated to have the world's largest natural gas supplies with 1,680 trillion cubic feet -nearly twice the reserves in the next largest country, Iran. If military might and nuclear weapons formed the core of Soviet cold war power, Russian elites view its energy resources as the basis of its power now. Russia has demonstrated that it will use its energy resources to promote a broader foreign policy agenda. This was illustrated when Russia reduced gas supplies to the Ukraine as part of a bilateral dispute and when it doubled the price of gas to Georgia in 2005. Russia's petrodollars are financing a $189 billion overhaul of its armed forces between now and 2015. They will purchase more than 1,000 new aircraft and helicopters, 4,000 new tanks and armoured vehicles and a new submarine fleet. New missiles will carry nuclear warheads. Western addiction to oil and gas is causing us to fund the threat against us. Reports that Russia is now withdrawing from the Conventional Forces in Europe Treaty will only fuel suspicions about Putin's defence posture. The stand-off over Litvinenko is another source of tension. Unfortunately, the threats do not stop with Russia. Terrorism poses a major threat to world energy supplies, transport and infrastructure especially. Osama Bin Laden has described refineries as the "hinges" of the world's economy. Al-Qaeda's failed attack last year on the Abqaiq oil facility in Saudi Arabia is a reminder of the threat. Future attacks could disrupt the world economy far more. An assault on a super-tanker in the Straits of Malacca could send the oil price rocketing, and tip economies which have just about coped with higher oil prices over the edge. If Japan's maritime supplies of crude oil were choked, even temporarily, a crisis of confidence could reverberate around the world. For developing countries, a sudden rise in fuel prices could wipe out the benefits of aid or debt relief. Fuel poverty would be a brutal reality. Fear of terrorism is justified. In 2002, Al-Qaeda terrorists rammed a boat rigged with explosives into a French tanker off Yemen but fortunately it did not sink. The distribution of global energy supplies means we are particularly vulnerable to the "choke points" in transport routes around the globe. These are far more numerous than the days when we simply patrolled the Strait of Hormuz. They are scattered from the Panama Canal to the entrance to the Red Sea to the seas of southeast Asia.

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Oil Dependence Bad - War with Russia in the Arctic Circle (1/2)
The US and Russia are preparing for an oil war in the arctic circle Cook, Financial Post.com Writer, 2008 (Bradley, Financial Post “Russian Army Trains for Arctic Resource War”, June 24th, http://www.financialpost.com/story.html?id=610362, Date Accessed: July 3, 2008)
Russia's military is training its forces for combat in the Arctic to protect its claims to resources on the continental shelf. "After the heads of several countries disputed Russia's rights to the resource-rich Arctic Ocean shelf," the military
"immediately" began adapting its training plans for units "that might be called upon to fight in the Arctic," Lieutenant General Vladimir Shamanov said in an interview published on Tuesday in Krasnaya Zvezda, or Red Star, the army's newspaper. The Arctic shelf

may hold 10 billion tons of oil equivalent, as well as gold, nickel and diamonds, according to the Russian government, which sent a mini-submarine to plant a flag beneath the polar cap in August. Danish Science Minister Helge Sander called the move "a joke," while Canada responded by saying it would move troops to its north to assert Arctic sovereignty. General Shamanov, head of training for the military, said special preparation for Russian troops is needed because "modern wars are won and lost long before they start." The U.S. recently held a 12-day military exercise in Alaska called Northern Edge 2008 with 5,000 troops after contesting Russia's polar claim. Russian military trainers "can't ignore such facts," he said. The U.S., Russia, Canada, Norway and Denmark, the countries bordering the Arctic Ocean, pledged at a meeting in Greenland last month to honor international law and work to reduce tension as they all seek ownership of natural resources in the area.

Conflict is expected to result from the arctic circle due to oil supplies Rayment, Defense Correspondent, 08
(Sean, Telegraph, “Russia accused of annexing the Arctic for oil reserves by Canada,” 5/18, http://www.telegraph.co.uk/news/worldnews/europe/russia/1976314/Russia-accused-of-annexing-the-Arctic-for-oilreserves-by-Canada.html, date accessed: 7/3/08) It has reinforced fears that Moscow intends to annex "unlawfully" a vast portion of the ice-covered Arctic, beneath which scientists believe up to 10 billion tons of gas and oil could be buried. Russian ambition for control of the Arctic has provoked Canada to double to $40 million (£20.5 million) funding for work to map the Arctic seabed in support its claim over the territory. The Russian ice breakers patrol huge areas of the frozen ocean for months on end, cutting through ice up to 8ft thick. There are thought to be eight
in the region, dwarfing the British and American fleets, neither of which includes nuclear-powered ships. Canada also plans to open an army training centre for cold-weather fighting at Resolute Bay and a deep-water port on the northern tip of Baffin Island, both of which are close to the disputed region. The country's defence ministry intends to build a special fleet of patrol boats to guard the North West Passage. The crisis has raised the spectre of Russia and the West joining in a new cold war over the

Arctic unless the United Nations can resolve the dispute.

Russia claiming territory in the arctic could cause confrontation between the US and Russia Frolov, former director of the National Laboratory for Foreign Policy, 07
(Vladimir, Russia profile, ”The Coming Conflict in the Arctic,” 7/10, http://www.russiaprofile.org/page.php?pageid=International&articleid=a1184076124, date accessed: 7/3/08) Russian President Vladimir Putin and U.S. President George W. Bush spent most of their time at the “lobster summit” at Kennebunkport, Maine, discussing how to prevent the growing tensions between their two countries from getting out of hand. The media and international affairs experts have been portraying missile defense in Europe and the final status of Kosovo as the two most contentious issues between Russia and the United States, with mutual recriminations over “democracy standards” providing the background for the much anticipated onset of a new Cold War. But while this may well be true for today, the stage has been quietly set for a much more serious confrontation in the non-too-distant future between Russia and the United States – along with Canada, Norway and Denmark. Russia has recently laid claim to a vast 1,191,000 sq km (460,800 sq miles) chunk of the ice-covered Arctic seabed. The claim is not really about territory, but rather about the huge hydrocarbon reserves that are hidden on the seabed under the Arctic ice cap. These newly discovered energy reserves will play a crucial role in the global energy balance as the existing reserves of oil and gas are depleted over the next 20 years.

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Oil Dependence Bad - War with Russia in the Arctic Circle (2/2)
The Arctic Circle will become ground zero for an oil war between US and Russia Chossudovsky, Editor of Global Research: Center for research on globalization, author of “The globalization of poverty” and Americas War on ‘Terrorism’ ‘07
Michel, Global Research, “North American Integration and Militarization of the Arctic” 8/20/07 http://www.globalresearch.ca/index.php?context=va&aid=6586 Accessed: 7/3/08 The Battle for the Arctic is part of a global military agenda of conquest and territorial control. It has been described as a New Cold War between Russia and America. Washington's objective is to secure territorial control, on behalf of the Anglo-American oil giants, over extensive Arctic oil and natural gas reserves. The Arctic region could hold up to 25% of the World's oil and gas reserves, according to some estimates. (Moscow Times, 3 August 2007). These estimates are corroborated by the U.S. Geological Survey (USGS): "The real possibility exists that you could have another world class petroleum province like the North Sea." (quoted by CNNMoney.com, 25 October 2006) From Washington's perspective, the battle for the Arctic is part of broader global military agenda. It is intimately related to the process of North American integration under the Security and Prosperity Partnership Agreement (SPP) and the proposed North American Union (NAU). The SPP envisages, under the auspices of a proposed "multiservice [North American] Defense Command", the militarization of a vast territory extending from the Caribbean basin to the Canadian Arctic. It also bears a relationship to America's hegemonic objectives in different parts of the World including the Middle East. The underlying economic objective of US military operations is the conquest, privatization and appropriation of the World's reserves of fossil fuel. The Arctic is no exception. The Arctic is an integral part of the "Battle for Oil". It is one of the remaining frontiers of untapped energy reserves.

High demand for oil will leading to military confrontation with Russia over the arctic circle Zabarenko Writer at Commondreams, ‘08 CommonDreams News center “Could Arctic Ice Melt Spawn A New Type of Cold War?” March 9th 2008 http://www.commondreams.org/archive/2008/03/09/7571/ Accessed: 7/3/08
WASHINGTON - With oil above $100 a barrel and Arctic ice melting faster than ever, some of the world’s most powerful countries — including the United States and Russia — are looking north to a possible energy bonanza. This prospective scramble for buried Arctic mineral wealth made more accessible by freshly melted seas could bring on a completely different kind of cold war, a scholar and former Coast Guard officer says. While a U.S. government official questioned the risk of polar conflict, Washington still would like to join a 25-year-old international treaty meant to figure out who owns the rights to the oceans, including the Arctic Ocean. So far, the Senate has not approved it. Unlike the first Cold War, dominated by tensions between the two late-20th century superpowers, this century’s model could pit countries that border the Arctic Ocean against each other to claim mineral rights. The Arctic powers include the United States, Russia, Canada, Denmark and Norway. The irony is that the burning of fossil fuels is at least in part responsible for the Arctic melt — due to climate change — and the Arctic melt could pave the way for a 21st century rush to exploit even more fossil fuels. The stakes are enormous, according to Scott Borgerson of the Council on Foreign Relations, a former U.S. Coast Guard lieutenant commander. The Arctic could hold as much as one-quarter of the world’s remaining undiscovered oil and gas deposits, Borgerson wrote in the current issue of the journal Foreign Affairs. Russia has claimed 460,000 square miles (1.191 million sq km) of Arctic waters, with an eye-catching effort that included planting its flag on the ocean floor at the North Pole last summer. Days later, Moscow sent strategic bomber flights over the Arctic for the first time since the Cold War. “I think you can say planting a flag on the sea bottom and renewing strategic bomber flights is provocative,” Borgerson said in a telephone interview.

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War with Russia goes Nuclear
Nuclear bombs will be used if Russia comes to war with the US—it’s too dependent on its nuclear arsenal
Markov, Strategy, Forces, and Resources division of the Institute for Defense Analyses, 1997
(David, Air Force Magazine Online, “The Russians and Their Nukes”, February, http://www.afa.org/magazine/feb1997/0297russi.asp, July 8, 2008) The importance of strategic nuclear weapons to Russia's overall military strategy has grown, rather than declined, since the collapse of the Soviet Union five years ago. In part, the increased importance stems from the dramatic shrinkage of Russian military forces from more than four million troops under arms at the height of the Cold War to fewer than two million today. Unable to rely on massive conventional forces, as it has in the past, the Russian military today plans to develop a much smaller, highly mobile force. In practice, this means that Russia's conventional capabilities are stretched thinly over a vast geographic area. New Russian military doctrine, adopted in 1993, reflected that reality. It resembled US doctrine in the late 1950s and early 1960s, when the Pentagon placed heavy emphasis on nuclear weapons to deter conventional conflict. Because conventional force capabilities have declined, "nuclear weapons of Russia begin to play a more important role," said Gen. Yevgeni Volkov, a retired senior officer who advised Soviet and Russian Strategic Arms Reduction Talks negotiators and is now a member of the Russian Academy of Cosmonautics and the International Academy of Information. The new role envisioned by Russian military doctrine seems to be a kind of "nuclear umbrella" that protects Russian ground forces abroad as well as allies and members of the Commonwealth of Independent States. The new doctrine asserts that "deterrence of [conventional attacks on Russia] may also be nuclear."

Russia possesses the ability to participate in nuclear war with the US Cirincione, Senior vice president for national security and international policy at the Center for American Progress and director for nonproliferation at the Carnegie Endowment for International Peace, 08 (Joseph,
Democracy Now!, July 2, Forty Years After Nuclear Non-Proliferation Treaty, US Tops World in Nuke Arsenal, http://i4.democracynow.org/2008/7/2/forty_years_after_nuclear_non_proliferation, 7/9/08) The US and Russia have 95 percent of the world’s arsenals. We have about 10,000 weapons, far more than any conceivable military contingency. Russia has an estimated 10,000 to 15,000 nuclear weapons. The rest of the countries number their nuclear weapons in dozens, so United Kingdom, about 200; France, China, about the same; Israel, somewhere between 100 and 200; India and Pakistan, enough material for between fifty and 100 weapons; and North Korea has less than ten. And we’re now engaged in a process to get rid of those.

The conflict could escalate to war. Rayment, Defense Correspondent, 08
(Sean, Telegraph, “Russia accused of annexing the Arctic for oil reserves by Canada,” 5/18, http://www.telegraph.co.uk/news/worldnews/europe/russia/1976314/Russia-accused-of-annexing-the-Arctic-for-oilreserves-by-Canada.html, date accessed: 7/3/08) It has reinforced fears that Moscow intends to annex "unlawfully" a vast portion of the ice-covered Arctic, beneath which scientists believe up to 10 billion tons of gas and oil could be buried. Russian ambition for control of the Arctic has provoked Canada to double to $40 million (£20.5 million) funding for work to map the Arctic seabed in support its claim over the territory. The Russian ice breakers patrol huge areas of the frozen ocean for months on end, cutting through ice up to 8ft thick. There are thought to be eight in the region, dwarfing the British and American fleets, neither of which includes nuclear-powered ships. Canada also plans to open an army training centre for cold-weather fighting at Resolute Bay and a deep-water port on the northern tip of Baffin Island, both of which are close to the disputed region. The country's defence ministry intends to build a special fleet of patrol boats to guard the North West Passage. The crisis has raised the spectre of Russia and the West joining in a new cold war over the Arctic unless the United Nations can resolve the dispute.

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Resource wars most likely form of conflict
Resource wars are the only viable situation for major conflict in today’s world, in a framework of competition, they become inevitable Moran and Russel, respectively Prof of national security affairs at CCC, Senior Lecturer; Co-Director, Center for Contemporary Conflict; Managing Editor, Strategic Insights. ‘08
Daniel and James, Center for Contemporary Conflict “The Militarization of Energy Security” 4/4/08 http://www.analyst-network.com/article.php?art_id=1671 Accessed: 7/3/08 This book does not seek to challenge the prevailing consensus that large-scale conflict among developed states has become unlikely. Its aim is rather to reflect upon conditions in the one area of international life where serious observers still regard it as possible: energy security. It is in the energy sector that strategic planners now find it easiest to imagine major states reconsidering their reluctance to use force against each other. “Energy security” is now deemed so central to “national security” that threats to the former are liable to be reflexively interpreted as threats to the latter. In a world in which territorial disputes, ideological competition, ethnic irredentism, and even nuclear proliferation all seem capable of being normalized in ways that constrain the actual use of military force, a crisis in global energy supply stands out as the last all-weather casus belli when the moment comes to hypothesize worst-case scenarios.

Resources are the final straw, pushing many countries into conflicts Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) Other lethal terror networks, such as Sri Lanka’s Tamil Tigers and Ireland’s Republican Army, arose with funding from diasporas rather than oil or other natural resources. Unlike modern state armies that require huge infusions of capital, terror networks are usually organized to make the most of scant funds. During the run-up in oil and gas prices, analysts have often claimed that these revenues will go to fund terror networks; yet it is sobering to remember that Al-Qaeda came out in the late 1990s, when oil earnings were at their lowest in recent history. Most of the tiny sums of money needed for the September 11 attacks came from that period. Al-Qaeda’s daring attacks against the U.S. embassies in Kenya and Tanzania occurred when oil-rich patrons were fretting about the inability to make ends meet at home because revenues were so low. Ideology and organization trump money as driving forces for terrorism. Most thinking about resource-lubed conflict has concentrated on the ways that windfalls from resources cause violence by empowering belligerent states or sub-state actors. But the chains of cause and effect are more varied. For states with weak governance and resources that are easy to grab, resources tend to make weak states even weaker and raise the odds of hot conflict. This was true for Angola’s diamonds and Nigeria’s oil, which in both cases have helped finance civil war. For states with stable authoritarian governments—such as Kuwait, Saudi Arabia, most of the rest in the western Gulf, and perhaps also Russia and Venezuela—the problem may be the opposite. A sharp decline in resource revenues can create dangerous vacuums where expectations are high and paltry distributions discredit the established authorities. On balance, the windfall in oil revenues over recent years is probably breeding more conflict than would a crash in prices. However, while a few conflicts partly trace themselves to resources, it is the other pernicious effects of resource windfalls, such as the undermining of democratic transitions and the failure of most resource-reliant societies to organize their economies around investment and productivity, that matter much, much more. At best, resources have indirect and mixed effects on conflict.

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Warming makes Resource Wars likely
Global warming prompts situations in which resource wars are inevitable Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) THE THIRD avenue for concern about coming resource wars is through the dangers of global climate change. The litany is now familiar. Sea levels will rise, perhaps a lot; storms will probably become more intense; dry areas are prone to parch further and wet zones are likely to soak longer. And on top of those probable effects, unchecked climate change raises the odds of suffering nasty surprises if the world’s climate and ecosystems respond in abrupt ways. Adding all that together, the scenarios are truly disturbing. Meaningful action to stem the dangers is long overdue. In the United States over the last year, the traditional security community has become engaged on these issues. Politically, that conversion has been touted as good news because the odds of meaningful policy are higher if hawks also favor action. Their concerns are seen through the lens of resource wars, with fears such as: water shortages that amplify grievances and trigger conflict; migrations of “climate refugees”, which could stress border controls and also cause strife if the displaced don’t fit well in their new societies; and diseases such as malaria that could be harder to contain if tropical conditions are more prevalent, which in turn could stress health-care systems and lead to hot wars.

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***Food Prices***

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Food Prices High Now
Multiple factors all prove food prices are skyrocketing now Retail Week ‘08
“Farewell to Cheap Food” 1/25/08 Lexis Accessed 6/1/08 The seeds of the present high level of inflation were sowed in the autumn. At that time, a global concoction of rocketing commodity prices, soaring oil prices that hit the supply chain, rampant demand for corn-based biofuel and continuing strong demand for food from developing countries, including India and China, started to hit home. Compounding these factors were a series of awful harvests stretching from Australia to the UK, which had its wettest summer on record, as well as diseases affecting livestock, such as bluetongue in the UK. Waitrose managing director Mark Price says: "There is no doubt that those categories that have been affected by global conditions have gone up." While Waitrose's food price inflation is running at about 2.5 per cent, Price emphasises that there have been "massive fluctuations" in prices. "Dairy is running at about 20 per cent and 30 per cent higher than last year, particularly on milk and cheese," he says. "This is the cost of food prices working through the chain."

Food prices already high Donovan CEO of OVS, with years of experience in telecommunications ‘08 Paul, The Edge Malaysia “Global Economic Outlook: Effects of Higher Food Prices” 5/26/’08. Lexis. Accessed: 7/1/08
Food price inflation is dominating media headlines across Asia. Last year alone, wheat prices rose nearly 100%, and rice prices 45%. In the US, the supermarket giant, Wal-Mart is rationing rice in an effort to prevent customer hoarding. Some countries have experienced protests over rising food prices.

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Food Prices High Now – Oil (1/2)
High Oil Prices Cause an Increase in Food Prices Forcing Families to Choose Between Food and Warmth Worth, Reporter for the International Herald Tribune, 08 (Robert, International Herald Tribune, February 28,
"High oil prices takes a toll on the Gulf's middle class", http://www.iht.com/articles/2008/02/24/business/gulf.php?page=1, 7/1/08) Even as it enriches Arab rulers, the recent oil-price boom is helping to propel an extraordinary rise in the cost of food and other basic goods that is squeezing this region's middle class and setting off strikes, demonstrations and occasional riots from Morocco to the Gulf. In Jordan, the soaring price of oil led the government to remove almost all its costly fuel subsidies this month, pushing the price of some fuels up 76 percent overnight. In a devastating domino effect, the cost of basic foods like eggs, potatoes and cucumbers doubled or more. In Saudi Arabia, where the inflation rate had been virtually zero for a decade, it has reached an official level of 6.5 percent, though unofficial estimates put it much higher. Public protests and boycotts have followed, and 19 prominent clerics posted an unusual statement on the Internet in December warning of a crisis that would cause "theft, cheating, armed robbery and resentment between rich and poor." The resurgence of inflation has many causes, from rising global demand to the monetary constraints of currencies pegged to the weakening U.S. dollar. But one cause is the skyrocketing price of oil itself, which is creating unheard-of riches for governments in the Gulf even as it helps push many ordinary people into poverty. "Now we have to choose: we either eat or stay warm," said Abdul Rahman Abdul Raheem, who works at a clothing shop in a mall in Amman and once dreamed of sending his children to private school. "We can't do both." "We're not really middle class anymore, we're at the poverty level," he said. Some governments have tried to soften the impact of high prices by increasing wages or subsidies on foods. Jordan, for instance, has raised the wages of public-sector employees earning less than 300 dinars, or $425, a month by 50 dinars. For those earning more than 300 dinars, the raise was 45 dinars. But that compensates for only part of the price increases, and people who work in the private sector get no such relief. The fact that the inflation is coinciding with new oil wealth has fed perceptions of corruption and economic injustice, some analysts say. "About two-thirds of Jordanians now believe there is widespread corruption in the public and private sector," said Mohammed al-Masri, the public opinion director at the University of Jordan's Center for Strategic Studies. "The middle class is less and less able to afford what they used to, and more and more suspicious." In a few places the price increases have led to violence. In Yemen, prices for bread and other foods nearly doubled in the past four months, setting off a string of demonstrations and riots in which at least a dozen people were killed.

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Food Prices High Now – Oil (2/2)
Multiple causes for high food prices now DOE and DOA, US Department of Energy and US Department of Agriculture, 08 (Responses to Questions of
Senator Bingmann, June, http://www.energy.gov/media/Secretaries_Bodman_and_Schafer_Ltr_to_Sen_Bingaman.pdf, 6/30/08) While increased biofuels production is partially responsible for the increase in com and soybean prices, many other factors have also contributed to the sharp increase in prices for these commodities. Some of these factors include: Higher incomes, population growth, and depreciation ofthe dollar are increasing the demand for processed foods and meat in rapidly growing developing countries such as India and China. These shifts in diets are leading to major changes in international trade. For example, U.S. com exports are projected to reach a record of2.S billion bushels in 2007/08 despite record high com prices. Drought and dry weather have affected grain production in Australia, Canada, Ukraine, the European Union, and the United States in 2007/08. These weather events have helped to deplete world grain stocks. The tight stocks situation is leading to increasing concerns that prices could move sharply higher if this year's harvest falls below expectations. These concerns are causing some importers to purchase for future needs, pushing prices higher. Many exporting countries have put in place export restrictions in an effort to reduce domestic food price inflation. By reducing supplies available for world commerce, these actions have exacerbated the surge in global commodity prices. Record high prices for diesel fuel, gasoline, natural gas, and other forms of energy affect costs throughout the food production and marketing chain. Higher energy prices increase producers' expenditures for fertilizer and fuel, driving up farm production costs and reducing the incentive for farmers to expand production in the face of record high prices. Higher energy prices also increase food processing, marketing, and retailing costs. These higher costs, especially if maintained over a long period, tend to be passed on to consumers in the form of higher retail prices. Estimating the effects of increased ethanol and biodiesel consumption on domestic agriculture and domestic food prices necessitates segmenting the portion ofthe increase in com and soybean prices due to the expansion in ethanol and biodiesel consumption and the increase in com and soybean prices due to other factors. Various analytical approaches were used to estimate the effects of increased ethanol and biodiesel consumption on com and soybean prices. Table 1 (below) compares actual and estimated com and soybean prices over the period 2005/062007/08, assuming com used for ethanol and soybean oil used for biodiesel production in the United States remained unchanged from the amount used in the 2005/06 marketing year. Under the alternative scenario, lower com and soybean oil use lowers the prices of com and soybeans. In addition, changes in relative returns for com and soybeans cause producers to switch from planting corn to planting soybeans. Lower com and soybean prices could also result in increased plantings and lower prices for other crops and lower feed costs to livestock producers.

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Food Prices High Now – Longterm Trend
Economists agree – high food prices are here to stay Retail Week ‘08
“Farewell to Cheap Food” 1/25/08 Lexis Accessed 6/1/08 After years of cheap food, prices are on the up. Staples such as bread, milk and cheese are all climbing and the rising cost of living has been making headlines. The fear is that the golden age of low-cost food is coming to an end. Last week, the Office for National Statistics reported the Consumer Price Index showed food price inflation jumped to 5.9 per cent year on year in December. Along with April 2007 it was the highest recorded rise since 2001. So just what is the true state of food price inflation in the UK grocery sector? What is causing it and what effect will sustained food price inflation have on the wider retail industry? International food and grocery organisation IGD believes that higher food price inflation is here to stay. IGD chief economist James Walton says: "We expect an extended period of elevated food price inflation for the foreseeable future, but from a low base."

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Famine Brink (1/2)
Grain reserves and food production are dangerously low; feeding the world is now dependent upon the highly unlikely scenario of having perfect crop-yielding weather worldwide Philpott, Food Editor of Grist, 08 (Tom, Grist, "Our Ruined Harvest," 6-13-8, http://grist.org/comments/food/2008/06/13/, 7-6-8)
In the past, societies stored grain precisely because agriculture has always been such a fickle food provider. A few decades ago, the U.S. began testing a new theory: sell off grain reserves and let "market forces" ensure there's enough food for everyone. Our policymakers have become so enamored of the idea that they've managed to convince many countries in the global south to do the same -- often with the help of the International Monetary Fund and its famed "structural adjustment" packages. More recently, our leaders have combined the no-grain-storage decree with another, deeply contradictory experiment: using heavy-handed subsidies and mandates (what happened to "market forces"?) to ensure that a large and growing chunk of our farm bounty be turned into car fuel. Combined, those policies have brought us to the present pass: As our friend the fertilizer executive reminds us, feeding the world now requires that the weather cooperate, every year. That's a tough row to hoe, given that climate change seems set to make weather patterns increasingly erratic. And as we're seeing this summer, it doesn't take much to make things come unhinged. In response to the rains, investors have driven up corn prices to levels never seen before. By Wednesday afternoon, corn was trading above $7 per bushel -an astonishing 75 percent rise since last June. Just three years ago, a bushel of corn fetched less than $2. The same factors have ramped up soy prices as well. And the worst may be yet to come. Weather reports suggest that the Midwest's wet spell may last through the month. If that happens, surviving plants will have a tough time developing deep roots, making them vulnerable to a dry spell later in the summer. If a soggy June turns into a bone-dry July and August, corn and soy prices will likely spike anew. Meanwhile, wheat prices have held relatively steady -- most of the U.S. wheat crop lies outside the area currently under water. But the same factor that pushed global wheat prices to all-time highs last year -- a persistent drought in Australia's wheat belt -- may be rearing up again. The New York Times reported recently that a new burst of dry weather in Australia could lead to another shortfall in its wheat output -- and push prices back into the stratosphere. And that's not all. While conditions are too dry in Australia, Chinese farmers, like their U.S. counterparts, are bracing for hard rain. According to the Times, China's agriculture ministry "issued an urgent notice to wheat and rice farmers in southern China on Sunday, telling them to harvest as much of their crop as possible immediately in the face of unseasonable torrential rains expected to rake the region for the next 10 days." At this point, given how much there already is to worry about, it's probably best not to think about the new fungal strain that, according to The Wall Street Journal, threatens to eviscerate wheat crops in Africa, the Middle East, and South Asia.

The food crisis is spreading to the US, affecting everyone and hurting 10% of families so far Philpott, Food Editor of Grist, 08 (Tom, Grist, "Our Ruined Harvest," 6-13-8, http://grist.org/comments/food/2008/06/13/, 7-6-8)
When fertilizer magnate Doyle predicted famine if global agriculture didn't hit on all cylinders this year, he probably wasn't talking about the industrial nations of North America and Western Europe. Despite our increasingly enfeebled economy, most Americans still command enough wealth to procure sufficient calories even if prices rise dramatically. Likely, Doyle meant the world's 850 million people who live in conditions of persistent hunger, mostly in the southern hemisphere. For them -- many of whom have been essentially evicted from productive farmland and pushed into cities over the past few decades -- spikes in food prices spell devastation. But here in the United States, too, hard times seem imminent. No one can envy the 10.9 percent of U.S. families who already lacked sufficient access to food as of 2006. That number will surely grow as the economy weakens. Bad weather and big ag are tossing shoppers around. And you don't have to be poor to feel the pinch of higher grocery bills. "You know those complaints you've been hearing about high food prices? They've just begun," a commodity trader told The New York Times Thursday.

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Famine Brink (2/2)
The food crisis exhibits a snowball effect- it will only get worse and force more people into poverty Faiola, Post Global Economics Reporter, 08 (Anthony, The Washington Post, April 27, “The New
Economics of Hunger; A brutal convergence of events has hit an unprepared global market, and grain prices are sky high. The world's poor suffer most.”, http://www.washingtonpost.com/wpdyn/content/article/2008/04/26/AR2008042602041_pf.htmlu, 7/12/08) The globe's worst food crisis in a generation emerged as a blip on the big boards and computer screens of America's great grain exchanges. At first, it seemed like little more than a bout of bad weather. In Chicago, Minneapolis and Kansas City, traders watched from the pits early last summer as wheat prices spiked amid mediocre harvests in the United States and Europe and signs of prolonged drought in Australia. But within a few weeks, the traders discerned an ominous snowball effect -- one that would eventually bring down a prime minister in Haiti, make more children in Mauritania go to bed hungry, even cause American executives at Sam's Club to restrict sales of large bags of rice. As prices rose, major grain producers including Argentina and Ukraine, battling inflation caused in part by soaring oil bills, were moving to bar exports on a range of crops to control costs at home. It meant less supply on world markets even as global demand entered a fundamentally phase. Already, corn prices had been climbing for months on the back of booming government-subsidized ethanol programs. Soybeans were facing pressure from surging demand in China. But as supplies in the pipelines of global trade shrank, prices for corn, soybeans, wheat, oats, rice and other grains began shooting through the roof. At the same time, food was becoming the new gold. Investors fleeing Wall Street's mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up even more. By Christmas, a global panic was building. With fewer places to turn, and tempted by the weaker dollar, nations staged a run on the American wheat harvest. Foreign buyers, who typically seek to purchase one or two months' supply of wheat at a time, suddenly began to stockpile. They put in orders on U.S. grain exchanges two to three times larger than normal as food riots began to erupt worldwide. This led major domestic U.S. mills to jump into the fray with their own massive orders, fearing that there would soon be no wheat left at any price. "Japan, the Philippines, [South] Korea, Taiwan -- they all came in with huge orders, and no matter how high prices go, they keep on buying," said Jeff Voge, chairman of the Kansas City Board of Trade and also an independent trader. Grains have surged so high, he said, that some traders walking off the floor for weeks at a time, unable to handle the stress. "We have never seen anything like this before," Voge said. "Prices are going up more in one day than they have during entire years in the past. But no matter the price, there always seems to be a buyer. . . . This isn't just any commodity. It is food, and people need to eat."

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High Food Prices = Famine
High food prices starve 100 million people on every continent. UN 8 (http://www.sciencedaily.com/releases/2008/04/080423095236.htm; April 23)
The World Food Programme (WFP) has said that high food prices are creating the biggest challenge that WFP has faced in its 45-year history, a silent tsunami threatening to plunge more than 100 million people on every continent into hunger. “This is the new face of hunger – the millions of people who were not in the urgent hunger category six months ago but now are,” said WFP Executive Director Josette Sheeran, who is meeting British Government officials after addressing a UK parliamentary hearing in London. “The response calls for large-scale, high-level action by the global community, focused on emergency and longer-term solutions,” she said. Analysis being carried out by WFP supports World Bank estimates that about 100 million people have been pushed deeper into poverty by the high food prices. WFP expects to release figures next week estimating how many new people have urgent hunger needs. She said that like the 2004 tsunami, which hit the Indian Ocean leaving quarter of a million dead and about 10 million more destitute, the food price challenge requires a global response. At that time, the donor community, including governments, the corporate sector and private individuals, stepped up, giving a record US$12 billion to help with recovery efforts. “We need that same kind of action and generosity,” Sheeran said. “What we are seeing now is affecting more people on every continent, destroying even more livelihoods and the nutrition losses will hurt children for a lifetime,” she said. She said WFP is urging a comprehensive approach where
all parties, from governments to UN agencies to NGOs, all work together. Alongside other partners, WFP will follow a 3-track response:in the short term, WFP will seek full funding for targeted food safety nets and mother-child health programmes in extreme situations, scale up school feeding and use it as a platform for urgent, nutritional interventions; in the medium term, WFP will offer its huge logistics capacity to support life-saving distribution networks – every hour of the day, WFP has 30 ships on the high seas, 5,000 trucks on the ground and 70 aircraft in the sky, delivering food to the hungry; it will also expand cash and voucher programmes and support local purchases from small farmers, helping them to afford inputs and sustain livelihoods;and in the longer term, it will support policy reform and provide advice and technical support to governments engaging in agricultural development programmes; at the same time WFP will pursue local purchase contracts that can help farmers increase investment and yields. Longer-term solution. “WFP can, if needed and if asked, ramp up to help cool down a nutritional crisis, so that longer-term solutions can come on board,” Sheeran said. Just as WFP sends an emergency team into the field to deal with a natural disaster, so it has assembled its top specialists to deploy programmes to mitigate the effects of high food prices among the most vulnerable. Sheeran stressed that partnerships will play a critical role in fighting this emergency. WFP has been engaging with donor governments, sister UN agencies, institutions such as the World Bank and International Monetary Fund and other humanitarian actors, including non-governmental organizations to mobilize a coordinated response. The urgency of the situation is underlined by WFP’s decision to suspend school

feeding to 450,000 children beginning in May in Cambodia, unless new funding can be found in time. WFP representatives in 78 countries around the world are facing similar difficult choices.

Global famine caused by high food prices kills 25,000 people a day Jose, Staff Writer for Commodity Online, 8
(Rinu, Commodity Online, "Food for thought: what fuels hunger?" 7-3-8, http://www.commodityonline.com/news/topstory/Food-for-thought-What-fuels-hunger-10169-3.html, 7-12-8) Haiti has fallen. Food riots have occurred in 22 countries, including Egypt, Yemen, Burkina Faso, Ethiopia, Cameroon, Bangladesh, Malaysia, Indonesia, Ivory Coast, Mauritania, Madagascar, Mozambique, Philippines and Senegal. In North Korea, where food shortages and famine have been endemic for years, the average adolescent is 18 cm shorter than his counterpart in South Korea. Hunger has created a lost generation (Rana Foroohar). High food prices are a matter of daily struggle, sacrifice and survival for more than two billion people today. World Bank estimates that the current food crisis could push 100 million people deeper into poverty. Everyday, 25,000 people die from hunger related causes. Today, as food prices spiral out of control, the worry is that millions more of the world’s poorest will also be lost to its savages. Beyond the numbers, it means stolen lives and stunted futures. Governments around the world have reacted with a variety of different measures to quell and head off disturbances as prices continue to rise and the prospect of shortages increases. The World Food Programme calls for a $755 million aid to meet emergency needs. Food is an amplifier of many kinds of risk, particularly political risk and its effects are traveling more rapidly because the world is a global village now. Fuel prices have risen farther and faster than agricultural commodities over the past few years adding fuel to the fire.

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High Food Prices = Famine
Oil and Food Prices are directly linked to famine. Mason 29 March 2008 Global food prices rise and famine increases
http://www.wsws.org/articles/2008/mar2008/fami-m29.shtml The United Nations body World Food Programme (WFP) has warned that the rise in global food prices will reduce its ability to feed hungry and malnourished people. Speaking last month in Rome, where the WFP is based, WFP Executive Director Josette Sheeran said, “Our ability to reach people is going down just as needs go up.... We are seeing a new face of hunger in which people are being priced out of the food market.... Situations that were previously not urgent—they are now.” In a press release, the WFP gave a new estimate for the funds needed for its work this year at nearly US$3.5 billion, half a billion more than estimated last year. This money is for approved projects to feed 73 million people in 78 countries throughout the world. It notes that this money is for projected feeding schemes and does not include unforeseen emergencies that may arise. It also notes that the poorest people on earth will have to spend an increasing portion of their meagre income on food. The WFP warns that these people will be forced to buy less food, or less nutritious food, or rely on outside help. The countries that will be most affected include Zimbabwe, Eritrea, Djibouti, the Gambia, Togo, Chad, Cameroon, Niger and Senegal, all on the African continent. Also affected will be Haiti, Myanmar (Burma), Yemen and Cuba. The WFP says amongst the factors pushing food increases are rising oil prices and the increase in demand for food, especially meat, in China and India. This increase in demand is a result of the rapid increase in economic power of these countries.

Food prices hit the poor hardest, putting hundreds of thousands in risk of starvation. Michel Chossudovsky Global Famine Global Research, May 2, 2008
http://www.globalresearch.ca/index.php?context=va&aid=8877 Famine is the result of a process of "free market" restructuring of the global economy which has its roots in the debt crisis of the early 1980s. It is not a recent phenomenon as suggested by several Western media reports. The latter narrowly focus on short-term supply and demand for agricultural staples, while obfuscating the broader structural causes of global famine. Poverty and chronic undernourishment is a pre-existing condition. The recent hikes in food prices have contributed to exacerbating and aggravating the food crisis. The price hikes are hitting an impoverished population, which has barely the means to survive. Food riots have erupted almost simultaneously in all major regions of the World: "Food prices in Haiti had risen on average by 40 percent in less than a year, with the cost of staples such as rice doubling.... In Bangladesh, [in late April 2008] some 20,000 textile workers took to the streets to denounce soaring food prices and demand higher wages. The price of rice in the country has doubled over the past year, threatening the workers, who earn a monthly salary of just $25, with hunger. In Egypt, protests by workers over food prices rocked the textile center of Mahalla al-Kobra, north of Cairo, for two days last week, with two people shot dead by security forces. Hundreds were arrested, and the government sent plainclothes police into the factories to force workers to work. Food prices in Egypt have risen by 40 percent in the past year... Earlier this month, in the Ivory Coast, thousands marched on the home of President Laurent Gbagbo, chanting “we are hungry” and “life is too expensive, you are going to kill us. Similar demonstrations, strikes and clashes have taken place in Bolivia, Peru, Mexico, Indonesia, the Philippines, Pakistan, Uzbekistan, Thailand, Yemen, Ethiopia, and throughout most of sub-Saharan Africa." (Bill Van Auken, Amid mounting food crisis, governments fear revolution of the hungry, Global Research, April 2008)

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Food Price Spikes Kill Billions
Even small increases in Food Prices risk killing billions Tampa Tribune, 1996
On a global scale, food supplies - measured by stockpiles of grain - are not abundant. In 1995, world production failed to meet demand for the third consecutive year, said Per Pinstrup-Andersen, director of the International Food Policy Research Institute in Washington, D.C. As a result, grain stockpiles fell from an average of 17 percent of annual consumption in 1994-1995 to 13 percent at the end of the 1995-1996 season, he said. That's troubling, Pinstrup-Andersen noted, since 13 percent is well below the 17 percent the United Nations considers essential to provide a margin of safety in world food security. During the food crisis of the early 1970s, world grain stocks were at 15 percent. "Even if they are merely blips, higher international prices can hurt poor countries that import a significant portion of their food," he said. "Rising prices can also quickly put food out of reach of the 1.1 billion people in the developing world who live on a dollar a day or less." He also said many people in low-income countries already spend more than half of their income on food.

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High Food Prices = Regional Wars
Destabilizing governments, street riots, and regional wars are all caused by the food price shock Faiola, Post Global Economics Reporter, 08 (Anthony, The Washington Post, April 27, “The New
Economics of Hunger; A brutal convergence of events has hit an unprepared global market, and grain prices are sky high. The world's poor suffer most.”, http://www.washingtonpost.com/wpdyn/content/article/2008/04/26/AR2008042602041_pf.html , 7/12/08) Beyond Hunger The food price shock now roiling world markets is destabilizing governments, igniting street riots and threatening to send a new wave of hunger rippling through the world's poorest nations. It is outpacing even the Soviet grain emergency of 1972-75, when world food prices rose 78 percent. By comparison, from the beginning of 2005 to early 2008, prices leapt 80 percent, accordeying to the United Nations' Food and Agriculture Organization. Much of the increase is being absorbed by middle men -- distributors, processors, even governments -- but consumers worldwide are still feeling the pinch. The convergence of events has thrown world food supply and demand out of whack and snowballed into civil turmoil. After hungry mobs and violent riots beset Port-au-Prince, Haitian Prime Minister Jacques-…douard Alexis was forced to step down this month. At least 14 countries have been racked by food-related violence. In Malaysia, Prime Minister Abdullah Ahmad Badawi is struggling for political survival after a March rebuke from voters furious over food prices. In Bangladesh, more than 20,000 factory workers protesting food prices rampaged through the streets two weeks ago, injuring at least 50 people. To quell unrest, countries including Indonesia are digging deep to boost food subsidies. The U.N. World Food Program has warned of an alarming surge in hunger in areas as far-flung as North Korea and West Africa. The crisis, it fears, will plunge more than 100 million of the world's poorest people deeper into poverty, forced to spend more and more of their income on skyrocketing food bills. "This crisis could result in a cascade of others . . . and become a multidimensional problem affecting economic growth, social progress and even political security around the world," U.N. Secretary General Ban Ki-moon said.

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Oil prices are the root cause for food prices (1/2)
The small increases in food prices from ethanol use stems from the fossil fuels used to create them DOE and DOA, US Department of Energy and US Department of Agriculture, 08 (Responses to Questions of
Senator Bingmann, June, http://www.energy.gov/media/Secretaries_Bodman_and_Schafer_Ltr_to_Sen_Bingaman.pdf, 6/30/08) In order to estimate the impact of the increased production of U.S. biofuels on global food prices, one needs to estimate the direct and indirect effects of the increased use of com and soybeans on individual commodity prices. Last month, CEA testified before the Senate Foreign Relations Committee about com-based ethanol's impact on global food prices using this strategy. The analysis below continues in this spirit, but it considers a broader category of factors and costs and a slightly different time period. Here the analysis is updated to the 12 months ending in April, and the analysis considers a broader mix of biofuelsfocusing on com-based and soybean oil-based biofuels. Table 2 (below) presents the estimated effects of ethanol and biodiesel production in the United States on global prices for com (maize), soybeans, soybean meal, and soybean oil as well as the impact on the IMF global food commodity price index. It is important to point out that the price impacts reflect greater ethanol and biodiesel production and not only ethanol. The majority of the price increases rely on the fossil fuels used in the creation of the biodiesel.The estimated impacts on global food prices are consistent with the estimates in response to Question 1. We estimate that the percentage increase in price ofcom from April 2007 to April 2008 would have been 23 percent lower in the absence of any growth in biofuel production in the United States. Based on this analysis, we estimate that the price of com would have increased by 47.5 percent assuming no growth in biofuel production in the United States, down from the actual increase of61.7 percent, from April 2007 to April 2008.

Biofuel production is a negligible contributor to rising food prices, energy costs are to blame DOE and DOA, US Department of Energy and US Department of Agriculture, 08 (Responses to Questions
of Senator Bingmann, June, http://www.energy.gov/media/Secretaries_Bodman_and_Schafer_Ltr_to_Sen_Bingaman.pdf, 6/30/08) The price of agricultural commodities is rising for several reasons. The most important, in the long run, is rising demand. This is in fact a tremendous success story as major emerging economies such as India and China are achieving rapid growth. We certainly applaud this development. Hundreds of millions of people are joining the global middle class -- and as standards of living improve, so do diets. It should be noted that some of the biggest price increases have been for commodities such as rice and wheat, which are not biofuels feedstocks at all. In addition to rising demand, other factors are at work as well. Rising energy costs directly increase food prices. Several major wheat exporters have recently suffered poor harvests. A number of countries have also imposed export restrictions on foodstuffs which have disrupted normal supply patterns in global markets, which has driven up prices. Biofuels production also contributes to demand but, when one considers the full range of factors involved, biofuels are clearly not the major factor driving food prices.

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Oil prices are the root cause for food prices (2/2)
The increase in food prices has had very little to do with ethanol consumption, gas prices are driving the increases DOE and DOA, US Department of Energy and US Department of Agriculture, 08 (Responses to Questions of
Senator Bingmann, June, http://www.energy.gov/media/Secretaries_Bodman_and_Schafer_Ltr_to_Sen_Bingaman.pdf, 6/30/08) In 2007, the expansion in ethanol and biodiesel consumption is estimated to have increased the Consumer Price Index (CPI) for all food by 0.10-0.15 percentage point. In other words, ethanol and biodiesel consumption accounted for approximately 3-4 percent of the overall rise in retail food prices. During the first 4 months of 2008, the all food CPI increased by 4.8 percent, with increased ethanol and biodiesel consumption accounting for only about 4-5 percent of the total increase while other factors accounted for 95-96 percent of the Increase. Increased demand for biofuel feedstocks has benefited com and soybean producers. Higher prices have encouraged production increases and some switching of acreage from soybeans to com. More dried distiller grains are available for feed, but higher grain prices are also prompting adjustments by livestock producers. In future years, production adjustments by livestock and dairy producers in response to higher feed costs resulting from the expansion in ethanol and biodiesel consumption could add a total of 0.6-0.7 percentage point to the CPI for all food. Commodities prices, both agricultural and nonagricultural, have risen sharply in recent years for a number of reasons unrelated to biofuels development. For agricultural commodities, higher incomes, population growth, and depreciation of the dollar are increasing the demand for food; drought and dry weather have lowered production and reduced stocks; and some countries have imposed export restrictions. All these factors contribute to higher commodity prices. In addition, record prices for gasoline and diesel fuel are increasing the costs of producing, transporting, and processing food products.

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Government action to incentivize renewables is key to solve
Government leadership is crucial to stop oil dependence Smith and Kelly, The Washington Post, 2006
(Frederick and P. X., “Are We Ready for the Next Oil Shock?”, August 11, pg A19) Government leadership is absolutely necessary. Many of the most promising solutions on both the demand and supply sides will require decades to mature. Government proposals should align the interests of businesses and individuals with society's goals; for example, tax credits and similar incentives must allow businesses to recover investments and engage in essential long-range planning, and they must account for the high implicit discount rates that consumers apply to future savings. While recent legislation has pointed us in the right direction, bolder action must be taken. Whatever the eventual shape of a credible energy security plan, significant public and private resources will be required to put policy into practice. The government needs to do more than just provide funds, though; it must sustain a strategic energy policy even if oil prices drop in the medium term. This is only fitting given the size and nature of the threat. Indeed, if it means condemning the country to another decade of energy dependence, the possible return of $50 oil should be no less frightening than the prospect of an oil shock wave.

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***Random Stuff***

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Oil is key to Hegemony
Oil is key to US military Klare, professor of peace and world security studies at Hampshire College, 08
(Michael, Common Dreams, “The End of the World As You Know It … and the Rise of the New Energy World Order,” April 15, http://www.commondreams.org/archive/2008/04/15/8316/, date accessed: 7/2/08) 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 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.

Militarism goes hand-in-hand with oil Flowers, writer for the Washington informer, ‘08 Gary L, The Washington Informer “Bush’s Trip to Africa: Was it about oil or democracy” Spring 2008, Proquest.com Accessed: 7/3/08
Bush's trip seemed to be more about oil, natural resources, and militarism than about democracy. This trip must be viewed relative to the Bush Administration's expansion of the U.S. military in Africa through the new U.S. African Command (Africom.) Of all of the African nations only Liberia, a former American nation, has given consent to the sitting of the Africom base in their country. This could foreshadow the recolonization of Africa and its resources in the name of militarism. Nicole Lee, executive director of TransAfrica Forum, the oldest and largest African American human rights and social justice advocacy organization for the African World, said Bush's significant success "is not about what he has done for Africa, but rather what [he] has done for certain U.S. interests." Further, "Africom represents a commitment to the promotion and protection of U.S. state and corporate interests above those of African citizens."

US military is key to hegemony. Lind, Whitehead Senior Fellow at the New America Foundation, 07
(Michael, The New American Foundation, “Beyond American Hegemony,” June, http://www.newamerica.net/publications/articles/2007/beyond_american_hegemony_5381, date accessed: 7/2/08 Finally, the global hegemony strategy insists that America’s safety depends not on the absence of a hostile hegemon in Europe, Asia and the Middle East -- the traditional American approach -- but on the permanent presence of the United States itself as the military hegemon of Europe, the military hegemon of Asia and the military hegemon of the Middle East. In each of these areas, the regional powers would consent to perpetual U.S. domination either voluntarily, because the United States assumed their defense burdens (reassurance), or involuntarily, because the superior U.S. military intimidated them into acquiescence (dissuasion). American military hegemony in Europe, Asia and the Middle East depends on the ability of the U.S. military to threaten and, if necessary, to use military force to defeat any regional challenge-but at a relatively low cost. This is because the American public is not prepared to pay the costs necessary if the United States is to be a "hyperpower."

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Oil Scarcity Justifies Hegemony
Oil scarcity legitimizes US militarization Moran and Russel, respectively Prof of national security affairs at CCC, Senior Lecturer; Co-Director, Center for Contemporary Conflict; Managing Editor, Strategic Insights. ‘08
Daniel and James, Center for Contemporary Conflict “The Militarization of Energy Security” 4/4/08 http://www.analyst-network.com/article.php?art_id=1671 Accessed: 7/3/08 These kinds of considerations suggest that, in the energy sphere as in all others, the successful application of military force will depend on how it is framed in political terms. Force exercised within the context of international law—in whose further development the United States has a strong, if lately dormant, interest— or at any rate with the blessing and support of major market participants, is manifestly preferable to unilateral action, whose self-interested motives are liable to be taken for granted even by friendly by-standers. Unilateral policies are especially ill-suited to an arena in which effective action will almost certainly require the synchronization of military and economic pressure. Sanctions regimes, boycotts, restrictions on the transfer of technology, and so on, are all difficult to employ by any state acting alone. A militarized energy strategy could scarcely be undertaken without imposing sharply higher prices, and correspondingly reduced consumption, on the American public. That being the case, efforts to reduce consumption in advance of a crisis might well be strategically advisable. Doing so would help to insulate the American economy from the negative effects of its own strategic behavior. A country that has demonstrated strong consciousness of the need to conserve energy resources is also more likely to be perceived as an honest policeman by other market participants.

Militarization will only fully occur in a world where energy resources are scarce Moran and Russel, respectively Prof of national security affairs at CCC, Senior Lecturer; Co-Director, Center for Contemporary Conflict; Managing Editor, Strategic Insights. ‘08
Daniel and James, Center for Contemporary Conflict “The Militarization of Energy Security” 4/4/08 http://www.analyst-network.com/article.php?art_id=1671 Accessed: 7/3/08 In such circumstances the great difficulty, from the point of view of both analysis and action, is to account for the enormous range of secondary effects that may follow once force is used on a significant scale. One must assume, for instance, that war by a major power to protect or to interfere with energy supplies would coincide with, or inaugurate, a period of sharply declining performance by the world economy, a development whose effects would be felt by the states immediately concerned, and also by potential opponents, collaborators, and by-standers. In general, the militarization of energy security needs to be envisioned as occurring within a context of strategic anxiety and severe economic stress, in which economic productivity is far below what people are used to, and in which the perennial peace-time trade-offs between guns and butter had become correspondingly more contentious. Such conditions have arisen before, in the 1930s, when the developed world’s demand for security increased rapidly, under conditions that made the relative social cost of that security extremely expensive. It remains difficult to this day to see how war could have been avoided under such circumstances.

Oil addiction needed to justify military intervention throughout the world Quinn Staff writer at Newsweek ‘06
Jane Bryant, Newsweek, “The Price of Our Addiction; For years to come, we'll be paying for our oil in both treasure and blood, as we fight and parley to keep ever-tighter supplies flowing our way.” April 26th 2006, Proquest.com Accessed 7/3/08 This throws our Iraq wars into a different light. To an extent that most Americans don't yet understand, the U.S. military has become a "global oil-protection force," says Michael Klare, an expert on naturalresource wars and author of the book "Blood and Oil." President Jimmy Carter declared the free flow of oil from the Persian Gulf to be a vital U.S. interest, enforced at the point of a gun, if necessary. Today, we patrol tanker routes not only in the gulf, but in the Indian Ocean and South China Sea. Troops and advisers help protect pipelines in chaotic countries such as Colombia and the Republic of Georgia. We're planting military bases near oil supplies in Asia and Africa. Gulf War I was billed as a war to save Saudi oilfields from Saddam Hussein. Gulf War II was elevated to a "war against terror." But it's arguably still about oil--the Carter Doctrine reigns. One of the prizes in Iraq was to have been British and American access to its huge and unexploited oil reserves, Klare says.

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Oil Dependence Undermines US Soft Power (1/3)
Oil dependence has significantly weakened U.S. foreign policy influence Lugar, Charmain of the U.S. Senate Committee on Foreign Relations, 06 (Richard G., June 7, Opening Statement
for Hearing on Oil Dependence and Economic Risk, http://www.senate.gov/~foreign/testimony/2006/LugarStatement060607.pdf, 7/3/08) As Secretary Rice stated before this Committee, our diplomatic activities around the world are being “warped” by petro-politics. Important foreign policy goals -- from accelerating progress in the developing world and expanding trade, to preventing weapons proliferation and promoting democratic reform -- are being undermined by international energy imbalances that have weakened our foreign policy leverage, while strengthening the hand of oil-rich authoritarian governments. In a speech in March at the Brookings Institution, I outlined these dynamics in greater detail, and I ask those remarks be entered into the record. As recently as four years ago, spare production capacity exceeded world oil consumption by about ten percent. As world demand for oil has rapidly increased in the last few years, spare capacity has declined to less than two percent. Any major disruption of oil creates scarcity that will drive prices up. Our vulnerability was made clear to Americans after the devastation of Hurricanes Katrina and Rita. But even as supplies rebounded from those disasters, we experienced a continued upward trend in oil prices. Events such as the civil unrest in Nigeria, uncertainty over Iran’s nuclear program, and worries over Venezuelan supply have kept the price of oil above $70 a barrel. Our capacity to deal with these energy vulnerabilities in a foreign policy context is shaped in part by the ability of our own economy to adjust to changing energy markets. Eventually, because of scarcity, terrorist threats, market shocks, and foreign manipulation, the high price of oil will lead to enormous investment in and political support for alternatives. The problem is that by the time sufficient motivation comes to markets, it may be too late to prevent the severe economic and security consequences of our oil dependence.

Energy dependence challenges all aspects of American foreign policy Downs, former CIA energy analyst, 06 (Erica S., The Brookings Institution, Mar 17, National Energy Security
Depends on International Energy Security, http://www.brookings.edu/opinions/2006/0317china_downs.aspx, 7/3/08) In a recent speech at The Brookings Institution, Senator Richard Lugar, chairman of the Senate Foreign Relations Committee, warned that "energy is the albatross of U.S. national security." America's appetite for oil both directly and indirectly challenges a variety of U.S. interests, such as economic growth, democratization, and counterterrorism. This albatross cannot be removed from America's neck through domestic measures alone.

Oil dependence undercuts the US ability to carry out foreign policy objectives Biden, Senator, 06 (Joesph R., U.S. Senate Committee on Foreign Relations, June 7,
http://www.senate.gov/~foreign/testimony/2006/BidenStatement060607.pdf, 7/3/08) Here in the Foreign Relations Committee, we deal every day with the foreign policy implications of our dependence on imported fossil fuels. Most obviously, there are our complex relationships with what Michael Mandelbaum and others have called the “Axis of Oil,” the oil-rich regimes around the world. This dependence has a pernicious effect on our foreign policy. It literally helps to fuel the terrorism we are fighting, because some of dollars we spend on crude oil wind up in the pockets of radicals. It limits our options and limits our leverage in dealing with national security threats, because oil rich countries can stand up to us, and oil dependent countries are afraid to stand with us. And it undercuts our hopes for advancing democracy and freedom, because repressive regimes, swimming in a sea of high-priced oil, can resist pressure to reform. 3 To cite just one example, Iran’s most recent threats to disrupt oil exports – as a direct response to our attempts to deal with their nuclear ambitions – was immediately translated into an increase in oil prices – a jump to $73 a barrel. Not just economic forces, but political conflicts, drive this market.

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Oil Dependence Undermines US Soft Power (2/3)
Oil dependency threatens US foreign policy initiatives through economic reliancee Deutch and Schlesinger, Chairs of the Council on Foreign Relations, 06 (John and James R., Council on
Foreign Relations, National Security Consequences of U.S. Oil Dependence: Independent Task Force Report 58, http://www.cfr.org/content/publications/attachments/EnergyTFR.pdf, 7/3/08) The Task Force has identified five major reasons why dependence on energy traded in world markets is a matter of concern for U.S. foreign policy. We have also examined a sixth, the relationship of military force structure to oil dependence. First, the control over enormous oil revenues gives exporting countries the flexibility to adopt policies that oppose U.S. interests and values. Iran proceeds with a program that appears to be headed toward acquiring a nuclear weapons capability. Russia is able to ignore Western attitudes as it has moved to authoritarian policies in part because huge revenues from oil and gas exports are available to finance that style of government. Venezuela has the resources from its oil exports to invite realignment in Latin American political relationships and to fund changes such as Argentina’s exit from its International Monetary Fund (IMF) standby agreement and Bolivia’s recent decision to nationalize its oil and gas resources. Because of their oil wealth, these and other producer countries are free to ignore U.S. policies and to pursue interests inimical to our national security.

Dependency on other countries for energy allows them to utilize power to obtain political oppurtunities Deutch and Schlesinger, Chairs of the Council on Foreign Relations, 06 (John and James R., Council on
Foreign Relations, National Security Consequences of U.S. Oil Dependence: Independent Task Force Report 58, http://www.cfr.org/content/publications/attachments/EnergyTFR.pdf, 7/3/08) Second, oil dependence causes political realignments that constrain the ability of the United States to form partnerships to achieve common objectives. Perhaps the most pervasive effect arises as countries dependent on imports subtly modify their policies to be more congenial to suppliers. For example, China is aligning its relationships in the Middle East (e.g., Iran and Saudi Arabia) and Africa (e.g., Nigeria and Sudan) because of its desire to secure oil supplies. France and Germany, and with them much of the European Union, are more reluctant to confront difficult issues with Russia and Iran because of their dependence on imported oil and gas as well as the desire to pursue business opportunities in those countries. These new realignments have further diminished U.S. leverage, particularly in the Middle East and Central Asia. For example, Chinese interest in securing oil and gas supplies challenges U.S. influence in central Asia, notably in Kazakhstan. And Russia’s influence is likely to grow as it exports oil and (within perhaps a decade) large amounts of natural gas to Japan and China. All consuming countries, including the United States, are more constrained in dealing with producing states when oil markets are tight. To cite one current example, concern about losing Iran’s 2.5 million barrels per day of world oil exports will cause importing states to be reluctant to take action against Iran’s nuclear program.

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Oil Dependence Undermines US Soft Power (3/3)
Oil dependency creates fears and special political relationships that hurt the US Deutch and Schlesinger, Chairs of the Council on Foreign Relations, 06 (John and James R., Council on
Foreign Relations, National Security Consequences of U.S. Oil Dependence: Independent Task Force Report 58, http://www.cfr.org/content/publications/attachments/EnergyTFR.pdf, 7/3/08) Third, high prices and seemingly scarce supplies create fears— especially evident in Beijing and New Delhi, as well as in European capitals and in Washington—that the current system of open markets is unable to ensure secure supply. The present competition has resulted in oil and gas deals that include political arrangements in addition to commercial terms. Highly publicized Chinese oil investments in Africa have included funding for infrastructure projects such as an airport, a railroad, and a telecommunications system, in addition to the agreement that the oil be shipped to China. Many more of these investments also include equity stakes for state-controlled Chinese companies. Another example is Chinese firms taking a position in Saudi Arabia, along with several Western firms, in developing Saudi Arabia’s gas infrastructure. At present, these arrangements have little effect on world oil and gas markets because the volumes affected are small. However, such arrangements are spreading. These arrangements are worrisome because they lead to special political relationships that pose difficulties for the United States. And they allow importers to believe that they obtain security through links to particular suppliers rather than from the proper functioning of a global market. We note that the United States, in the past, has also taken decisions to restrict markets partly due to similar concerns about energy security. For example, when the trans-Alaska pipeline opened, it included a prohibition against exporting the oil. The hostility toward proposals by the Chinese National Overseas Oil Company (CNOOC) to purchase Union Oil ofCalifornia is seen by some as denying investment opportunity in the U.S. market in a similar manner to what the United States decries about other nations’ conduct. The Task Force believes that foreign entities should be able to purchase U.S. assets provided that the acquisitions meet the criteria established by the Committee on Foreign Investment in the United States (CFIUS).12 Opening a dialogue with rapidly growing consumers, notably China and India, can help those consumers gain confidence that will lead to a greater willingness to allow markets to operate. (We return to this policy recommendation later.) The United States and other consuming countries have a tremendous interest in maintaining the present open market oil commodity trading rules.

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A2: SPR CP
Perm: SPR and investing in renewable energy is the best way to solve for oil dependency in the short and long term Podesta, Former staff of President Clinton from 1998 to 2001 and is currently the president and chief executive officer of the Center for American Progress, 08 (John, Washington Times, “Long and short of oil price spike,” 06-15-08, http://washingtontimes.com/news/2008/jun/15/long-and-short-of-oil-price-spike/, accessed 07-01-08)
The high price of oil and gasoline is like the weather - everyone talks about it but no one does anything to fix it. That's certainly the case for the Bush administration. In 2006, President Bush said, "America is addicted to oil," yet his administration did nothing to reduce oil use. Had he acted in 2001, there would be millions more fuel-efficient cars on our roads today, cutting our oil use. However, there are immediate steps that the Bush administration and Congress can take today to help stem the rising price of oil and also help those Americans hit hardest by rising gasoline prices. Then there are bold, long-term

measures that the next president and Congress must embrace to drastically reduce long-term oil use by providing affordable alternatives, which will also increase our energy security.
Record oil prices are due to growing worldwide demand, sluggish production, a weak dollar and speculators gone wild. In the short term, oil demand is unlikely to abate much, which means oil-producing countries have little incentive to pump more oil now when the price may be higher next year. But the United States could upset that calculation

by selling 500,000 barrels per day from our nation's brimming Strategic Petroleum Reserve. This is about half of the production increase President Bush unsuccessfully sought from Saudi Arabia. Even if we did this for 100 days, the SPR would still be nearly 90 percent full. Putting this additional oil on the market would burst the speculative bubble. Investors and speculators in oil contracts would see today's safe, one-way bet challenged. Speculators count on market forces to back up their bets, but when institutional investors and oil traders sense that the supply and price of oil might go in different directions, all bets are off. And with oil at $135 per barrel, this is a profitable time to sell oil bought at a much lower price. These steps would break market momentum driving oil prices, but gas prices will remain high in the near term. So we need to help those suffering the most from record energy prices, which are ravaging the budgets of
low- and middle-income families. These families today spend about 50 percent more of their income on gasoline compared to 2001 - even though wage gains have been stagnant since then. Many households cannot quickly reduce the amount of gas use built into their daily lives due to the location of their home and work and the gas mileage of their cars. Many families cannot afford to buy a more fuel-efficient car right now. Significantly, Americans are reducing their gasoline use, down 4 percent from a year ago, yet gas prices are up 23 percent since then. So here's a bold idea to help low- and middle-income families cope with rising energy prices - a "fuel price oilbate" program for households based on income. This program would also assist low-income households without cars because they still pay more for food and other goods due to high fuel prices. To pay for these "oilbates," Congress could eliminate some egregious tax breaks for Big Oil and recover lost royalties from wells in U.S. waters. With record profits and prices, oil companies don't need tax breaks.

Ultimately, though, we must invest in affordable transportation options to slash oil dependence and high costs. The new Energy Security and Independence Act increases fuel economy standards to cut oil use by 1.1 million barrels daily in 2020. And its requirement for more "cellulosic ethanol" made from switch grass and plant waste, combined with other biofuels, would reduce gasoline use by another 15 percent.
These measures, however, are inadequate to significantly reduce consumption. We need to invest heavily in transportation options that use little oil. The "plug-in hybrid electric vehicle," such as the Chevy Volt, could help meet this goal. A plugin car has a rechargeable battery that powers the engine for up to 40 miles - approximately a typical driving day. Gasoline fuels any additional driving. The battery recharges overnight by plugging the car into an electrical socket. Plug-ins could get 100 miles per gallon or more. Like with earlier new technologies such as nuclear power, government must also help commercialize plug-ins. That can be done by investing in battery research and development, purchasing plug-ins for government fleets, altering vehicle taxes to reward efficiency and granting an $8,000 tax credit to purchase a plug-in or other hyper-efficient automobiles. Mass transit - rail and buses - is another viable option. Last year saw the highest transit ridership in 50 years, and it's up another 3 percent in 2008. Yet the Highway Trust Fund provides only 16 cents of every dollar for transit, with the rest going for highways. Congress should significantly increase the public transit share. Record gas prices are exacting a real economic toll on American families. Bold new steps are required to shake up

oil markets, give some relief for families and provide affordable alternatives to reduce our dependence on costly, foreign oil from hostile regimes. We must begin these efforts today to protect our economy and security from the future ravages of high energy prices.

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A2: ANWR CP
Due to strict ANWR regulations, oil production is bottlenecked as we are already working at maximum capacity. Friend, Staff Writer, 08
(Chris, The Bulletin, “Pickens Misses The Point: We Need More Oil,” 7/10, http://www.thebulletin.us/site/index.cfm?newsid=19842696&BRD=2737&PAG=461&dept_id=576361&rfi=8, date accessed: 7/11/08) It may come as a surprise, but the United States is the third-largest oil producer in the world. What makes our situation so frustrating is that we are extracting a mere fraction of the petroleum resources located right beneath our feet. The Arctic National Wildlife Refuge in Alaska (ANWR) holds untold billions of barrels, and yet even that figure is dwarfed by the oil and natural gas reserves off both continental coasts and in the Gulf of Mexico. Add to that the mammoth amount of coal at our disposal (which can be converted to energy using new clean-coal technology) and our huge shale deposits, and America could be calling all the shots. Of course, Congress doesn't see it that way. They won't lift the moratorium on offshore drilling, and they refuse to open up even small tracts in ANWR. But it really doesn't matter how more oil can be captured if you can't refine it efficiently - and we haven't built a new refinery since 1976. A major reason why petroleum prices continue to spike is because of the bottleneck created by our refineries operating at maximum capacity - so much so that most can never be taken offline for any extended period of time because of the constant backlog.

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US-Saudi Relations Declining
US-Saudi relations are on the decline, multiple reasons Richter, Staff Writer, 08
(Paul, Las Angeles Times, “New forces fraying U.S.-Saudi oil ties,” 6/8, http://www.latimes.com/news/nationworld/world/la-fg-ussaudi8-2008jun08,0,169219.story, date accessed: 6/29/08) (Newser) – The weakening dollar and rising oil prices are marring more than just the American economy: It’s also eroding the long-standing friendly relationship between the US and Saudi Arabia, the Los Angeles Times reports. A bleak economic outlook has cost the US clout with its oil-producing ally. “There’s certainly a perception that the power equation has changed,” said an oil analyst. The oilrich nation feels disillusioned by the US-led Iraq war and Washington’s perceived weak commitment to the Palestinians, and is ignoring American exhortations to increase oil production to keep prices lower. China is beginning to step in as a huge oil consumer and ally, and a “relationship is clearly developing rapidly,” noted another analyst, adding that Beijing may soon have greater leverage than Washington.

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***NEG***

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***Soft Landing Now***

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Soft Landing Now
Maintaining current rate cuts ensures a soft landing King, Staff writer at the WSJ. ‘08
Wall Street Journal, “OPEC Pins Hope on US Soft Landing” 2/1/08 Proquest.com. Accessed 7/01/08 VIENNA -- With OPEC widely expected to hold oil production steady at its meeting today, the cartel's leaders are facing the politically thorny possibility of an output cut in the weeks ahead. For now, the Organization of Petroleum Exporting Countries hopes the U.S. Federal Reserve's rate cuts will bring the U.S. economy in for a soft landing. The U.S. is the world's largest oil consumer. A stronger U.S. economy would shore up demand, stabilize oil prices and give leverage to OPEC members who want to keep production levels where they are.

Soft landing most likely scenario, even if we can’t control oil prices Irish Independent ‘07 “Working for A Soft Landing” 6/12/07 LexisNexis Accessed: 7/01/08
The Central Bank believes that the hoped-for "soft landing" now appears to be the most likely outcome. That is a welcome analysis. However, not all the variables which can help deliver that soft landing are actually within our control. The "Known Unknowns", as Donald Rumsfeld might call them, are international oil prices, currently at an 11month high, and rising, and the decline of the dollar against the euro.

Australia proves – soft landing inevitable The Australian ‘08 “On the Market – Monday Briefing” June 23rd 2008 LexisNexis Accessed: 7/01/08
Forecasts for the Australian economy are for a soft landing, as growth slows down, UBS says. "This slowdown is likely to bring its share of earnings pressures, particularly given the high level of starting point profitability," strategist David Cassidy says. "However, the NAB business survey continues to suggest profit conditions at present are far from disastrous." Despite elevated interest rates and surging oil prices eating into the economy, the bank says it's too early to forecast a hard landing because of Australia's rising terms of trade and a healthy "starting point" for many households and corporates.

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A2: Soft Landing – It’s impossible
Even a soft landing oil scenario will devastate those in debt, causing starvation and a collapse of law and order Church, Independent Energy Analyst for Counter Currents, 06 (Norman, Powerswitch, "Major Problems of Surviving Peak Oil," 10-23-6, http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2026&It emid=2, 7-2-8)
Experts suggest several possible scenarios for the coming energy decline and any of these scenarios will present significant challenges for intentional communities. Even in the “soft landing” scenario, there will still be massive structural changes in society and being in debt may be the undoing of many. Common advice among many Peak Oil experts is to get out of debt! Let’s say for example, that a community is deeply in debt, and is still paying off its property purchase loans. Let’s say the community loses its financial resource base—if members lose their jobs or if a weak economy reduces the market for the goods and services the community produces—the group could default on its loan payments, and may have its property seized by the bank or other creditors. A property-value crash may worsen the debt situation for intentional communities. If a community’s property value falls below their equity in the property, they won’t be able to save themselves from defaulting on loans by selling off their land, which is typically the last resort of farmers in debt. All the shortages and systems failures that can affect mainstream culture can affect intentional communities as well. A community may not have enough foresight, labour, tools, or funds to create alternatives to whatever their members use now for heating, lighting, cooking, refrigeration, water collection, water pumping, and disposal utilization of gray water and human waste. Then there’s the matter of community security—a subject many find “politically incorrect” to even consider. If the government fails; if the law and order system falls apart, there can be various kinds of dangerous consequences. Desperate, hungry people can loot and steal and take what they want from others.

There is no chance of a soft landing; civilization will unravel without oil as a cheap energy source to sustain the global population Church, Independent Energy Analyst for Counter Currents, 06 (Norman, Powerswitch, "Major Problems of Surviving Peak Oil," 10-23-6, http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2026&It emid=2, 7-2-8)
We are in fantasy land if we think that we can continue to support the number of people that we do now without the full input of oil and related products. There are just way too many people who depend on civilization for their every day survival for there to be a "soft landing" as some would hope. We have become so dependent on those fuels, that there is no way we can sustain ourselves at this population density and level of technology without them. Even something as basic as food becomes impossible to produce, process and transport without fuel. It is difficult to think about 'how things will play out' when an oil-based global economy loses its cheap energy source. It has never happened before. It will never happen again. I think it quite probable that it will start very slowly, may be so slowly that we may not even see it start. It will take time for civilization to come apart, and the process will be like rolling down a slope, not like falling off a cliff. We will face a future of shortages, economic crises, disintegrating infrastructure, and collapsing public health, probably stretched out over a period of decades.

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***A2: High Oil Prices***

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A2: High Oil Prices hurt the Economy (1/3)
Rising Energy prices have not hurt the economy in the squo, CBO says Katayama, Graduate Student at University of California: San Francisco, 07 (Munechika, December 22,
http://econ.ucsd.edu/%7Em1kataya/paper/OilShock.pdf, 7/02/08) Macroeconomic consequences of large increases in the price of oil have been of great concern among economists and policy makers, as well as the general public since two major oil-price shocks hit the economy in the 1970's. In recent years, however, it seems that the effect of oil-price shocks has been decreasing. For example, the Congressional Budget Office reports that: Contrary to general expectations, the large and persistent rise in energy prices that has occurred over the past two and a half years has not caused substantial problems for the overall U.S. economy. Although many households have had trouble adjusting to the higher prices, the effects on the nation's gross domestic product (GDP), employment, and innovation have thus far been moderate. (Congressional Budget O_ce, 2006, p.VII)

Times have changed, oil prices no longer effect the economy Burroughes, Staff Writer, 07
(Tom, The Business, “Global economy takes era of high oil prices in its stride,” 9/15, Lexis, date accessed: 7/4/08) Some analysts are predicting prices could eventually go on to hit $100 or beyond. Yet in the 1970s, when oil prices spiked to what would now, in inflation-adjusted terms, be about $90 per barrel, there were severe economic consequences so why haven t there been any this time round? The reason is that the worlds largest economies are less oil-intensive than they were. This is partly due to the rise of the services sector and the demise of manufacturing; oil-using parts of the economy are also more efficient. In the 1970s, the oil sector accounted for about 8% of the world s gross domestic product; it now accounts for about 4%, so high oil prices take a smaller bite than before.

High energy prices will not cause recession Siegel, Staff Writer, 07
Gary E, The Bond Buyer, “In Brief: Fed's Poole: Oil Price Shocks Need Not Lead to Recession,” 3/5, lexis, date accessed: 7/4/08 "Members of the [Federal Open Market Committee], as well as monetary policy makers in Europe and the United Kingdom, have spoken about oil prices and inflation on many occasions in recent years," Poole said. "Despite differences in emphasis, a clear proposition runs through these discussions: irrespective of the behavior of oil prices, we can be confident that monetary policy oriented to price stability will deliver control over inflation over the medium term." Not to say that spikes in energy prices are without impact, according to Poole. "Without question, energy supply shocks are disruptive, but they need not create recessions," he said. "Indeed, there is a more general lesson from experience with oil price shocks. Monetary policy should not allow an economy to operate at the edge of a cliff. When balanced precariously at the edge of a cliff, even a minor disturbance, oil or otherwise, may be sufficient to push the economy over the edge. Although an outside shock may be the catalyst, or trigger, that creates undue inflation pressures, the fundamental problem is not the catalyst but the powerful and risky brew of an overheated economy."

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A2: High Oil Prices hurt the Economy (2/3)
No risk of economic impact from high oil prices – increase in incomes prove we are actually spending less on oil now then 20 years ago Zakaria Staff writer ‘08 Fareed, Newsweek, “Why We Can't Quit; Even at $100 a barrel, oil is still cheaper than a Starbucks latte.” 3/24/08 Proquest.com Accessed: 7/4/08
I think that's been a huge surprise to everyone. I remember meeting with government officials when oil was heading towards $25, and they thought economic disaster was around the corner. They thought the same thing at $50 and $75 a barrel. The reason we've withstood the increase is that consumer income has grown faster than energy expenditures have. We spend about 6 percent of our income on energy, down from 8 percent 20 years ago. Energy just isn't the largest or most important item in our personal spending. Even after the recent price increases, gasoline is still two times less than the cost of Evian water, and 10 times less than a Starbucks latte.

The economy is going to remain solid through this oil shock Dechaux, Staff Writer, 07
(Delphine, Herald Sun, “Less damage in third 'oil shock',” 12/5, Lexis, 7/4/08) THE world is enduring a third ''oil shock'' as crude prices trade at record levels close to $US100 a barrel after a sustained surge over the past three years, according to economists. But unlike the oil shocks of 1973 and 1980, this time the global economy remains solid, even amid the added threat of the US housing crisis. ''There is no doubt we are in the third oil price shock,'' said Leo Drollas, chief economist at the Centre for Global Energy Studies in London. ''Because since 2004 . . . prices have gone from $US30 to almost $US100.'' OPEC ministers meeting in Abu Dhabi today to decide on output quotas for the cartel argue that the oil price spike does not reflect the supply-demand situation. Rather they believe prices have surged because of geopolitical concerns, such as that over Iran's nuclear program. In the run-up to the 1980 oil shock prices had more than doubled. Francois Lescaroux, an economist at IFP, a French state-run energy research body, said majority opinion was that the first two oil shocks were due to supply factors. ''Everyone agrees this time that demand factors are pulling up prices,'' he said. The oil price shock of 1973 occurred after Arab members of OPEC halted shipments of crude to the United States, Western Europe and Japan for their perceived support of Israel in its battle against Syria and Egypt during the Yom Kippur War. Following the oil embargo, the price of crude jumped above $US10 a barrel for the first time. The second oil crisis, in 1979, followed the Iranian Revolution. By the start of 1981, oil prices had surged to $US39, which, adjusted for inflation, is the equivalent of $US101 a barrel today. Yahia Said, a professor at the London School of Economics, said political unrest was a common factor in all three oil shocks. ''In the first case, it was the Yom Kippur War of 1973, in the second case it was the Iraqi invasion of Iran (after the Iranian Revolution). In this case it is tensions around Iraq and Iran,'' he added. ''The shock this time has not had the same negative repercussions in terms of inflation or in terms of recession. ''It means that the economies as the result of the previous two shocks have managed to reduce the impact of high oil prices, especially in developed countries,'' he added.

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A2: High Oil Prices hurt the Economy (3/3)
Empirically proven that high oil prices DO NOT hurt economic growth. McKillop, energy economist and consultant, 04
(Andrew, Energy Pulse, “High oil prices do not hurt economic growth,” 11/24, http://www.energypulse.net/centers/author.cfm?at_id=599, date accessed: 7/2/08) The often repeated but unproven claim that ‘High oil prices hurt economic growth’ is also lacking the proof of its logical corollary, i.e. that “Low oil prices favor economic growth”. The fast fall in economic growth rates in all OECD countries following the ‘liberation’ of Kuwait in 1991, which most certainly helped Bill Clinton to massively defeat G. Bush-1 in the US presidential elections of 1991, was accompanied (and in fact driven) by fast falling oil and energy prices. In any case, cheap oil, in 1991, led to no spontaneous upsurge or recovery in US or other OECD country economic growth. Before this non proof of lower oil prices ‘aiding’ economic growth, the very large oil price falls of 1985-86 did not lead to faster economic growth in any major OECD country through 1986-88. Conversely, the ‘Baghdad Bounce’ so often predicted by business and finance ‘experts’ for the US and world economy in the run-up to the US and UK invasion of Iraq in 2003 was most certainly upward - for oil prices. Economic growth rates, already at high levels in South and East Asia, were either unaffected by, or marginally increased by the economic context in which oil prices bounced upward, and continued bouncing upward as Iraq descended into chaos. From early 2004, with continuing and strong growth of the oil price, the ‘trickle down’ effect of higher oil, gas and ‘real resource’ prices began to take effect. Since early 2004 economic growth rates in most world regions, including Europe, Africa and Latin America, have been repeatedly re-estimated upwards by the European Commission, OECD and IMF. In addition and for about 4 months from late 2003, even the erratic US economy showed some signs of ‘vintage’ economic growth, before falling back to lower and more hesitant trend rates of about 3.75% to 4.5% annual in mid-2004.

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A2: High Oil Prices hurt the Economy – Resilient
The economy is resilient. Due to several factors, there will be no effect on the economy due to high oil prices. Norris, chief financial correspondent of The New York Times and The International Herald Tribune, 06,
(Floyd, International Herald Tribune, “Have oil shocks become business as usual?” 7/21, Lexis, date accessed: 7/4/08) When oil almost hit $40 a barrel in 2003, there was talk that the rising cost of gasoline would slow the American economy. The talk returned when oil topped $50 in 2004 and $60 last year. But the economy kept on growing at a good clip. Now, with oil above $70, some seem to think that the logic was simply wrong and that the new American economy is impervious to oil. A differing interpretation, with the same conclusion, was that oil shocks matter only if they come from supply cutbacks, not from added demand. Just why the reason for higher prices should matter to consumers was not clear, but it provided comfort, as did assertions that oil prices are far higher than they "should" be, driven up by speculators and sure to fall some day. If you believe all that, you can forget about the bad old days when Mideast troubles led to soaring oil prices that produced recessions. Calls for saving oil now are halfhearted at best, particularly since the already reeling American automakers would be even worse off if consumers abandoned sport utility vehicles. Certainly the U.S. economy is less dependent on oil than it was 30 years ago. It is more of a service economy, and strides in fuel efficiency made in the 1980s have lasted to some degree. Energy spending does not take nearly as large a share of consumer budgets as it did after the first oil shock.

England proves – economy remain resilient in times of high oil prices Seager, economics correspondent, and Elliot, editor, 08
Ashley and Larry, The Guardian, “Chancellor insists economy will grow, despite oil price nearing $150,” 4/4, http://www.guardian.co.uk/politics/2008/jul/04/economy.economicgrowth, date accessed: 7/4/08 Alistair Darling dismissed speculation last night that Britain was poised for its first recession since the early 1990s as the growing threat to western economies was highlighted by a fresh surge in oil prices to within striking range of $150 a barrel. With G8 leaders set to explore ways of reducing the cost of crude when they meet in Japan next week, the chancellor admitted that a combination of spiralling energy costs and the credit crunch were having a dampening impact on growth, which the City expects to slow from the 0.3% registered in the first three months of 2008. A week of poor economic news continued yesterday as the Bank of England reported that lenders were stringently rationing the supply of credit and a snapshot of the service sector showed companies raising prices but cutting output. Darling acknowledged that the surging price of crude oil was a "huge threat" to the economy, which had to be countered by greater energy efficiency and a switch to renewable and nuclear energy so that the country could reduce its dependence on imported energy. "It is important that we reduce our dependency far more quickly than perhaps people thought was necessary," he said at a press conference with the US treasury secretary, Henry Paulson, after a breakfast meeting with the heads of Britain's major banks. But the chancellor denied the British economy was heading for recession. "The economy will continue to grow," he said, adding that it was also the view of a majority of forecasters in the City. The banking executives told Darling and Paulson that they believed the worst of the year-long credit crisis was now over. This is a view the Treasury is treating with some caution amid signs that the problems of the financial sector are spreading in Britain, the US and the rest of the world. Stockmarkets around the world are falling, with Japan's leading share prices down for an 11th straight day yesterday - the longest period of declines since 1953 - while non-farm payrolls in the US dropped by 60,000 in June.

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A2: High Oil Prices hurt the Economy – Alt Cause
Alternate Causality – It’s the housing market, not oil slowing our economy. Norris, chief financial correspondent of The New York Times and The International Herald Tribune, 06,
(Floyd, International Herald Tribune, “Have oil shocks become business as usual?” 7/21, Lexis, date accessed: 7/4/08) Two things kept the economy rolling despite rising oil prices. One was the conservation of yesteryear, combined with the fact that major economies are more service-oriented and less energy-dependent than they used to be. The other, particularly in the United States, was the willingness of consumers to use money from rising home values to support spending. Now it appears that housing is sinking. New home starts are down, but still much higher than you would expect from looking at either home builder stock prices down 40 percent in a year or the index of sentiment maintained by the National Association of Home Builders. That index is down 45 percent in a year, and it is at its lowest level since 1991. That the economy is slowing is getting clearer. Paul Kasriel of Northern Trust notes that adjusted for inflation, retail sales in the second quarter fell more than in any quarter since 1991.

Alternate Causality – It’s the housing market that is the real cause of economic slow down Norris, chief financial correspondent of The New York Times and The International Herald Tribune, 06,
(Floyd, International Herald Tribune, “Have oil shocks become business as usual?” 7/21, Lexis, date accessed: 7/4/08) Even the U.S. Federal Reserve may be growing worried. Ben Bernanke, the Fed chairman, told the Senate on Wednesday that he thought a slowing economy might enable inflation to cool without more tightening. That sent the stock market soaring, although a slowing economy is hardly what investors want. But want it or not, we may get it. The housing slowdown is likely to have a greater impact than in the past because the strange mortgages that financed the boom some without principal payments and some with negative amortization, meaning the amount owed grew every month could now cause distress for some borrowers. The economy itself became far more dependent on a strong housing market than ever before. If people cannot take more money out of their homes, and must pay more for gas, they may have no choice but to buy less of everything else.

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A2: High Oil Prices cause inflation (1/2)
High oil prices have no impact on the global economy and have no effect on inflation Segal, Research Fellow at Oxford in Economics and Energy Studies, 07
(Paul, Oxford Institute for Energy Studies, “Why do oil prices no longer shock?,” October, http://www.oxfordenergy.org/pdfs/WPM35.pdf, date accessed: 7/4/08) We also saw, however, that high oil prices have had no perceptible impact on the macroeconomy over the last few years, and that in the data oil price rises already stopped having an impact some time in the 1980s. At the same time, oil price rises stopped passing through to inflation, and this may hold the explanation: if oil price rises do not raise prices, then interest rates do not need to respond to them, and the impact on aggregate activity may therefore be minimal. Some hypotheses regarding why oil prices have less pass-through to core inflation were suggested, but more research on this area would seem to be required. I argued that the view that oil prices are not hurting the world economy this time around because they are ‘demand driven’ as opposed to ‘supply driven’ was implausible a priori, and that it is not in fact supported by the evidence adduced in its favour. It was also shown that the oil price has only just (as of late 2007) reached the magnitude of the shocks of the 1970s, in terms of total direct cost to the economy. While this may mean that the harm to the global macroeconomy is just around the corner, the existing empirical research would suggest otherwise

Oil price is not connected with inflation Segal, Research Fellow at Oxford in Economics and Energy Studies, 07
(Paul, Oxford Institute for Energy Studies, “Why do oil prices no longer shock?,” October, http://www.oxfordenergy.org/pdfs/WPM35.pdf, date accessed: 7/4/08) The key question then becomes why oil prices no longer pass through to core inflation. This matter requires further research, but one can point to some plausible hypotheses. Labour’s bargaining power is probably weaker today than in the 1970s, owing to both weaker unions and international capital mobility. 11 This reduces labour’s ability to demand wage catch-up. A second reason is ‘globalization’, or increased competition from imports. Firms prefer to maintain market share at lower margins rather than lose sales to imports, particularly the low-priced imports from Asia and China in particular. Firms therefore absorb the losses rather than raising prices. A third reason affecting both workers and firms may be that monetary policy is now more credible.12 Thus agents in the economy know that any wage– price spiral would be crushed by the interest rate response, and therefore do not make wage or price demands in response to a rise in the price of oil. Hooker (2002) refers to Taylor’s (2000) argument that low levels of inflation and inflation persistence lead to lower pricing power on the part of firms, and therefore lower pass-through of increased costs (of all kinds) to prices. However, Taylor’s argument applies only to temporary rises in costs, and therefore cannot explain the lack of impact of the current sustained oil price rise. The monetary policy explanation is clearly important, but one should also observe that the direct cost of the present oil price rise has only just reached the level of the two shocks of the 1970s. Petroleum expenditure as a share of GDP for the world, the OECD, and the US is plotted in Figure 3

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A2: High Oil Prices cause inflation (2/2)
There is no link between monetary policy and oil prices. Siegel, Staff Writer, 07
Gary E, The Bond Buyer, “In Brief: Fed's Poole: Oil Price Shocks Need Not Lead to Recession,” 3/5, lexis, date accessed: 7/4/08 Energy prices remain a topic of conversation because they are fueling fears of inflation. But Federal Reserve Bank of St. Louis president William Poole said Friday that despite the volatility of the price of this commodity, inflation can be contained. The key, Poole said, is linking monetary policy to price stability. Policy makers pay attention mostly to the core rate, which excludes volatile numbers, Poole said at a conference in Santiago, Chile, according to a prepared text of the speech released by the Fed. "The reason why price stability is not contingent on oil price behavior is that inflation is a sustained rise in the general level of prices," he said. "The price of oil enters heavily into a particular category of consumer prices - gasoline prices - and indirectly into the prices of many other products. It is possible for the price of energy-intensive goods to change relative to a general index of prices; in fact, such relativeprice movements are part of the everyday workings of a market economy. And, over periods of, say, a year or more it is possible for monetary policy to secure low inflation - which meanslow growth rates in indexes of overall prices - even when energy price inflation is high.

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High Oil Prices Good – Renewables
High oil prices make transition to alternative energy inevitable. Squo proves. Price, editor of Pipeline Magizine, 04,
(Richard, Pipeline Magazine, “Major oil price increases forecast,” 5/17, http://www.pipelinedubai.com/press/2004/pr_04_0482.htm, date accessed: 7/2/08) “Environmentalists argue that the world should not wait for a catastrophe before doing anything about global warming. Under the same logic it would be unwise to wait before trying to develop real substitutes and learn to cope with less oil,” said Westwood. “The future driver for renewable energy will not be global warming, but security of supply. “We forecast a major increase in investment in all sources of renewable energy as ‘conventional’ energy prices rise. Windpower is already attracting investment but as onshore sites are used up attention is being focused offshore. Only 16 offshore windfarms have been installed to date, but our World Offshore Wind Database now lists over 220 prospects. Of course not all will go ahead, but what is certain is that a significant new sector is now developing. Wave and tidal power is at an even earlier stage of development but already some 70 prospects are under consideration. “Biomass is also attracting attention worldwide with power plants under consideration using a wide range of feedstocks, from farm and forest waste to specially grown energy crops.”

High oil prices assist in the shift to alternative energy. Taylor, Director of Natural Resources at the Cato Institute, 00
(Jerry, Cato Institute, “No Need to Panic over Oil Prices: Don't Believe the Politicians' Rhetoric,” 9/7, http://www.cato.org/pub_display.php?pub_id=4499, date accessed: 7/2/08) The same dilemma is faced by consumers. As most any environmental activist will tell you, we have a tremendous cupboard of energy-efficient technologies and alternative-energy sources that have been gathering dust because, with energy cheaper than water, it made little sense to invest in them. If prices remain high, America can, over the long run, shift away from oil consumption far more quickly — and far more dramatically — than it could in the 1970s. While demand for oil is inelastic in the short run, every energy economist knows that it's quite elastic in the long run. All this means that the Saudis — and therefore OPEC — can't maintain these prices forever. Too much slack capacity exists in the system. The trick for the Saudis is to extract what economic rents they can without inducing major increases in non-OPEC supply or long-term investments in energy efficiency. Either the Saudis will break the price bubble, or non-OPEC suppliers will do it for them — as was the case in the great price collapse of 1986.

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High Oil Prices Good – Texas Economy
High oil prices is good for states economy – Texas Proves Zehr, Staff Writer, 08
Dan, States Man, “High gas and oil prices fuel state funds,” 4/4, http://www.statesman.com/business/content/business/stories/other/07/04/0704oilgas.html, date accessed; 7/3/08 It might not feel like it when filling the tank or paying the utility bill, but the sustained high prices of oil and natural gas could be a benefit for the overall Texas economy. The record price of fossil fuels isn't expected to plummet any time soon, and that should help push a continued surge in state tax revenues from oil and gas production. So as high energy prices pummel most parts of the country, the huge stake Texas holds in the country's oil and gas industry is helping nudge the state's economy forward, according to one noted economist. Put another way, the revenue streaming into the state's economy from the oil and gas sector is offsetting the rising costs at the fuel pump and on utility bills.

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High Oil Prices Good – Reduces Unemployment
High oil prices actually decrease unemployment Segal, Research Fellow at Oxford in Economics and Energy Studies, 07
(Paul, Oxford Institute for Energy Studies, “Why do oil prices no longer shock?,” October, http://www.oxfordenergy.org/pdfs/WPM35.pdf, date accessed: 6/30/08) They also find that a negative oil price shock has very little impact on employment, slightly reducing job destruction and thereby producing a modestly higher job rate. They suggest that this asymmetry may be due to a positive impact of the oil price decline through aggregate channels partially offsetting the negative impact of the allocative channels. As we will see later, however, asymmetry is also explicable on the basis of aggregate channels.

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***A2: Oil Shocks***

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A2: Oil Shocks – No Impact (1/4)
Oil shocks don’t pose any danger – today’s world is unique The Economist ‘07
“Shocktreatment” November 15th 2007 http://www.economist.com/finance/displaystory.cfm?story_id=10130655 Accessed: 6/1/08 Yet for all that, something has changed. Today's oil prices would have been unthinkable until very recently. Six years ago, when a barrel of crude could be bought for as little as $20, oil prices at today's levels would have raised fears of deep recession. Notwithstanding the spectre of past oil shocks, crude prices have risen to ever-dizzier heights without derailing a five-year period of strong global growth. But why has the oil bogeyman become less scary? Two new papers* by three well-known economists set out to explain. They come to similar conclusions: oil shocks do not hurt as much because oil is used less intensively than before, because the economy is more flexible and because central banks are better at controlling inflation. What makes oil special is that it is a uniquely dense and portable form of energy. It is not easy to switch to alternatives very quickly, so disruptions to supply are damaging. Yet improvements in energy efficiency mean dependence on oil is not what it once was. Rich countries use less than half as much oil as they did in 1970 for each inflation-adjusted dollar of GDP. So although prices in real terms have returned to levels last seen in the 1970s, their impact is not as powerful when set against the diminished economic importance of oil (see charts).

Modern flexibility means we’ll simply absorb oil shocks The Economist ‘07
“Shocktreatment” November 15th 2007 http://www.economist.com/finance/displaystory.cfm?story_id=10130655 Accessed: 6/1/08 The blow from dearer oil is less powerful than it was and compared with their rigid state in the 1970s, today's more flexible economies are better able to take a punch. Higher oil prices have some unavoidable direct consequences on companies' production costs and on prices paid by consumers for oil-derived products. Wider damage to jobs and output depends on how well these increased costs are absorbed. If workers insist on higher cash wages to maintain their spending power, firms' costs will take an additional hit, resulting in lay-offs, higher unemployment and depressed demand. To the extent that workers take it on the chin, accepting higher oil prices as a temporary tax increase that lowers their real take-home pay, the collateral damage will be smaller. The rigidity of the 1970s economies, where union power and indexed contracts meant wages were unyielding, only magnified the adverse effects of oil shocks. Today's flexible jobs markets allow oil shocks to be absorbed less harmfully. If consumers are more forgiving of oil shocks, it is partly because they have become more accustomed to volatile prices and partly because they have greater trust in policymakers to keep inflation under control. Dearer oil has pushed up consumer prices, but expectations of future price increases have remained remarkably stable. That in turn reflects a belief that central banks will act where necessary to keep a lid on inflation. There is a self-fulfilling aspect to that faith. Employees are less pushy in seeking inflationary wage deals and firms think twice about raising their own prices. As a result, central banks do not need to respond as aggressively as in the past to the inflation caused by higher oil prices. A less jerky monetary policy makes for greater stability.

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A2: Oil Shocks – No Impact (2/4)
Oil prices no longer cause shocks. Even back in the 70s there were tons of alt causality to the recession. Segal, Research Fellow at Oxford in Economics and Energy Studies, 07
(Paul, Oxford Institute for Energy Studies, “Why do oil prices no longer shock?,” October, http://www.oxfordenergy.org/pdfs/WPM35.pdf, date accessed: 6/30/08) Oil prices and economic cycles have been firmly linked in the public imagination since the oil shocks of the 1970s, and the global recessions that followed. Spurred by these events, economists in the 1980s analysed the relationship in a number of econometric studies, demonstrating a negative correlation in the US and other industrial countries between oil prices and macroeconomic performance. Yet while the association is unambiguous at least in the US up to the early 1980s, at some point thereafter the relationship appeared to attenuate, and in the last few years we have witnessed a steady rise in the price of oil to historically high levels with no observable negative impact on macroeconomic indicators. In this paper I review the literature on the impact of oil price shocks and use the resulting analysis to explain the minimal impact of high oil prices today. I will suggest that the empirical literature supports three arguments. First, oil shocks have never been as important as is commonly thought. Oil prices are just one more macroeconomic variable, and the view that they are ever the main determining factor of an economic downturn is not consistent with the evidence. While they have never been decisive they have played a role, however, and the second argument is that the most important component of the impact that oil prices have on output runs through monetary policy. If oil prices raise inflation, then monetary authorities raise interest rates, slowing activity. This argument complements the first argument because monetary authorities make policy in the light of the full range of economic news. In the 1970s, the major economies of the world were suffering from high inflation and low growth independently of the rise in the oil price. Monetary policy responded to the high level of inflation, and the oil price contributed to, but was not the sole cause of, this inflation.

Monetary policy and oil prices are no long correlated. There’s only the risk these high prices can reduce inflation. Segal, Research Fellow at Oxford in Economics and Energy Studies, 07
(Paul, Oxford Institute for Energy Studies, “Why do oil prices no longer shock?,” October, http://www.oxfordenergy.org/pdfs/WPM35.pdf, date accessed: 6/30/08) Within this context, the third argument uses the first two arguments to answer the question in the title: why is the impact of high oil prices so much smaller today than in the 1970s? Given the importance of monetary policy in the causal chain, I argue that a key difference is that oil prices no longer feed through to core inflation, so that monetary policy no longer has to tighten in response to high oil prices. Indeed, as I discuss later, high oil prices can also have a deflationary impact, requiring monetary policy to loosen. In turn, the decline in feed-through to inflation is probably due to more flexible wages, and to more credible monetary policy.

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A2: Oil Shocks – No Impact (3/4)
Due to cartels like OPEC, prices of oil are predetermined and cannot effect the economy in an uncontrollable way Segal, Research Fellow at Oxford in Economics and Energy Studies, 07
(Paul, Oxford Institute for Energy Studies, “Why do oil prices no longer shock?,” October, http://www.oxfordenergy.org/pdfs/WPM35.pdf, date accessed: 6/30/08) While these studies find that oil price shocks no longer have a significant impact on the macroeconomy, Barsky and Kilian (2004) argue that they have never been a major driver of macroeconomic cycles. They do not present formal statistical tests of the hypothesis but instead argue that oil prices are themselves determined, so some extent, by global macroeconomic conditions. In particular, they argue that the ability of a cartel like OPEC to sustain co-operation among its members is increased in times of low real interest rates (owing to the high weight that this implies on future revenues that depend on cooperation), and high growth (following a model of imperfect information by Green and Porter, 1984). They also point out, following Mabro (1988), that the impact of exogenous events in the Middle East on the oil price depends a lot on the tightness of global demand for oil, so that embargo- or war-induced price spikes are partly due to global economic conditions, in addition to the disturbances themselves.

No Impact - Oil prices and the economy are not connected. Taylor, Researcher of Environmental Policy at Cato Institute, and Van Doren a research fellow at Cato Institute, 07
(Jerry and Peter, National Post, “No need to fear oil shocks,” 10/17, lexis, date accessed: 7/1/08) Although oil prices hit $80US, the inflation, unemployment and recession that supposedly follow oilprice shocks are nowhere on the macroeconomic radar screen. If the economy goes into a tailspin, it will be in response to bad news in the housing market, not the oil market. The lesson to be derived from this is pretty clear: While oil-price spirals are certainly nothing for consumers to celebrate, the health of the economy is not held hostage to oil markets. The orthodox view that governed our understanding of oilprice shocks until recently was that the economic damage associated with those shocks was not the result of oil-price increases per se. Higher oil prices, after all, simply make oil producers richer, and everyone else poorer. Over the long run, more money spent on oil equals less money spent on everything else. This reduces the demand for, and thus the price of, everything (including labour!) save for oil. As long as oil producers are spending and/or investing their increased profits, the net effect of all this -- from a macroeconomic perspective--is zero.

No impact – Oil shocks have happened and no impact. Blanchard, Chairman of economics at MIT, and Gali, Macroeconomist, 07
Olivier, Jordi, EconLog, “Why No Oil Shock Effect?” 9/21, http://econlog.econlib.org/archives/2007/09/why_no_oil_shoc_1.html, date accessed: 7/2/08 Since the 1970s, and at least until recently, macroeconomists have viewed changes in the price of oil as as an important source of economic fluctuations, as well as a paradigm of a global shock, likely to affect many economies simultaneously. Such a perception is largely due to the two episodes of low growth, high unemployment, and high inflation that characterized most industrialized economies in the mid and late 1970s. ...The events of the past decade, however, seem to call into question the relevance of oil price changes as a signficant source of economic fluctuations. The reason: Since the late 1990s, the global economy has experienced two oil shocks of sign and magnitude comparable to those of the 1970s but, in contrast with the latter episodes, GDP growth and inflation have remained relatively stable in much of the industrialized world.

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A2: Oil Shocks – No Impact (4/4)
The economy will adjust to the oil shock 1970s and 1980s prove Economist, 2008 (The Economist Finance and Economics, “Crude Threat”, 05-15-08, http://www.economist.com/finance/displaystory.cfm?story_id=11376492, access 07-04-08)
A COUPLE of years ago, those who forecast that oil would reach $100 a barrel were seen either as doomsayers or publicity-seekers. Now some are predicting $200 oil—and are taken deadly seriously. Had economists been told that oil would barely pause at the century mark before reaching the recent peak of nearly $127, they would no doubt have forecast dire economic consequences. But the global economy, although rattled by the high price of energy, is still chugging along. Meanwhile inflation has picked up, but headline rates in most developed countries are nowhere near the levels seen in the 1970s and 1980s. There are three explanations for the oil price's muffled impact. The first is that nowadays developed economies are more efficient in their use of energy, thanks partly to the increased importance of service industries and the diminished role of manufacturing. According to the Energy Information Administration, the energy intensity of America's GDP fell by 42% between 1980 and 2007. A second theory is that the oil-price rise has been steady, not sudden, giving the economy time to adjust. Giovanni Serio of Goldman Sachs points out that in 1973 there was a severe supply shock because of the oil embargo, when the world had to cope with 10-15% less crude almost overnight. Not this time. The third explanation turns the argument on its head; rather than oil harming the global economy, it is global expansion that is driving up the price of oil. The most important factor is the shift in favour of the developing economies. America has responded to high prices in familiar fashion: UBS forecasts that demand will drop by 1.1% this year and will be no higher in 2009 than it was in 2004. But demand from China and other emerging markets is more than offsetting this shortfall. With supply growth sluggish, the steady increase in demand is hauling prices remorselessly higher. Alex Patelis of Merrill Lynch reckons it would take a recession in emerging markets to drive commodity prices substantially lower. The best-known pessimist on the oil price's link with global growth is Andrew Oswald of the University of Warwick. In March 2000, at the height of the dotcom boom, he argued that the world economy would slow in response to higher oil prices just as it did in the 1970s, early 1980s and early 1990s. Although his argument was brushed aside at the time, there was indeed a slowdown in 2001 and 2002. Even so, his argument looks harder to sustain this time, given that a fourfold increase in oil over the past five years has been accompanied by some fantastic global GDP growth. Mr Oswald says the problem is that the lags are long, with few effects seen for at least 12 months. It may take as long as two years before a big impact appears, he reckons, during which time higher oil prices will have pushed up business costs, leading to a decline in profits and an eventual rise in the rate of unemployment. Perhaps that transmission mechanism has not worked quite so quickly during this cycle because companies have been benefiting from the productivity gains of their investments in technology and from their outsourcing to Asian economies. But those gains may be starting to run out: profit growth, as a share of American GDP, peaked over a year ago. Companies are now facing a squeeze. Figures from Britain this week showed that firms had pushed up their output prices by 7.5% over the previous year but this rise, while startling enough, was nowhere near sufficient to compensate them for a 23.3% gain in raw-materials prices, the biggest since 1980. It will be even more difficult to maintain profit margins when consumers are under pressure. Again, higher oil prices are part of the problem. Goldman Sachs reckons that some $3 trillion of wealth was transferred from oil consumers to oil producers between 2001 and 2007 and the pace of transfer is running at $1.8 trillion a year. In general, producing countries save more, and spend less, than consuming nations. At the same time, of course, falling house prices in America, Britain, Spain and Ireland threaten to make consumers feel the pinch. Moreover, central banks may be unable to give consumers much help. With British inflation rising faster than expected, the Bank of England may join the European Central Bank, the Bank of Japan and the Federal Reserve in keeping interest rates on hold for the foreseeable future. So far oil has been the “dog that did not bark”; but it may yet give the global economy a nasty bite.

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Turn: Oil Shocks boost the economy
Oil shocks are good for the economy. Segal, Research Fellow at Oxford in Economics and Energy Studies, 07
(Paul, Oxford Institute for Energy Studies, “Why do oil prices no longer shock?,” October, http://www.oxfordenergy.org/pdfs/WPM35.pdf, date accessed: 6/30/08) The key finding that established the case that oil shocks cause recessions was Hamilton’s (1983) result that up to 1980, ‘All but one of the U.S. recessions since World War II have been preceded, typically with a lag of around three-fourths of a year, by a dramatic increase in the price of crude petroleum’ (p. 228). A flurry of research then confirmed this relationship across a number of rich countries. Burbidge and Harrison (1984) used vector auto-regressions (VARs) to estimate the impact of oil price rises in Canada, Japan, West Germany, the UK and the USA, using data from 1961 to 1982. Estimating the impact of a temporary onestandard deviation spike in the oil price, they find that ‘oilprice shocks increase wages and prices in all countries, albeit with appreciable variation in the size of the effect’ (p. 468). Both Germany and Japan show relatively small effects on the CPI and industrial wages, while the UK sees a small rise in wages and a larger rise in the CPI (their Figures 6 and 7, p. 466). GDP is not included in the VAR, but industrial production declines substantially in the US and Japan, and much less so in the other countries. Also using a VAR, Blanchard and Galí (2007) similarly find that oil price rises over 1970–83 had a strong effect on most rich countries, but very little effect on inflation in West Germany, or on inflation or output in Japan. Mork (1994) observed (without recourse to any formal statistical analysis) that in addition to the USA, all of Japan, West Germany and the UK suffered declines in real GDP after the oil shock of 1973–74, while of these countries only Japan avoided a decline after the 1979–80 shock. A broad consensus emerges, therefore, that only Japan avoided some strong negative effects of the oil price rises of the 1970s.

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***A2: Peak Oil***

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A2: Peak Oil
Hubbert’s peak oil theory is wrong and we have more oil now than ever before. Corsi, Staff writer for WND, 05
(Jerome, World Net Daily, “'Hubbert's Peak' is a failed theory,” 11/2, http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=47182, date access: 6/30/08) Hubbert's graph predicted that oil production would "peak" in 1970, and that it would taper off from there until 2050, when we would have used up all the oil that ever was. Unfortunately for Hubbert, these predictions were flat wrong. Today, the Energy Information Administration of the U.S. Department of Energy estimates that we have 1.28 trillion barrels of proven oil reserves worldwide, more than ever before in human history, despite decades of increased usage. Still, having their predictions proven wrong has not discouraged peak-production oil theorists. Since the 1950s, oil "experts" continually move the date for peak production" further out, unable to consider that the theory itself might just be wrong. Craig Smith and I argue that the Peak Production Theory is nothing more than a logical tautology – an argument that assumes as true what one should be trying to prove. In other words, if oil is a fossil fuel, we have to run out eventually. If we are not running out now, we will eventually – so the theory goes – no matter that we haven't peaked yet and worldwide oil-reserve estimates keep growing. The alternative hypothesis – that the world will never run out of oil – is one the supporters of Hubbert's Peak never seriously contemplate.

Doomsday scenarios of peak oil are threat constructions and ignore research that disagrees. Smil, Research Professor of environmental, energy, food, population, economic and public policy studies, 06
(Vaclav, University of Manitoba, “Peak Oil: A Catastrophist Cult and Complex Realities,” February, http://home.cc.umanitoba.ca/~vsmil/pdf_pubs/WorldWatch.pdf, date accessed: 6/30/08) Proponents of the imminent peak of global oil extraction—led by Colin Campbell, Jean Laher- rère, L.F. Ivanhoe, Richard Duncan, and Ken- neth Deffeyes—resort to deliberately alarmist arguments as they mix incontestable facts with caricatures of complex realities and as they ignore anything that does not fit their preconceived conclusions in order to issue their obituaries of modern civilization. Ivanhoe sees an early end of the oil era as “the inevitable doomsday” followed by “economic implosion” that will make “many of the world’s developed societies look more like today’s Russia than the U.S.” Duncan’s future brings massive unemployment, breadlines, homelessness, and a catastrophic end of industrial civilization. These conclusions are based on interpretations that lack any nuanced understanding of the human quest for energy, disregard the role of prices, ignore any historical perspectives, and presuppose the end of human inventiveness and adapt- ability. I will raise just three key points aimed at dismantling the foundations of this new catastrophist cult. First, these preachings are just the latest installments in a long history of failed peak forecasts. Second, the peak-oil advocates argue that this time the circumstances are really different and that their forecasts will not fail—but in order to believe that, one has to ignore a multitude of facts and possibilities that readily counteract their claims. Third, and most importantly, there is no reason why even an early peak of global oil production should trigger any catastrophic events.

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A2: Peak Oil – Technology Solves
Technology solves peak oil Yergin, Chairman of Cambridge Energy Research Associates, author of “The Prize: Epic Quest for Oil, Money and Power and received the Pulitzer Prize ,” 05
(Daniel, Washington Post, “It’s Not the End of the Oil Age,” 07-31-05, http://www.washingtonpost.com/wpdyn/content/article/2005/07/29/AR2005072901672_pf.html, access 07-02-08) We're not running out of oil. Not yet.
"Shortage" is certainly in the air -- and in the price. Right now the oil market is tight, even tighter than it was on the eve of the 1973 oil crisis. In this high-risk market, "surprises" ranging from political instability to hurricanes could send oil prices spiking higher. Moreover, the specter of an energy shortage is not limited to oil. Natural gas supplies are not keeping pace with growing demand. Even supplies of coal, which generates about half of the country's electricity, are constrained at a time when our electric power system has been tested by an extraordinary heat wave. But it is oil that gets most of the attention. Prices around $60 a barrel, driven by high demand growth, are fueling the fear of imminent shortage -- that the world is going to begin running out of oil in five or 10 years. This shortage, it is argued, will be amplified by the substantial and growing demand from two giants: China and India. Yet this fear is not borne out by the fundamentals of supply. Our new, field-by-field analysis of production capacity, led by my colleagues Peter Jackson and Robert Esser, is quite at odds with the current view and leads to a strikingly different conclusion: There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16 million barrels a day -- from 85 million barrels per day to 101 million barrels a day -- a 20 percent increase. Such growth over the next few years would relieve the current pressure on supply and demand. Where will this growth come from? It is pretty evenly divided between non-OPEC and OPEC. The largest non-OPEC growth is projected for Canada, Kazakhstan, Brazil, Azerbaijan, Angola and Russia. In the OPEC countries, significant growth is expected to occur in Saudi Arabia, Nigeria, Algeria and Libya, among others. Our estimate for growth in Iraq is quite modest -- only 1 million barrels a day -- reflecting the high degree of uncertainty there. In the forecast, the United States remains almost level, with development in the deepwater areas of the Gulf of Mexico compensating for declines elsewhere.

While questions can be raised about specific countries, this forecast is not speculative. It is based on what is already unfolding. The oil industry is governed by a "law of long lead times." Much of the new capacity that will become available between now and 2010 is under development. Many of the projects that embody this new capacity were approved in the 2001-03 period, based on price expectations much lower than current prices. There are risks to any forecast. In this case, the risks are not the "below ground" ones of geology or lack of resources. Rather, they are "above ground" -- political instability, outright conflict, terrorism or slowdowns in decision making on the part of governments in oil-producing countries. Yet, even with the scaling back of the forecast, it would still constitute a big increase in output. This is not the first time that the world has "run out of oil." It's more like the fifth. Cycles of shortage and surplus characterize the entire history of the oil industry. A similar fear of shortage after World War I was one of the main drivers for cobbling together the three easternmost provinces of the defunct Ottoman Turkish Empire to create Iraq. In more recent times, the "permanent oil shortage" of the 1970s gave way to the glut and price collapse of the 1980s. But this time, it is said, is "different." A common pattern in the shortage periods is to underestimate the impact of technology. And, once again, technology is key. "Proven reserves" are not necessarily a good guide to the future. The current Securities and Exchange Commission disclosure rules, which define "reserves" for investors, are based on 30-year-old technology and offer an incomplete picture of future potential. As skills improve, output from many producing regions will be much greater than anticipated. The share of "unconventional oil" -- Canadian oil sands, ultra-deep-water developments, "natural gas liquids" -- will rise from 10 percent of total capacity in 1990 to 30 percent by 2010. The "unconventional" will cease being frontier and will instead become "conventional." Over the next few years, new facilities will be transforming what are inaccessible natural gas reserves in different parts of the world into a quality, diesel-like fuel. The growing supply of energy should not lead us to underestimate the longer-term challenge of providing energy for a growing world economy. At this point, even with greater efficiency, it looks as though the world could be using 50 percent more oil 25 years from now. That is a very big challenge. But at least for the next several years, the growing production capacity will take the air out of the fear of imminent shortage. And that in turn will provide us the breathing space to address the investment needs and the full panoply of technologies and approaches -- from development to conservation -- that will be required to fuel a growing world economy, ensure energy security and meet the needs of what is becoming the global middle class.

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A2: Peak Oil – It’s good, causes renewables
Reaching peak oil in 2010 will lead to oil shortages and skyrocketing prices, causing shifts in global power and wealth Andrews, Co-founder of the Association for the Study of Peak Oil US affiliate, 08 (Steve, Energy Bulletin, "World oil reserves and future production," 6-30-8, http://www.energybulletin.net/node/31362, 6-30-8)
Mr. Leonard started by saying he has “always been interested in the oil reserves question.” In 2001, he wrote a paper on peak oil that two U.S.-based publications turned down but which Yukos then published in Russian. At a recent energy seminar, Leonard handed out copies of his 2001 paper to the 50 attendees. The key quote up front is this: “By 2010, the production of the fuel that has driven the world’s economy will start to rapidly decline. This will conflict with the steadily increasing demand for oil. The collision of these two trends will lead to shortages and increased prices, providing a strong incentive to shift to alternative fuel resources…Due to unequal distribution through the world of oil and gas supply and consumption, [the upcoming] transition will result in significant shifts in global power and wealth.”

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A2: Peak Oil – It’s a Myth
Peak Oil is a myth designed to prevent new oil production Watson and Jones, Watson-Author of “Order out of Chaos”, Jones directs ‘Martial Law, 9-11: Rise of the Police State’. ‘05
Paul Joseph & Alex. Prison Planet. “The Myth of Peak Oil” October 12 2005. http://www.prisonplanet.com/archives/peak_oil/index.htm Accessed: 7/1/08 There have also been reports that Russia has vastly increased its reserves even beyond those of Saudi Arabia. Why would they do this if they believed there would be no more oil to get hold of? It seems clear that Russia is ready for unlimited future production of oil. There is a clear contradiction between the peak oil theory and the continual increase in oil reserves and production. New untapped oil sources are being discovered everywhere on earth. The notion that there are somehow only a few sources that the West is trying to monopolize is a complete myth, promulgated by those raking in the massive profits. After all how do you make huge profits from something available in abundance? A Wall Street Journal article by Peter Huber and Mark Mills describes how the price of oil remains high because the cost of oil remains so low. We are not dependent on the middle east for oil because the world's supplies are diminishing, it is because it is more profitable to tap middle east supplies. Thus the myth of peak oil is needed in order to silence the call for tapping the planet's other plentiful reserves.

Peak oil is a myth propagated by big oil in order to increase profits Watson and Jones, Watson-Author of “Order out of Chaos”, Jones directs ‘Martial Law, 9-11: Rise of the Police State’. ‘05
Paul Joseph & Alex. Prison Planet. “The Myth of Peak Oil” October 12 2005. http://www.prisonplanet.com/archives/peak_oil/index.htm Accessed: 7/1/08 The crux of the issue is that if oil was plentiful in areas in which we are being told by the government and the oil companies that it is not, then we have clear evidence that artificial scarcity is being simulated in order to drive forward a myriad of other agendas. And we have concrete examples of where this has happened. Three separate internal confidential memos from Mobil, Chevron and Texaco have been obtained by The Foundation for Taxpayer and Consumer Rights. These memos outline a deliberate agenda to gouge prices and create artificial scarcity by limiting capacities of and outright closing oil refineries. This was a nationwide lobbying effort led by the American Petroleum Institute to encourage refineries to do this. An internal Chevron memo states; "A senior energy analyst at the recent API convention warned that if the US petroleum industry doesn't reduce its refining capacity it will never see any substantial increase in refinery margins."

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A2: Peak Oil – Oil is renewable (1/2)
Oil fields are self-replenishing, oil wont run out – Eugene Island proves Watson and Jones, Watson-Author of “Order out of Chaos”, Jones directs ‘Martial Law, 9-11: Rise of the Police State’. ‘05
Paul Joseph & Alex. Prison Planet. “The Myth of Peak Oil” October 12 2005. http://www.prisonplanet.com/archives/peak_oil/index.htm Accessed: 7/1/08 Eugene Island is an oil field in the gulf of Mexico, 80 miles off the coast of Louisiana. It was discovered in 1973 and began producing 15,000 barrels of oil a day which then slowed to about 4,000 barrels in 1989. But then for no logical reason whatsoever, production spiked back up to 13,000 barrels a day. What the researchers found when they analyzed the oil field with time lapse 3-D seismic imaging is that there was an unexplained deep fault in the bottom corner of the computer scan, which showed oil gushing in from a previously unknown deep source and migrating up through the rock to replenish the existing supply Furthermore, the analysis of the oil now being produced at Eugene Island shows that its age is geologically different from the oil produced there after the refinery first opened. Suggesting strongly that it is now emerging from a different, unexplained source. The last estimates of probable reserves shot up from 60 million barrels to 400 million barrels. Both the scientists and geologists from the big oil companies have seen the evidence and admitted that the Eugene Island oil field is refilling itself. This completely contradicts peak oil theory and with technology improving at an accelerating pace it seems obvious that there are more Eugene Islands out there waiting to be discovered. So the scientific community needs to embrace these possibilities and lobby for funding into finding more of these deep source replenishing oilfields. The existence of self-renewing oil fields shatters the peak oil myth. If oil is a naturally replenishing inorganic substance then how can it possibly run out?

Oil is a renewable resource Watson and Jones, Watson-Author of “Order out of Chaos”, Jones directs ‘Martial Law, 9-11: Rise of the Police State’. ‘05
Paul Joseph & Alex. Prison Planet. “The Myth of Peak Oil” October 12 2005. http://www.prisonplanet.com/archives/peak_oil/index.htm Accessed: 7/1/08 The Scientific evidence also flies in the face of the peak oil theory. Scientific research dating back over a hundred years, more recently updated in a Scientific Paper Published In 'Energia' suggests that oil is abiotic, not the product of long decayed biological matter. Oil, for better or for worse, is not a nonrenewable resource. It, like coal, and natural gas, replenishes from sources within the mantle of earth.

Oil is a renewable resource – its compressed methane that’s pumped up through the mantle Bennet Staff writer at worldnetdaily.com ‘05 Chris, World Net Daily. “Sustainable Oil” 5/25/08 http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=38645 Accessed: 7/2/08
An intriguing theory now permeating oil company research staffs suggests that crude oil may actually be a natural inorganic product, not a stepchild of unfathomable time and organic degradation. The theory suggests there may be huge, yet-to-be-discovered reserves of oil at depths that dwarf current world estimates. The theory is simple: Crude oil forms as a natural inorganic process which occurs between the mantle and the crust, somewhere between 5 and 20 miles deep. The proposed mechanism is as follows: Methane (CH4) is a common molecule found in quantity throughout our solar system – huge concentrations exist at great depth in the Earth. At the mantle-crust interface, roughly 20,000 feet beneath the surface, rapidly rising streams of compressed methane-based gasses hit pockets of high temperature causing the condensation of heavier hydrocarbons. The product of this condensation is commonly known as crude oil. Some compressed methane-based gasses migrate into pockets and reservoirs we extract as "natural gas." In the geologically "cooler," more tectonically stable regions around the globe, the crude oil pools into reservoirs. In the "hotter," more volcanic and tectonically active areas, the oil and natural gas continue to condense and eventually to oxidize, producing carbon dioxide and steam, which exits from active volcanoes. Periodically, depending on variations of geology and Earth movement, oil seeps to the surface in quantity, creating the vast oil-sand deposits of Canada and Venezuela, or the continual seeps found beneath the Gulf of Mexico and Uzbekistan. Periodically, depending on variations of geology, the vast, deep pools of oil break free and replenish existing known reserves of oil.

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A2: Peak Oil – Oil is renewable (2/2)
Age differences, and geographical locations all indicate that oil and natural gas are not products of animals, but an unending geological process Bennet Staff writer at worldnetdaily.com ‘05 Chris, World Net Daily. “Sustainable Oil” 5/25/08 http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=38645 Accessed: 7/2/08
There are a number of observations across the oil-producing regions of the globe that support this theory, and the list of proponents begins with Mendelev (who created the periodic table of elements) and includes Dr. Thomas Gold (founding director of Cornell University Center for Radiophysics and Space Research) and Dr. J.F. Kenney of Gas Resources Corporations, Houston, Texas. In his 1999 book, "The Deep Hot Biosphere," Dr. Gold presents compelling evidence for inorganic oil formation. He notes that geologic structures where oil is found all correspond to "deep earth" formations, not the haphazard depositions we find with sedimentary rock, associated fossils or even current surface life. He also notes that oil extracted from varying depths from the same oil field have the same chemistry – oil chemistry does not vary as fossils vary with increasing depth. Also interesting is the fact that oil is found in huge quantities among geographic formations where assays of prehistoric life are not sufficient to produce the existing reservoirs of oil. Where then did it come from?

Oil reservoirs are refilling themselves, proving that oil is renewing itself Bennet Staff writer at worldnetdaily.com ‘05 Chris, World Net Daily. “Sustainable Oil” 5/25/08 http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=38645 Accessed: 7/2/08
Even more intriguing is evidence that several oil reservoirs around the globe are refilling themselves, such as the Eugene Island reservoir – not from the sides, as would be expected from cocurrent organic reservoirs, but from the bottom up. Dr. Gold strongly believes that oil is a "renewable, primordial soup continually manufactured by the Earth under ultrahot conditions and tremendous pressures. As this substance migrates toward the surface, it is attached by bacteria, making it appear to have an organic origin dating back to the dinosaurs."

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No Energy Crunch (1/3)
No energy crunch: Fossil consumption assures we’ll have the tech for a smooth transition Bjorn Lomborg, University of Aarhus Associate Professor of Statistics, Department of Political Science, The Skeptical Environmentalist: Measuring the Real State of the World, 2001, p. 119-20
The main question is whether this depen- dency is sustainable. The surprising answer is that we will not run out of fossil fuel within the foreseeable future. But what do we do in the long run? Our pre- sent-day energy supply is based on coal and oil, created over millions of years. Many have pointed out the apparent problem that - to uphold our civilization - we consume millions of years' resources in just a few hundred years. Rather, we should use our resources sustain- ably, such that our consumption does not pre- vent future generations from also making use of these resources. But even if this argument sounds quite reasonable, it is impossible to use isolated, non-renewable resources such that future generations can also be assured of their use.'" Even if the world used just one barrel ofoil a year this would still imply that some future generation would be left with no oil at all."" However, this way of framing the question is far too simple. According to the economics Nobel laureate Robert Solow, the question of how much we can allow ourselves to use of this or that resource is a "damagingly narrow way to pose the question The issue is not that we should secure all specific resources for all future generations - for this is indeed impossible - but that we should leave the future generations with knowledge and capi- tal, such that they can obtain a quality of life at least as good as ours, all in all. This is actually a surprisingly important insight. Let us look at it in connection with oil. Sooner or later it will no longer be profitable to use oil as the primary fuel for the world. The price of oil will eventually increase and/or the price the other energy sources will fall. But societies do not demand oil as such, only the energy this oil can supply. Consequently, the question is not whether we leave a society for the coming generations with more or less oil, but whether we leave a society in which energy can be produced cheaply or expensively. Let us put this slightly more simplistically. If our society - while it has been using up the coal and oil simultaneously has developed an amazing amount of technical goods, knowledge and capital, such that this society now can use other energy sources more cheaply, then this is a better society than if it had left the fossil fuel in the ground but also neglected to develop the society. Asking whether we will run out of oil in the long run is actually a strange question. Of course, in the long run we will undoubtedly rely on other energy sources. The reason why the question nevertheless makes us shudder is because it conjures images of energy crises and economic depression. However, in this chapter (as well as the next on raw materials) we will see that there are sufficient resources for the long-term future and that there are good reasons to expect that when the transi- tion happens it will happen because it actually makes us even better off. As Sheik Yamani, Saudi Arabia's former oil minister and a founding architect of OPEC, has pointed out: "the Stone Age came to an end not for a lack of stones, and the oil age will end, but not for a lack of oil." We stopped using stone because bronze and iron were superior materials, and likewise we will stop using oil, when other energy technolo- gies provide superior benefits.""

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No Energy Crunch (2/3)
Functioning markets, New resources, & efficiency prevent. History proves Bjorn Lomborg, University of Aarhus Associate Professor of Statistics, Department of Political Science, The Skeptical Environmentalist: Measuring the Real State of the World, 2001, p. 147-8
All indicators seem to suggest that we are not likely to experience any significant scarcity of raw materials in the future. The prices of nearly all resources have been declining over the last century, and despite an astounding increase in production of a large number of important raw materials they today have more years of consumption left than they did previously.
The total economic expense for raw materi- als is 1.1 percent of global GDP, and 60 percent of our expenses concern raw materials with more than 200 years of consumption left. An analysis of all the important raw materials shows that the reserves of only three minerals have dropped, and this drop is serious for only one element, namely tantalum. The total costof tantalum is below one-millionth of global GDP, and the element can be substituted. We have often feared that we will run out of raw materials. But gold, silver, tin and mer- cury are still all here, and with good reason.

As with the chapter on fossil fuels, these facts do not contest that non-energy resources are non-renewable - if we continued to use resources with no change in technology, we would eventually run out. But the fact that this chapter can conclude that significant scarcities are unlikely is because we continuously find new resources, use them more efficiently, and are able to recycle them and to substitute them.

Technology will outpace the crunch Bjorn Lomborg, University of Aarhus Associate Professor of Statistics, Department of Political Science, The Skeptical Environmentalist: Measuring the Real State of the World, 2001, p. 135-6
The evidence clearly shows that we are not headed for a major energy crisis. There is plenty of -energy. We have seen that although we use more and more fossil energy we have found even more. Our reserves even measured in years of consumption - of oil, coal and gas have increased. Today we have oil for at least 40 years at present consumption, at least 60 Years' worth of gas, and 230 years' worth of coal. At $40 a barrel (less than one-third above the current world price), shale oil can supply oil for the next 250 years at current consump- tion. And all in all there is oil enough to cover our total energy consumption for the next 5,000 years. There is uranium for the next 14.000 years. Our current energy costs make up less than 2 percent of the global GDP, so even if we were to see large price increases it would still not have significant welfare impact - in all likelihood the budget share for energy would still be falling. Moreover there are many options using renewable energy sources. Today, they make up a vanishingly small part of the global energy production, but this can and probably will change. The cost of both solar energy and wind energy has dropped by 94-98 percent over the last 20 years such that they have come much closer to being strictly profitable. Renewable energy resources are almost incomprehensibly large. The sun leaves us with about 7,000 times our own energy con- sumption - for example, covering just 2.6 per- cent of the Sahara Desert with solar cells could supply our entire global energy consumption. It is estimated that wind energy realistically could cover upwards of half of our total energy consumption.

Notice that all of these facts do not contest that fossil fuels which today supply most of our energy are nonrenewable - if technology remained constant and we kept on using just fossil fuels, we would some day run out of energy. But the point is that technology does not remain constant and fossil fuels are not our only or main long-term energy source. First, the historical evidence shows that we have become constantly better able to find, extract and utilize fossil fuels, outpacing even our increased consumption. Second, we know that the available solar energy far exceeds our energy needs and it will probably be available at competitive prices within 50 years. Consequently, it is surprising that over and over again we hear the stories that now we will run out of energy. The data show us that this is not plausible. As the US Energy Information Agency wrote in the International Energy Outlook 1999: "bleak pictures painted of the world's remaining oil resource potential are based on current estimates of proven reserves and their decline in a [typical, theoretical] manner. When undiscovered oil, efficiency improve- ments, and the exploitation of unconven- tional crude oil resources are taken into account, it is difficult not to be optimistic about the long-term prospects for oil as a viable energy source well into the future.""' In the longer run, it is likely that we will change our energy needs from fossil fuels towards other and cheaper energy sources - maybe renewables, maybe fusion, maybe some as-of-now unimagined technology. Thus, just as the stone age did not end for lack of stone, the oil age will eventually end but not for lack of oil. Rather, it will end because of the eventual availability of superior alternatives.

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No Energy Crunch (3/3)
We have enough to last far into the future Bjorn Lomborg, University of Aarhus Associate Professor of Statistics, Department of Political Science, The Skeptical Environmentalist: Measuring the Real State of the World, 2001, p. 159
Perhaps more surprising, there do not seem to be any serious problems with the nonrenewable resources, such as energy and raw materials. In general, we have found so much more of these resources that, despite large increases in consumption, the years of supply still remaining have been increasing and not decreasing, for both energy and raw materials. " While non-renewable resources are in principle exhaustible, more than 60 percent of our consumption consists of resources with reserves of 200 years or more. With sufficient energy we will have the opportunity to exploit much lower grade deposits than today, yet again increasing the exhaustion times substantially and in principle towards millions of years. We have many energy resources that can last far into the future.

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New energy makes the crash harder (1/2)
Turn: New energy means a worse crunch later. Richard Heinberg, New College of California Core Faculty, Power Down: Options and Actions For A PostCarbon World, 2004, p. 52-4
This deep intertwining of benefits and costs makes the problem of fossil fuel depletion especially knotty. When I speak to engineers about this subject, they inevitably tend to see it in abstract terms and in isolation from its ecological context: the problem is that we are running out of oil, therefore the solution must be to discover a new energy source capable of substituting for fossil fuels. Simple!, Since the publication of The Party's Over I have received dozens of phone calls, e-mails, and letters from intelligent, well-meaning people with new ideas for alternative energy sources. A few of these proposals appear to be workable, at least on a small scale. Yet rather than becoming a cheerleader for this or that energy alternative, I persist in drawing these people's attention back to the need to reduce population and.resource usage. I continue to say that, unless we dramatically cut back our demand on the Earth's life-support

sys- tems, a new energy source will make little difference. To the practi- cal problem-solvers this seems blatantly unfair: I have outlined a problem (oil depletion) and they have proposed what seems to them an answer. I must appear to want to see the human project go down in~ flames. The difference between the engineers' perspectives and mine is that I am viewing the situation as an ecological problem - not as an economic or engineering one. While fossil fuel depletion is a real and immediate crisis, it is also symptomatic of a universal ecological dilemma, which consists of three interrelated factors:
1. Population pressure 2. Resource depletion 3. Habitat destruction. Every species encounters this dilemma from time to time and in one way or another, and. we humans have done so in countless ways throughout our tenure on Earth. There are six possible responses to the ecological dilemma: 1. Move elsewhere (i.e., find territories that are under-exploited). 2. Exploit existing resources more intensively (many human technologies, including fire and agriculture, provide ways of doing this). 3. Discover new exploitable resources (uranium and so on). 4. Limit population (tribal cultures have accomplished this in the past through sexual taboos, infanticide, prolonged lactation, birth control, or other measures). 5. Limit resource usage (e.g., through ethical systems that val- orize voluntary poverty). 6. Die off (usually from famine, disease, or predation). The first three options are "supply-side," while the latter three focus on the "demand side" of the survival equation. For other species, supply-side options are usually limited, and so demand-side responses predominate. For example, when deer overpopulate the woodlands of the American Midwest, their numbers are eventually culled through starvation and predation (including hunting by humans).

Our species, in contrast, has become extraordinarily good at find- ing and implementing supply-side solutions to the ecological dilem- ma. We have populated virtually the entire surface of the Earth; we have invented new technologies (including plows, steam shovels, and stock exchanges) to exploit resources more intensively; and we have harnessed new resources (from aluminum to zinc) to tem- porarily enlarge our environment's carrying capacity. The current global human population level is a testament to our Ingenuity (See Chapter 1, pages 19-32, of The Party's Over for a lengthier descrip- tion of the supply-side strategies that humans have developed over the millennia.) But our very success brings grave problems. Because nature cannot tolerate the unlimited proliferation of any species, supply-side strategies are always temporary, and sometimes counterproductive, eventually resulting in spectacular population crashes in species that have momentarily benefited from them. That is why the solution to the problem of oil depletion cannot consist merely of the development of an alternative energy source. Much of our usage of energy goes to facilitate the extraction, trans- formation,-and use of other resources - metals, soils, water, and so on. Without an accompanying demand-side response, merely increasing the supply of energy to our species will mean the contin- ued depletion of other resources, more competition for those dwindling resources, and an eventual crash.

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New energy makes the crash harder (2/2)
Turn: We’ll hit the wall even harder if we replace fossil energy Richard Heinberg, New College of California Core Faculty, Power Down: Options and Actions For A PostCarbon World, 2004, p. 132-7
Even in the best imaginable case - let us suppose for the moment that one of the many free-energy devices currently being peddled actually turns out to work, and that industrial societies' energy appetites can be fully satisfied for the foreseeable future - we still face an immense difficulty. I discussed this at the end of Chapter 1, but
because many people may find the point difficult to grasp, I return to it now. Our real problem is that we are trapped in a perpetual growth machine. As long as modern societies need economic growth in order to stave off collapse (as is clearly the case today, given exist- ing debt-and-interest-based national currencies), we will continue to require ever more resources on a yearly basis from our already overtaxed earthly environment. But the Earth has limited resources; even renewable resources like trees and rainfall are replenished only at a certain rate. Moreover, some of us humans (particularly those of us who live in rich, industrialized countries) want a lot more than basic necessities. We have become accustomed to a high standard of living - indeed, to an unsustainably high standard - and we wish that standard to be available to a constantly growing population. The energy conundrum is thus intimately tied to the fact that we anticipate perpetual growth within a finite system. We developed this expectation during the recent historical period in which vast supplies of nonrenewable energy resources became available, and we understandably (though foolishly) came to believe that the party would never end.

Thus, our predicament is not entirely reducible to the fact that we are now starting to run out of the cheap energy sources on which we have become dependent. That is, in my view, the aspect of the predicament that is most likely to present itself to us first and most forcibly, but the predicament itself is broader and deeper. In essence, the crisis we face is - again, as discussed in Chapter 1 - essentially a particularly nasty instance of the universal ecological dilemma of population pressure, resource depletion, and, habitat destruction. We humans recently discovered a strategy for defeating popula- tion pressure by extracting fossil energy resources and burning them in machines that in turn enabled us to intensify our extraction and use of other resources (water, topsoil, fish, minerals, trees, etc.). Through the application of this strategy, we have conquered virtually every ecosystem and increased our numbers dramatically. We have, at least temporarily, increased the human carrying capac- ity of our environment by hundreds of percent. But avoiding pop- ulation pressure has predictably resulted in resource depletion and habitat disruption. While short-term carrying capacity has doubled, redoubled, and doubled yet again, it appears that we are in fact degrading the long-term carrying capacity of our environment to a level far below its status at the time we began the exercise. Will finding a supply-side solution in the form of the perfect energy resource (once more, let us
hypothesize the possibility of free ener- gy), without dealing head-on with the universal ecological dilem- ma, enable us to continue in the pattern of life we have come to accept as "normal"? There are many economists and techno-optimists who believe that it can. After all, more energy could generate substitutes for other resources. For example, if we had enough energy available we could make up for shortages in fresh water by desalinizing ocean water in vast quantities. The oceans may be running out of stocks of wild fish, but with enough available cheap energy we could simply farm as many fish as we needed. Eventually, 'using biotechnology and nanotechnology, we should be able to synthesize any substance we desired. Even if wild nature disappears altogether, this should present no obstacle. We could create artificial environments of any kind we chose - so long as we had enough energy. Running out of metals? No problem! Get them from Mars. Too many people? No problem! Put them on space ships and establish colonies on other planets. There is no way to fully disconfirm this cheery vision of what peo- ple could accomplish, given unlimited power - without actually running the experiment. But we will be able to run the experiment. only once if at all (remember: currently it is by no means clear that a free-energy source exists). Since the entire Earth is the proposed lab- oratory and the experiment would be irreversible, one can perhaps be forgiven for feeling a momentary flush of squeamish caution.

In principle, however, we have already run the "free-energy" experiment, on a smaller scale, several times in human history, and other species have run it as well. Every time we humans have found a way to harvest a dramatically increased amount of food or fuel from the environment, we have been presented with a quantity of energy that is, if not entirely free, at least cheap and abundant rela- tive to what we had previously. Each time, we have responded by increasing our population, and correspondingly, the load on the environmental systems that sustain us. Each time, we have ended up degrading the environment and creating the conditions for a crash. When we first migrated from Africa tens of thousands of years ago and discovered new continents then filled with edible megafauna - mastodons, mammoths, giant sloths, and so on we found what seemed to be an inexhaustible protein source. We con- tinued our migrations, expanding our population and killing large animals as we went. Evidence suggests that we hunted many of these species to extinction, and the resulting collapse in our

↓ Continued ↓

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New energy makes the crash harder (3/3) ↑ Heinberg Continued ↑
food supply meant that we had to adjust to eating smaller game and cul- tivated plants. Agriculture gave us another energy boost, but one agricultural civilization after another - from that of the Mesopotamians to that of the Mayans - built densely populated cities and high cultures, and then collapsed after exhausting the soil and cutting too many trees. The same pattern plays out with other species whenever they discover a significant temporary food subsidy. The behavior has been observed so many times, in so many species and human soci- eties, that it really has to be considered a standard response. The Industrial Revolution was our most recent and dramatic human experience with "free" energy (in the forms of coal, oil, and natu- ral gas), and these fuels have proven to be a windfall of unbeliev- able proportions. In Texas in the 1930s, oil was literally cheaper than drinking water - and it still is, if we're talking about the water in one-pint containers sold at convenience stores. What have we done with this windfall? We have increased our population from 800 million to 6.4 billion in a little over three centuries and brought the planet to the verge of ecological ruin. This should come as no surprise. Any other species would have done essential- ly the same.

So if some new free-energy device were to become available tomorrow, how would people respond? We really don't need to speculate much. Absent a self-limiting, culturally reinforced Powerdown program, we can be virtually 100 percent sure that the response would be to continue population growth, and to increase the harvesting of other resources from the environment, until Liebig's Law got us in one way or another.
Liebig's Law, named after the 19th century German soil scientist Justus von Liebig, is sometimes called the Law of the Minimum. It tells us that the carrying capacity for any given species is set by the necessity in least supply. Every species has a list of requirements for survival water, temperature range, degree of salinity of water, degree of acidity or alkalinity of soil, food of a certain nature, so many hours of sunlight, and so on. Liebig's Law tells us that even if all other factors are optimal, the lack of one necessity can undermine an organism's ability to survive. This puts a tough burden on humans' attempts to completely manage a fully artificial environment. We might get nearly everything perfect (plenty of fresh water, enough proteins and carbohydrates, enough oxygen), and yet fail to adequately manage just one factor, and the result would be catastrophic. The failure of the Biosphere experiments - in which highly equipped and well-prepared scientists attempted to establish an artificial, fully enclosed, self-sustaining environment - is a case in point. In my own mind, an understanding of Liebig's Law inspires a profound respect for wild nature. Somehow, through endless mutual accommodations over hundreds of millions of years, untold numbers of species have managed to adjust themselves to their environments, and their environments to themselves, in such a way that they can mutually survive. Of course, none do so for- ever: a given species appears, flourishes for a few tens or hundreds of thousands of years, and then dies out as conditions change. In the meantime, a wondrous and delicate balance enables that species to cooperate with others in the maintenance of the web of existence. Are we humans clever enough to replace that mutually woven and continually micro-adjusted network of interdependence with an artificial system of our own design that is capable of satisfying all of our basic needs well into the future? Again, some people may think so, but not, I'd guess, many people with much familiarity with how nature actually works. Yes, we need energy. And, ultimately, energy is everything in the sense that life and matter are themselves reducible to energy. But we humans are biological creatures that have evolved in the context of complex ecosystems. We depend on the services of thousands of other species for our survival. If we seri- ously upset the

systems on which we depend, we will most likely merely reconfirm the universality of the Law of the Minimum and the inevitability of the ecological dilemma.
Of course we wish to find a way to preserve our current way of life. No one wants to undertake basic change unless we have to, especially if doing so means restrictions on reproduction and indi- vidual consumption. But, as I have said already, business as usual is not an option, even if there is a solution to the energy problem in isolation. The oil-depletion crisis is merely the current mask for the timeless ecological dilemma. The way out of that dilemma requires no technological breakthrough; indeed, purely technical "solu- tions" may only distract us from addressing the underlying problem. The way out is to restrict per-capita resource usage and to reduce the human population. If we take the Powerdown path, then alter- native energy sources could help. If we refuse to power down, then nothing will help. In the end, self-limitation is the only answer that counts, but that is the answer that no one wants to hear. So we sit, and wait, and assume, and deny. And as we wait, the signs of depletion worsen and global resource wars loom. If we refuse to take the hard Powerdown path, after a while we will simply have no choice: we will compete for what is left (whether for oil, natural gas, water, or phosphates) or we will die. Plan Snooze simply leads us back to Plan War.

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Peak Oil Kish Links
Giving in to the “peak oil myth” allows for the establishment of the neo-fascist world government Watson and Jones, Watson-Author of “Order out of Chaos”, Jones directs ‘Martial Law, 9-11: Rise of the Police State’. ‘05
Paul Joseph & Alex. Prison Planet. “The Myth of Peak Oil” October 12 2005. http://www.prisonplanet.com/archives/peak_oil/index.htm Accessed: 7/1/08 Peak oil is a scam designed to create artificial scarcity and jack up prices while giving the state an excuse to invade our lives and order us to sacrifice our hard-earned living standards. Publicly available CFR and Club of Rome strategy manuals from 30 years ago say that a global government needs to control the world population through neo-feudalism by creating artificial scarcity. Now that the social architects have de-industrialized the United States, they are going to blame our economic disintegration on lack of energy supplies. Globalization is all about consolidation. Now that the world economy has become so centralized through the Globalists operations, they are going to continue to consolidate and blame it on the West's "evil" overconsumption of fossil fuels, while at the same time blocking the development and integration of renewable clean technologies. In other words, Peak oil is a scam to create artificial scarcity and drive prices up. Meanwhile, alternative fuel technologies which have been around for decades are intentionally suppressed. Peak oil is a theory advanced by the elite, by the oil industry, by the very people that you would think peak oil would harm, unless it was a cover for another agenda. Which from the evidence of artificial scarcity being deliberately created, the reasons for doing so and who benefits, it’s clear that peak oil is a myth and it should be exposed for what it is. Another excuse for the Globalists to seize more control over our lives and sacrifice more American sovereignty in the meantime

Merely by propagating the myth of ‘peak oil’ allows for the ruling elite of the new world order to justify war, mass starvation and global poverty Watson and Jones, Watson-Author of “Order out of Chaos”, Jones directs ‘Martial Law, 9-11: Rise of the Police State’. ‘05
Paul Joseph & Alex. Prison Planet. “The Myth of Peak Oil” October 12 2005. http://www.prisonplanet.com/archives/peak_oil/index.htm Accessed: 7/1/08 Even though many will see it as immoral, many will subconsciously attach it as a reason for the war. In reality the war is purely for profit, power and control, oil can be a part of that, but only if the peak oil claim is upheld. If we continue to let the corrupt elite tell us we are wholly dependent on oil, we may reach a twisted situation whereby they can justify starvation and mass global poverty, perhaps even depopulation, even within the western world due to the fact that our energy supplies are finished. Peak oil is just another weapon the globalists have in their arsenal to move towards a new world order where the elite get richer and everyone else falls into line.

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***A2: High Food Prices***

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High Food Prices Good - Growth
High food prices good for long term economic development Donovan CEO of OVS, with years of experience in telecommunications ‘08 Paul, The Edge Malaysia “Global Economic Outlook: Effects of Higher Food Prices” 5/26/’08. Lexis. Accessed: 7/1/08
It is important to note that (as with any price increase) the economic consequences of higher food prices are not positive or negative as such, but redistributive. Higher food prices are bad for food consumers (which is everyone, of course, but in this context particularly urban consumers). Countering that, higher food prices are good for food producers. Money is redistributed from urban to rural areas as food prices rise - reversing the trend of the last decade or so of economic development, when wealth tended to accumulate in urban areas.

Rising prices for food supplies help out farmers, resulting in growth CISA Catholic Information Service for Africa ‘08
“All Africa” “High Food Prices Could Benefit Farmers, Catholic Expert Says” 5/4/08 http://allafrica.com/stories/200805050070.html Accessed: 6/1/08 The rising food prices, he pointed out, can be an opportunity for farmers in the developing world if they are included as part of the solution. "Make no mistake: The increased prices for wheat, maize, soybean and other edible oils have been a boon for farmers who are exporting from the United States, Europe and elsewhere. The question is, how can we help African farmers also benefit from the increase in prices while contributing to increases in food supply?"

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High Food Prices Good - Environment
High food prices force a shift to environmental responsibility and greater long term efficiency Retail Week ‘08
“Farewell to Cheap Food” 1/25/08 Lexis Accessed 6/1/08 The big grocers have more scope to drive cost efficiencies from their operations to keep a lid on rising food prices. "Every year, we have a programme of what we call step change, where we work to increase efficiencies, such as less time (for customers) at checkouts. We use those savings for price campaigns," says Neville-Rolfe. Walton believes that higher food price inflation will force grocers to step up their sustainability and environmental programmes. "We are seeing really strong pressures for grocers to reduce things like road miles from their transport fleets or the performance of their refrigeration units. Those things will move from being nice-to-have initiatives to must-haves," he explains.

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High Food Prices Good – Welfare
High food prices increase the funding and participation in welfare programs Capehart and Richardson, respectively they are a specialist in agricultural policy and a specialist in domestic social policy. ‘08 CRS Report for Congress “Food Price Inflation: Causes and Impacts” April 10th 2008. http://www.bread.org/learn/rising-food-prices/congressional-research-service-on-food-priceinflation.pdf Accessed: 7/2/08
Food price inflation increases spending on domestic assistance efforts. Increasing prices encourage those who are eligible but not participating to enroll. Increasing prices translate directly into benefit payments and per-meal subsidies for entitlement programs in which benefits are indexed to food-price inflation (e.g., food stamps, school meal programs). Increasing prices place pressure on appropriators to provide more funding to support caseloads for discretionary programs like the Special Supplemental Nutrition Program for Women, Infants, and Children (the WIC program).

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A2: High Food Prices cause Famine
High food prices will not lead to famine; the problem is distribution, not growth The Economist, 08 (The Economist, "Food for thought," 3-27-8, http://www.economist.com/world/international/displaystory.cfm?story_id=10925518, 7-6-8)
Dismal as all this sounds, there are some grounds for hope. Today's woes may lead to fundamental changes for the better in the world's approach to hunger and food shortages. And not before time, in the view of experts who see something crazy about the way many food-aid efforts are now conceived and executed. One mistake, arguably, is the very idea of defining the main problem as massive hunger, and hence the solution as providing food by any means necessary. “There is simply no shortage of food,” insists Rachel Nugent of America's Centre for Global Development. Of course, there are places—like North Korea or Darfur—where political (and in some cases ecological) factors cause an intense local shortage of food. In those cases, insists Josette Sheeran, head of the WFP, food aid is the only option. She also fears that the world is getting less resilient in its ability to respond to a growing number of food emergencies. But leaving aside those extraordinary events, most pundits, including Ms Sheeran, agree that the world now has plenty of food: last year saw a record cereal harvest. And the investments spurred by today's high prices promise even more food in future. Even if one allows for rising demand from Asia's middle classes, the real challenge is not the volume of food available; it is the problem of food being in the wrong place and at a price the poorest cannot afford. Michael Hess of USAID adds that famines are made inevitable by poor governance, not natural disasters. After all, “America has droughts, but not famine.”

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A2: High Food Prices – Alt Cause, Global Capitalism (1/4)
Famines and economics collapses are sending the world into an era worse than the Great Depression, entailing total destruction of countries, hunger, and wars Chossudovsky, Professor of Economics at the University of Ottawa, Director of the Centre for Research on Globalization, Contributor to the Encyclopedia Britannica, 08 (Michel, Global Research, "Global Famine," 5-2-8, http://www.globalresearch.ca/index.php?context=va&aid=8877, 7-6-8)
Humanity is undergoing in the post-Cold War era an economic and social crisis of unprecedented scale leading to the rapid impoverishment of large sectors of the World population. National economies are collapsing, unemployment is rampant. Local level famines have erupted in Sub-Saharan Africa, South Asia and parts of Latin America. This "globalization of poverty" --which has largely reversed the achievements of post-war decolonization-- was initiated in the Third World coinciding with the debt crisis of the early 1980s and the imposition of the IMF's deadly economic reforms. The New World Order feeds on human poverty and the destruction of the natural environment. It generates social apartheid, encourages racism and ethnic strife, undermines the rights of women and often precipitates countries into destructive confrontations between nationalities. Since the 1990s, it has extended its grip to all major regions of the World including North America, Western Europe, the countries of the former Soviet block and the "Newly Industrialized Countries" (NICs) of South East Asia and the Far East. This Worldwide crisis is more devastating than the Great Depression of the 1930s. It has far-reaching geo-political implications; economic dislocation has also been accompanied by the outbreak of regional wars, the fracturing of national societies and in some cases the destruction of entire countries. By far this is the most serious economic crisis in modern history.

Widespread riots are a result of poverty and famine due to the increasingly worsening global food crisis Chossudovsky, Professor of Economics at the University of Ottawa, Director of the Centre for Research on Globalization, Contributor to the Encyclopedia Britannica, 08 (Michel, Global Research, "Global Famine," 5-2-8, http://www.globalresearch.ca/index.php?context=va&aid=8877, 7-6-8)
Famine is the result of a process of "free market" restructuring of the global economy which has its roots in the debt crisis of the early 1980s. It is not a recent phenomenon as suggested by several Western media reports. The latter narrowly focus on short-term supply and demand for agricultural staples, while obfuscating the broader structural causes of global famine. Poverty and chronic undernourishment is a pre-existing condition. The recent hikes in food prices have contributed to exacerbating and aggravating the food crisis. The price hikes are hitting an impoverished population, which has barely the means to survive. Food riots have erupted, almost simultaneously in all major regions of the World: "Food prices in Haiti had risen on average by 40 percent in less than a year, with the cost of staples such as rice doubling.... In Bangladesh, [in late April 2008] some 20,000 textile workers took to the streets to denounce soaring food prices and demand higher wages. The price of rice in the country has doubled over the past year, threatening the workers, who earn a monthly salary of just $25, with hunger. In Egypt, protests by workers over food prices rocked the textile center of Mahalla al-Kobra, north of Cairo, for two days last week, with two people shot dead by security forces. Hundreds were arrested, and the government sent plainclothes police into the factories to force workers to work. Food prices in Egypt have risen by 40 percent in the past year... Earlier this month, in the Ivory Coast, thousands marched on the home of President Laurent Gbagbo, chanting “we are hungry” and “life is too expensive, you are going to kill us. Similar demonstrations, strikes and clashes have taken place in Bolivia, Peru, Mexico, Indonesia, the Philippines, Pakistan, Uzbekistan, Thailand, Yemen, Ethiopia, and throughout most of sub-Saharan Africa."

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A2: High Food Prices – Alt Cause, Global Capitalism (2/4)
Famine and widespread "starvation deaths" are caused by speculative trading, not biofuel Chossudovsky, Professor of Economics at the University of Ottawa, Director of the Centre for Research on Globalization, Contributor to the Encyclopedia Britannica, 08 (Michel, Global Research, "Global Famine," 5-2-8, http://www.globalresearch.ca/index.php?context=va&aid=8877, 7-6-8)
There are two interrelated dimensions to the ongoing global food crisis, which has spearheaded millions of people around the World into starvation and chronic deprivation, a situation in which entire population groups no longer have the means to purchase food. First, there is a long term historical process of macroeconomic policy reform and global economic restructuring which has contributed to depressing the standard living Worldwide in both the developing and developed countries. Second, these preexisting historical conditions of mass poverty have been exacerbated and aggravated by the recent surge in grain prices, which have led in some cases to the doubling of the retail price of food staples. These price hikes are in large part the result of speculative trade in food staples. Speculative Surge in Grain Prices The media has casually misled public opinion on the causes of these price hikes, focusing almost exclusively on issues of costs of production, climate and other factors which result in reduced supply and which might contribute to boosting the price of food staples. While these factors may come into play, they are of limited relevance in explaining the impressive and dramatic surge in commodity prices. Spiraling food prices are in large part the result of market manipulation. They are largely attributable to speculative trade on the commodity markets. Grain prices are boosted artificially by large scale
speculative operations on the New York and Chicago mercantile exchanges. It is worth noting that in 2007, the Chicago Board of Trade (CBOT), merged with the Chicago Mercantile Exchange (CME), forming the largest Worldwide entity dealing in commodity trade including a wide range of speculative instruments (options, options on futures, index funds, etc). Speculative trade in wheat, rice or corn, can occur without the occurrence of real commodity transactions. The institutions speculating in the grain market are not necessarily involved in the actual selling or delivery of grain. The transactions may use commodity index funds which are bets on the general upward or downward movement of commodity prices. A "put option" is a bet that the price will go down, a "call option" is a bet that the price will go up. Through concerted manipulation, institutional traders and

financial institutions make the price go up and then place their bets on an upward movement in the price of a particular commodity. Speculation generates market volatility. In turn, the resulting instability encourages further speculative activity. Profits are made when the price goes up. Conversely, if the speculator is short-selling the market, money will be made when the price collapses. This recent speculative surge in food prices has been conducive to a Worldwide process of famine formation on an unprecedented scale. These speculative operations do not purposely trigger famine. What triggers famine
is the absence of regulatory procedures pertaining to speculative trade (options, options on futures, commodity index funds). In the present context, a freeze of speculative trade in food staples, taken as a political decision, would immediately contribute to lower food prices. Nothing prevents these transactions from being neutralized and defused through a set of

carefully devised regulatory measures. Visibly, this is not what is being proposed by the World Bank and the International Monetary Fund. The Role of the IMF and the World Bank The World Bank and the IMF have come forth with an emergency plan, to boost agriculture in response to the "food crisis". The causes of this crisis, however, are not addressed. The World Bank's president Robert B. Zoellick describes this initiative
as a "new deal", an action plan "for a long-term boost to agricultural production.", which consists inter alia in a doubling of agricultural loans to African farmers. "We have to put our money where our mouth is now so that we can put food into hungry mouths" (Robert Zoellick, World Bank head, quoted by BBC, 2 May 2008) IMF/World Bank "economic medicine" is not the "solution" but in large part the "cause" of famine in developing countries. More IMF-World Bank lending "to boost agriculture" will serve to increase levels of indebtedness and exacerbate rather alleviate poverty. World Bank "policy based loans" are granted on condition the countries abide by the neoliberal policy agenda which, since the early 1980s, has been conducive to the collapse of local level food agriculture.

"Macro-economic stabilization" and structural adjustment programs imposed by the IMF and the World Bank on developing countries (as a condition for the renegotiation of their external debt) have led to the impoverishment of hundreds of millions of people.

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A2: High Food Prices – Alt Cause, Global Capitalism (3/4)
IMF intervention and the interplay of market forces cause food crises that result in unemployment, famines, and violent massacres Chossudovsky, Professor of Economics at the University of Ottawa, Director of the Centre for Research on Globalization, Contributor to the Encyclopedia Britannica, 08 (Michel, Global Research, "Global Famine," 5-2-8, http://www.globalresearch.ca/index.php?context=va&aid=8877, 7-6-8)
The harsh economic and social realities underlying IMF intervention are soaring food prices, locallevel famines, massive lay-offs of urban workers and civil servants and the destruction of social programs. Internal purchasing power has collapsed, health clinics and schools have been closed down, hundreds of millions of children have been denied the right to primary education. Historically, spiraling food prices at the retail level have been triggered by currency devaluations, which have invariably resulted in a hyperinflationary situation. In Peru in August 1990, for instance, on the orders of the IMF, fuel prices increased overnight by 30 times. The price of bread increased twelve times overnight: "Throughout the Third World, the situation is one of social desperation and hopelessness of a population impoverished by the interplay of market forces. Anti-SAP riots and popular uprisings are brutally repressed: Caracas, 1989. President Carlos Andres Perez after having rhetorically denounced the IMF of practicing "an economic totalitarianism which kills not with bullets but with famine", declares a state of emergency and sends regular units of the infantry and the marines into the slum areas (barrios de ranchos) on the hills overlooking the capital. The Caracas anti-IMF riots had been sparked off as a result of a 200 per cent increase in the price of bread. Men, women and children were fired upon indiscriminately: "The Caracas morgue was reported to have up to 200 bodies of people killed in the first three days ... and warned that it was running out of coffins". Unofficially more than a thousand people were killed. Tunis, January 1984: the bread riots instigated largely by unemployed youth protesting the rise of food prices; Nigeria, 1989: the anti-SAP student riots leading to the closing of six of the country’s universities by the Armed Forces Ruling Council; Morocco, 1990: a general strike and a popular uprising against the government’s IMFsponsored reforms."

"Free market" policies supported by the IMF and World Bank have destroyed local markets and devastatingly undermined food security Chossudovsky, Professor of Economics at the University of Ottawa, Director of the Centre for Research on Globalization, Contributor to the Encyclopedia Britannica, 08 (Michel, Global Research, "Global Famine," 5-2-8, http://www.globalresearch.ca/index.php?context=va&aid=8877, 7-6-8)
Since the 1980s, grain markets have been deregulated under the supervision of the World Bank and US/EU grain surpluses are used systematically to destroy the peasantry and destabilize national food agriculture. In this regard, World Bank lending requires the lifting of trade barriers on imported agricultural staples, leading to the dumping of US/EU grain surpluses onto local market. These and other measures have spearheaded local agricultural producers into bankruptcy. A "free market" in grain --imposed by the IMF and the World Bank-- destroys the peasant economy and undermines "food security". Malawi and Zimbabwe were once prosperous grain surplus countries, Rwanda was virtually self-sufficient in food until 1990 when the IMF ordered the dumping of EU and US grain surpluses on the domestic market precipitating small farmers into bankruptcy. In 1991-92, famine had hit Kenya, East Africa's most successful bread-basket economy. The Nairobi government had been previously placed on a black list for not having obeyed IMF prescriptions. The deregulation of the grain market had been demanded as one of the conditions for the rescheduling of Nairobi's external debt with the Paris Club of official creditors. (Michel Chossudovsky, The Globalization of Poverty and the New World Order, Second Edition, Montreal 2003)

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A2: High Food Prices – Alt Cause, Global Capitalism (4/4)
Famine is caused by international agro-businesses like the IMF-World Bank which undermine all facets of economic activity Chossudovsky, Professor of Economics at the University of Ottawa, Director of the Centre for Research on Globalization, Contributor to the Encyclopedia Britannica, 08 (Michel, Global Research, "Global Famine," 5-2-8, http://www.globalresearch.ca/index.php?context=va&aid=8877, 7-6-8)
Throughout Africa, as well as in Southeast Asia and Latin America, the pattern of "sectoral adjustment" in agriculture under the custody of the Bretton Woods institutions has been unequivocally towards the destruction of food security. Dependency vis-à-vis the world market has been reinforced leading to a boost in commercial grain imports as well as an increase in the influx of "food aid". Agricultural producers were encouraged to abandon food farming and switch into "high value" export crops, often to the detriment of food self-sufficiency. The high value products as well as the cash crops for export were supported by World Bank loans. Famines in the age of globalization are the result of policy. Famine is not the consequence of a scarcity of food but in fact quite the opposite: global food surpluses are used to destabilize agricultural production in developing countries. Tightly regulated and controlled by international agro-business, this oversupply is ultimately conducive to the stagnation of both production and consumption of essential food staples and the impoverishment of farmers throughout the world. Moreover, in the era of globalization, the IMF-World Bank structural adjustment program bears a direct relationship to the process of famine formation because it systematically undermines all categories of economic activity, whether urban or rural, which do not directly serve the interests of the global market system. The earnings of farmers in rich and poor countries alike are
squeezed by a handful of global agro-industrial enterprises which simultaneously control the markets for grain, farm inputs, seeds and processed foods. One giant firm Cargill Inc. with more than 140 affiliates and subsidiaries around the World controls a large share of the international trade in grain. Since the 1950s, Cargill became the main contractor of US "food aid" funded under Public Law 480 (1954). World agriculture has for the first time in history the capacity to satisfy the food requirements of the entire planet, yet the very nature of the global market system prevents this from occurring. The capacity to produce food is immense yet the levels of food consumption remain exceedingly low because a large share of the World's population lives in conditions of abject poverty and deprivation. Moreover, the process of "modernization" of agriculture has led to the dispossession of the peasantry, increased landlessness and environmental degradation. In other words, the very forces which encourage global food production to expand are also

conducive antithetically to a contraction in the standard of living and a decline in the demand for food.

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***A2: Resource Wars***

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A2: Resource Wars (1/5)
Impossible for countries to go to war over resources, there are too many fail safes in the market Moran and Russel, respectively Prof of national security affairs at CCC, Senior Lecturer; Co-Director, Center for Contemporary Conflict; Managing Editor, Strategic Insights. ‘08
Daniel and James, Center for Contemporary Conflict “The Militarization of Energy Security” 4/4/08 http://www.analyst-network.com/article.php?art_id=1671 Accessed: 7/3/08 The militarization of energy security requires, in the first instance, that something must change that would cause major participants in the energy market to reject their well-grounded calculation that war for energy (or any merely economic advantage) does not pay. High energy prices would be a likely, but probably not a sufficient, motivation for such a change. In addition, governments would have to believe that the normal mechanisms by which prices adjust to changes in supply and demand had broken down, or were on their way to doing so. Prices in any market demonstrate three basic tendencies: short-term volatility, medium-term momentum, and long-term reversion to the mean. The meaning of these terms varies depending on what is being bought and sold, but their operation is apparent across an enormous range of economic phenomena. They represent, collectively, the self-modulating action of supply and demand, which is the economist’s equivalent of the Law of Gravity.

Countries in the squo want cooperation. No risk of resource wars. FES, 07
(“Global Energy Security – Prospects for Cooperation between Industrial and Emerging Countries,” 9/19, http://www.fes-globalization.org/events/download/Global_Energy_Security_Programme.pdf, date accessed: 7/2/08) Rising energy prices due to vastly growing demand from “rising powers”, a switch from demand to supply driven markets, tendencies to use energy as a “power currency” in international affairs, risks of growing conflict over access to energy resources, and last, but not least the debate over sustainable energy paths flowing from climate change and the scarcity of fossil fuels – all these tendencies have put energy policy on the global agenda. Pressure is mounting to coordinate policies and to lay the foundations and extend the scope for an international energy order. The global dimension of energy supply calls for closer cooperation at the international level, including coordination of economic, security related and environmental aims. Ongoing dialogue between leading industrial and emerging countries is crucial. In the “Petersburg Declaration”, adopted at the St. Petersburg Summit 2006, the G8 countries had agreed upon principles, aims and policies for global energy security. This declaration could be an interesting starting point for discussions over energy policy beyond the G8.

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A2: Resource Wars (2/5)
No impact and Turn - No risk of resource wars- strategy, shared interest and institution resiliency arguments all point to increased cooperation – water proves GECHS, 99
(Global Environmental Change and Human Security, June, online: http://www.gechs.org/aviso/03/index.html) There are, however, two major problems with the literature describing water both as an historic and, by extrapolation, as a future cause of acute international conflict: 1. There is little evidence that water has ever been the cause of international warfare; and 2. War over water seems neither strategically rational, nor hydrographically effective, nor economically viable. In our work on the Transboundary Freshwater Dispute Database Project we have found only seven cases in which armies were mobilized or shots were fired across international boundaries. In every case, the dispute did not escalate into warfare. According to our findings, with one exception, there has never been a war fought over water.1 It is simplistic to base a discussion about the future solely on historical evidence, particularly when the demand for fresh water is reaching unprecedented levels. However, there are additional arguments against the possibility of so-called water wars2: 1) A Strategic Argument A complex array of social, economic, and political conditions would have to be present if there was to be conflict over water between two countries. Water must be viewed in the larger context of international relations, and the cost – economic and otherwise – of going to war for a resource that costs about $1 U.S. per cubic meter to create from seawater, makes such action highly unlikely. 2) A Shared Interest Argument Countries, regions, and communities share a strong interest in an orderly development of river systems. Despite their adverse environmental impacts, dams can often reduce the seasonal variability of flow for all riparian nations; hydropower can be distributed across borders, and water-based transportation is inexpensive and creates strong ties across countries and regions. Another example is the cooperation among farmers, environmentalists, and recreational users, who all share an interest in having a healthy stream-system. 3) An Institutional Resiliency Argument Once cooperative water regimes are established, they are tremendously resilient over time. For example, the Mekong Committee, functioning since 1957, exchanged data throughout the Vietnam War. Secret “picnic table” talks between Israel and Jordan have been held since the unsuccessful Johnston negotiations of 195355, even while the nations were in a legal state of war. The Indus River Commission not only survived through two wars between India and Pakistan, but treaty-related payments continued unabated throughout the hostilities. Any of these arguments, in and of itself, might not convince one of the unlikelihood of “water wars.” The combination of all of these factors, though – a lack of historical evidence combined with strategic, interestbased, and institutional irrationality of acute international hydro-conflicts – should convince us to think of water as a resource for reducing tensions and encouraging cooperation.

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A2: Resource Wars (3/5)
Empirically proven- territorial disputes over resources do not lead to resource wars Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) Finally, serious thinking about climate change must recognize that the “hard” security threats that are supposedly lurking are mostly a ruse. They are good for the threat industry—which needs danger for survival—and they are good for the greens who find it easier to build a coalition for policy when hawks are supportive. Building a policy on this house of cards is no way to muster support for a problem that requires several decades of sustained effort. One of the greatest hurdles in the climate debate—one that is just now being cleared, but will reappear if policy advocates seize on false dangers—has been to contain the entrepreneurial skeptics who have sown public doubt about the integrity of the science on causes and effects of climate change. The false logic now runs in both directions. Not only will climate change multiply threats by putting stress on societies, but a flood of articles warns of new territorial conflicts as warming opens the formerly ice-bound Arctic for exploration. Russia recently planted a flag on the seabed at the North Pole. In fact, the underlying causes of this exploration rush are ambiguous property rights and advances in undersea drilling that are unrelated to climate change. A similar pattern unfolded in the 1950s in Antarctica, which led to a standoff of territorial claims and no real harm to the region, no production of usable minerals and no resource wars. The real dangers lie in the growing risk that climate change could be a lot worse than the likely scenarios, which could create severe and direct harm to societies that is much more worrisome than the indirect and remote risk of climate-induced resource wars. Yet politicians give more attention to imagined insecurities from climate change and rarely talk about climate as a game of odds and risk management. They talk even less about the resource war that nobody should want to win—mankind’s domination of nature. For the real losers in unchecked climate change will be natural ecosystems unable, unlike humans, to look ahead and adapt.

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A2: Resource Wars (4/5)
Resource wars not likely- cooperative legislation in the squo guarantees International Energy Security Downs, former CIA energy analyst, 06 (Erica S., The Brookings Institution, Mar 17, National Energy Security
Depends on International Energy Security, http://www.brookings.edu/opinions/2006/0317china_downs.aspx, 7/3/08) The United States needs the cooperation of other major consumers, specifically China and India, to reduce, if not eliminate the challenges posed by our so-called addiction to oil. Much of the recent discussion in Washington about the growing oil demand of China – and to a lesser extent India – has focused on the threats posed to the U.S. economy and foreign policy, but that often obscures the fact that the oil interests of China, India and the United States are also broadly aligned. National energy security depends on international energy security. Energy security – often defined as the obtainment of adequate, reliable and reasonably priced supplies in ways that do not undermine national interests – is a global problem that requires a global solution. Daniel Yergin, a highly respected authority on energy, has noted that U.S. energy security is part and parcel of international energy security. There is only one world oil market, and the energy security of the United States – and all other oil consumers – is linked to the stability of that market. Consequently, America's energy future will be shaped not only by decisions made in Washington but also by those made in the capitals of other major oil consuming and producing states. The "Energy Diplomacy and Security Act," to be introduced by Senator Lugar this week, takes a step in the right direction. The legislation calls for the United States to shift its diplomatic priorities to better serve America's energy interests. The bill proposes that the United States, the world's largest oil consumer, forge energy partnerships abroad, notably with China and India, the world's second and fifth largest oil consumers, respectively. Specifically, the legislation calls for China, India, and the United States to coordinate the release of strategic oil stocks, currently under construction in China and under discussion in India, to manage supply disruptions. Unlike the United States, neither China nor India are members of the International Energy Agency (IEA), the institution established to foster cooperation among the world's major oil consumers. The centerpiece of the IEA is the maintenance of emergency oil stocks and plans for coordinated use. In the near future, China and India are unlikely to join the IEA, which requires membership in the Organization for Economic Cooperation and Development and the maintenance of emergency oil stocks equivalent to at least 90 days of net oil imports. A formal coordination agreement with the United States would reinforce the informal cooperation that already exists between the IEA and China and India. Such an agreement, as outlined in Sen. Lugar's bill, would encourage both countries to contribute to global energy security through participation in international emergency oil stock releases to manage oil supply disruptions and their consequences.

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177 Oil Toolkit

A2: Resource Wars (5/5)
Resources aren’t the root cause of conflicts Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) RISING ENERGY prices and mounting concerns about environmental depletion have animated fears that the world may be headed for a spate of “resource wars”—hot conflicts triggered by a struggle to grab valuable resources. Such fears come in many stripes, but the threat industry has sounded the alarm bells especially loudly in three areas. First is the rise of China, which is poorly endowed with many of the resources it needs—such as oil, gas, timber and most minerals—and has already “gone out” to the world with the goal of securing what it wants. Violent conflicts may follow as the country shunts others aside. A second potential path down the road to resource wars starts with all the money now flowing into poorly governed but resource-rich countries. Money can fund civil wars and other hostilities, even leaking into the hands of terrorists. And third is global climate change, which could multiply stresses on natural resources and trigger water wars, catalyze the spread of disease or bring about mass migrations. Most of this is bunk, and nearly all of it has focused on the wrong lessons for policy. Classic resource wars are good material for Hollywood screenwriters. They rarely occur in the real world. To be sure, resource money can magnify and prolong some conflicts, but the root causes of those hostilities usually lie elsewhere. Fixing them requires focusing on the underlying institutions that govern how resources are used and largely determine whether stress explodes into violence. When conflicts do arise, the weak link isn’t a dearth in resources but a dearth in governance.

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A2: Warming causes disease spread
Fears of disease spread due to warming are unwarranted- industrialized worlds have already eradicated the diseases in the West Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08)\ The dangers of disease have caused particular alarm in the advanced industrialized world, partly because microbial threats are good fodder for the imagination. But none of these scenarios hold up because the scope of all climate-sensitive diseases is mainly determined by the prevalence of institutions to prevent and contain them rather than the raw climatic factors that determine where a disease might theoretically exist. For example, the threat industry has flagged the idea that a growing fraction of the United States will be malarial with the higher temperatures and increased moisture that are likely to come with global climate change. Yet much of the American South is already climatically inviting for malaria, and malaria was a serious problem as far north as Chicago until treatment and eradication programs started in the 19th century licked the disease. Today, malaria is rare in the industrialized world, regardless of climate, and whether it spreads again will hinge on whether governments stay vigilant, not so much on patterns in climate. If Western countries really cared about the spread of tropical diseases and the stresses they put on already fragile societies in the developing world, they would redouble their efforts to tame the diseases directly (as some are now doing) rather than imagining that efforts to lessen global warming will do the job. Eradication usually depends mainly on strong and responsive governments, not the bugs and their physical climate.

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179 Oil Toolkit

A2: Resource Wars with China (1/5)
China perceives the threat of resource wars and is switching to alternative energies to prevent them IHT ‘07 International Herald Tribune. “China to develop renewable energy” December 26th 2007. http://www.iht.com/articles/2007/12/26/business/energy.php Accessed 7/3/08
In a report on its energy plans, the government announced no new initiatives but said it wanted to curb reliance on oil and gas to drive an economy that is the world's second-biggest energy consumer after the United States. "China gives top priority to developing renewable energy," said the 44-page report released by the cabinet's press office. Zheng Xinli, deputy director of the Policy Research Office of the Communist Party's Central Committee, said government departments are drawing up a plan to establish a higher-level management team to oversee energy issues. "Setting up a mega-government body will help enhance the efficiency in supplying and utilizing energy resources," he said. The new energy department, long speculated by the industry to be a Ministry of Energy, will coordinate the management of coal, oil, gas, electricity and renewable energy sectors, according to Zheng. "It will not take long for the government to disclose relevant information regarding the issue," Zheng said. "Reconstructing the government's ministries is one of the government's priorities for next year." The energy report said that Beijing would promote hydroelectric, nuclear, solar and wind energy, as well natural gas extracted from garbage dumps and coal mines. China's economic boom has sharply increased its need for imported oil and gas. That has prompted complaints that Chinese demand is driving record-high world crude prices and led to diplomatic strains as Beijing has been building closer ties with oil-rich pariah states like Sudan and Iran. Communist leaders worry about the mounting damage to China's battered environment from fossil fuel use and see mounting reliance on imported energy as a strategic weakness.

Maintaining oil as a national security threat ensures defeat of a rising china and militant islam Watts Professor of Geography and Development Studies at Berkeley ‘06
Michael, Monthly Review “Empire of Oil: Capitalist Dispossession and the Scramble for Africa” September 2006 http://proquest.umi.com/pqdweb?index=9&did=1123316561&SrchMode=2&sid=9&Fmt=3&VInst=PROD&VType =PQD&RQT=309&VName=PQD&TS=1215107076&clientId=10553 Accessed: 7/3/08 Energy security is the name of the game. No surprise, then, that the Council on Foreign Relations's call for a different U.S. approach to Africa in its new report, More than Humanitarianism (2005), turns on Africa's "growing strategic importance" for U.S. policy. It is the West African Gulf of Guinea, encompassing the rich on and offshore fields stretching from Nigeria to Angola, that represents a key plank in Bush's alternative to the increasingly volatile and unpredictable oil-states of the Persian Gulf.
Nigeria and Angola alone account for nearly four million barrels per day (almost half of Africa's output) and U.S. oil companies alone have invested more than $40 billion in the region over the last decade (with another $30 billion expected between 2005 and 2010). oil investment now represents over 50 percent of all foreign direct investment (FDI) in the continent (and over 60 percent of all FDI in the top four FDI recipient countries), and almost 90 percent of all cross-border mergers and acquisition activity since 2003 has been in the mining and petroleum sector. The strategic interests of the United States certainly include not only access to

cheap and reliable low-sulphur oil imports, but also keeping the Chinese (for example in Sudan) and South Koreans (for example in Nigeria)-aggressive new actors in the African oil business-and Islamic terror at bay. Africa is, according to the intelligence community, the "new frontier" in the fight against revolutionary Islam. Energy security, it turns out, is a terrifying hybrid of the old and the new: primitive accumulation and American militarism coupled to the war on terror.

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A2: Resource Wars with China (2/5)
Resource wars are nonstrategic for China, instead utilizing the global market provides higher revenues Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) To be sure, the struggle over resources has yielded a wide array of commercial conflicts as companies duel for contracts and ownership. State-owned China National Offshore Oil Corporation’s (CNOOC) failed bid to acquire U.S.-based Unocal—and with it Unocal’s valuable oil and gas supplies in Asia—is a recent example. But that is hardly unique to resources—similar conflicts with tinges of national security arise in the control over ports, aircraft engines, databases laden with private information and a growing array of advanced technologies for which civilian and military functions are hard to distinguish. These disputes win and lose some friendships and contracts, but they do not unleash violence. Most importantly, China’s going-out strategy is unlikely to spur resource wars because it simply does not work, a lesson the Chinese are learning. Oil is a fungible commodity, and when it is sourced far from China it is better to sell (and buy) the oil on the world market. The best estimates suggest that only about one-tenth of the oil produced overseas by Chinese investments (so-called “equity oil”) actually makes it back to the country. So, thus far, the largest beneficiaries of China’s strategy are the rest of the world’s oil consumers—first and foremost the United States—who gain because China subsidizes production. Until recently, the strategy of going out for oil looked like a good bet for China’s interests. But, despite threat-industry fear-mongering, we need not worry that it will continue over the long term because Chinese enterprises are already poised to follow a new strategy that is less likely to engender conflict. The past strategy rested on a trifecta of passing fads. One fad was the special access that Chinese state enterprises had to cheap capital from the government and by retaining their earnings. The ability to direct that spigot to political projects is diminishing as China engages in reforms that expose state enterprises to the real cost of capital and as the Chinese state and its enterprises look for better commercial returns on the money they invest. Second, nearly all the equity-oil investments overseas have occurred since the late 1990s, as prices have been rising. Each has looked much smarter than the last because of the surging value of oil in the ground. But that trend is slowing in many places because the cost of discovering and developing oil resources is rising. And the third passing fad in China’s going-out strategy is the fiction that China can cut special deals— such as by channeling development assistance to pliable host governments—to confer a durable advantage for Chinese companies. While there is no question that the special deals are rampant—by some measures, most of China’s foreign assistance is actually tied to natural-resources projects—the Chinese government and its overseas enterprises are learning that it is best to avoid these places for the long haul. Among the special havens where Chinese companies toil are Sudan, Nigeria, Chad, Iran and Zimbabwe—all countries where even Chinese firms find it hard to assure adequate stability to reliably extract natural resources. As China grapples with these hard truths about going out, the strategy will come unstuck. It won’t happen overnight, but evidence in this direction is encouraging. China already pursues the opposite strategy— seeking reliable hosts, multiple commercial partners and market-oriented contracts—when it secures natural resources that require technical sophistication. China’s first supplies of imported natural gas, which started last year at a liquefied natural gas terminal in Shenzhen, came from blue-chip investments in Australia, governed by contracts and investments with major Western companies. With time, China will shift to such arrangements and away from the armpits of governance. At best, badly governed countries are mediocre hosts for projects that export bulk commodities, such as iron ore and raw crude oil. These projects, however, are least likely to engender zero-sum conflicts over resources because it is particularly difficult to corner the market for widely traded commodities, as China has learned with its equity-oil projects. Resources that require technical sophistication to develop tend to favor integration and stability, rather than a zero-sum struggle.

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A2: Resource Wars with China (3/5)
China and the US are focusing on cooperation despite strains over oil LaFranchi, Diplomatic Correspondent for The CS Monitor, 06 (Howard, Christian Science Monitor, "Bold idea for energy woes: global cooperation," 4-24-06, http://www.csmonitor.com/2006/0424/p02s01-wogi.html, 7-4-08)
Increasingly, world diplomacy is linked to energy. Whether it's the proposed US nuclear agreement with India, tension over a natural-gas pipeline from Russia to Europe, or talks between President Bush and Chinese President Hu Jintao about China's growing ties to oil-rich Iran, world leaders are factoring crucial energy needs into their strategic calculations. Global energy strains have been particularly evident over oil, which topped a record $75 a barrel last Friday. So is it time for an OPIC - an organization of petroleum-importing countries - as a way to build up cooperation among the world's booming and increasingly competitive energy consumers? Such an idea may sound far-fetched. Indeed, any discussion among officials about greater energy cooperation is just in the beginning stages: NATO has held a conference on energy security, and Sen. Richard Lugar (R) of Indiana has recently proposed legislation calling for enhanced international partnerships. But among analysts, consensus is growing on the need to find new ways to boost international energy security and cooperation. "Energy considerations underlie international politics today more than any other issue and are at the root of every country's international behavior," says Gal Luft, codirector of the Institute for Analysis of Global Security in Washington. "As more countries like China and India enter the club of energy-intensive societies, we should be developing forums for steering the competitive tendencies into more cooperative channels." China's entry into the club of major energy consumers - last year it overtook Japan as the world's secondlargest consumer of petroleum after the United States - demonstrates both the challenges of growing competition and the opportunities held out by greater cooperation. China is engaged in a search for oil that has it setting deals with Iran, Sudan, Burma, and other energy sources the US considers unsavory - and, in some cases like Iran, as threats to international security. US officials worry that the priority of securing oil supplies from Iran is leading the Chinese to balk at US efforts to penalize Iran for moving ahead with what the US suspects is a nuclear-weapons program. But China is also interested in building a stable and cooperative economic relationship with the US, its largest commercial partner. And it is that desire the US could tap into, some experts say, by working with China and other countries like it on enhancing energy cooperation and security. China's interest in greater international economic cooperation and in a larger role in international economic and security frameworks was on display during Mr. Hu's visit last week, White House officials say. Perhaps the greatest long-term accomplishment of the Bush-Hu summit was the indication that Chinese leaders see their country as "a stakeholder in the international economic system," said Dennis Wilder, the National Security Council's acting senior director for East Asian affairs. For some observers, such broad characterizations simply mean the White House was unable to extract any specific commitments from the Chinese: on accelerating appreciation of the yuan, for example, or going along with sanctions against Iran. But other officials say the degree to which energy issues suffused the Bush-Hu discussions suggests a desire for potentially significant cooperation. The two leaders approached energy as "a common challenge of the two countries," said Faryar Shirzad, deputy national security adviser for international economic affairs. Mr. Bush, he said, emphasized to Hu "the importance of diversifying away from oil," in particular to develop nuclear energy. US companies are keen on entering the Chinese market to develop nuclear power plants, energy experts note. After his US visit, Hu headed to Saudi Arabia. His itinerary also includes Nigeria and other African countries.

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A2: Resource Wars with China (4/5)
International cooperative efforts over energy are already underway; China and US key LaFranchi, Diplomatic Correspondent for The CS Monitor, 06 (Howard, Christian Science Monitor, "Bold idea for energy woes: global cooperation," 4-24-06, http://www.csmonitor.com/2006/0424/p02s01-wogi.html, 7-4-08)
One hurdle in the road to developing cooperation among energy-consuming countries is the Bush administration's distaste for the kind of international bureaucracy that might be charged with overseeing such a project, some experts say. But others add that the bones of what might be a starting point already exist in the International Energy Agency (IEA), a branch of the Organization for Economic Cooperation and Development that serves developed countries. James Bartis, an expert in energy security at the RAND Corp. in Arlington, Va., says the IEA or something like it could serve as an "umbrella of oil consumers" that could begin to address fears about stable supplies and develop joint energy-investment strategies - and therefore become a force for stability in a world of tightening energy supplies. "Right now most energy deals are bilateral, but energy is a global issue and bilateral agreements are not the solution to global problems," says Mr. Bartis. By becoming members of the IEA, countries agree on building strategic petroleum reserves, and commit to coming to the rescue of any fellow member country that has its energy supply cut, by natural disaster or otherwise. The problem with the IEA as currently structured is that it serves developed countries - and thus excludes fast-growing energy consumers like China and India. "The producer countries have their OPEC," says Bartis. "If you want to enhance energy security, then creating a structure that takes in all the big consuming countries would be a natural place to start." He notes, for example, that vast amounts of energy are thought to be locked in regions that either overlap the boundaries of consumer nations or are in disputed territory, as in parts of the South China Sea. Building a forum for discussing and addressing such issues could both enhance international stability and lead to new energy development, he says. Others point out that the contemplation of enhanced energy-security cooperation goes beyond a few experts. James Pinkerton, a fellow with the New America Foundation in Washington, notes the legislation outlined by Senator Lugar, chairman of the Senate Foreign Relations Committee. In addition to calling for international energy partnerships, his proposed Energy Diplomacy and Security Act also calls for a hemispheric energy cooperation forum. Still, others remain realistic about the prospects for greater cooperation in a domain that has long been more typified by aggressive competition. "As crucial as I think [greater international cooperation on energy] is, we also have to remember that this attention comes at a time when energy markets are extremely tight," says Mr. Luft of Global Security. China hears the US emphasizing alternative energy sources and counseling an arm's-length approach to Iran and is a little suspicious, he adds. "China looks at the US - the consumer of 25 percent of the world's energy - and says, 'You don't have a right to lecture to us, where we have one-third the use and five times the population.' " Luft adds that if there is to be greater international energy cooperation, it will indeed require US leadership - but that will mean "leading by example," he says. "And that means curbing our consumption and taking a deep look at our policies of consumption."

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A2: Resource Wars with China (5/5)
Despite tensions, China and the US cooperate on many issues including proliferation and a war is unlikely Sutter, National Intellegence Council, 04 (Robert E., National Intelligence Council/CIAO, September, “China’s
Future: Implications for US interest”, http://www.ciaonet.org/wps/dod127/index.html, 7/10/08) Thus far, Sino-US strategic competition has largely been a war of words, despite the mistaken bombing of the Chinese Embassy in Belgrade and Chinese "missile diplomacy" near Taiwan in 1995-96. Increasingly, though, the two nation's hard national security interests rub up against each other in the Asia-Pacific region-particularly with regard to Taiwan's security; US alliances and military forces in the region; strengthening of the US-Japan Mutual Security Treaty and expanded Defense Guidelines; and prospects for theater and national missile defenses (TMD/NMD). Beijing's opposition to Washington's "dual containment" of Iraq and Iran is an added irritant. Institutionally, the competition is increasingly apparent in the United Nations Security Council and other forums, where diplomats of the two countries debate each other. While not yet a new Cold War of geopolitical competition or a clash of civilizations in the Huntingtonian sense, the essence of the new Sino-American strategic competition is very much a clash of worldviews about the structure and nature of international relations and security. The contested weltanschauung is buttressed by the growing strategic competition over the balance of power and structure of East Asian security and the Persian Gulf. Although I anticipate increased friction between Washington and Beijing in the years ahead, these strategic competitors need not become adversaries. Indeed, they can cooperate in some realms while competing in others. While having strong differences over issues of "high security"--Taiwan, the US-Japan alliance, TMD and NMD, NATO and other security alliances, Iran and Iraq, etc.--the two governments do cooperate in areas of what may be described as "low security": fighting narcotics production and smuggling, organized crime, alien smuggling, and environmental security. They can also cooperate in "high security" areas such as North Korea, stemming proliferation, and weapons of mass destruction (WMD). Thus, as figure 9 illustrates, relations between the United States and China will embody elements of both cooperation and competition, but I would expect that in the strategic/security realm, they will increasingly gravitate toward the antagonistic end of the median point on the continuum. There remains an opportunity for the United States and its allies and security partners to establish a strategic relationship of competitive coexistence with elements of cooperation with the PRC. Even this kind of relationship will require constant high-level attention to policy and hard work by both sides, if a real adversarial relationship is to be avoided. As apparent recently, the Chinese leadership has realized that, despite its differences, it must coexist with the United States and that the United States holds the key to numerous goals Beijing seeks economically, politically, and in terms of China's security. For its part, the US administration continues to ignore public distrust of China and work toward "building a constructive strategic partnership for the 21st century."99 The joint desire of the two governments to arrest the downward spiral in relations, and to cooperate together where possible, may "cushion" bilateral ties from further deterioration.

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A2: Resource Wars with China/India
China and India will not partake in a resource war- free market cheaper and more reliable Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) The sweep of history points against classic resource wars. Whereas colonialism created long, oppressive and often war-prone supply chains for resources such as oil and rubber, most resources today are fungible commodities. That means it is almost always cheaper and more reliable to buy them in markets. At the same time, much higher expectations must be placed on China to tame the pernicious effects of its recent efforts to secure special access to natural resources. Sudan, Chad and Zimbabwe are three particularly acute examples where Chinese (and in Sudan’s case, Indian) government investments, sheltered under a foreign-policy umbrella, have caused harm by rewarding abusive governments. That list will grow the more insecure China feels about its ability to source vital energy and mineral supplies. Some of what is needed is patience because these troubles will abate as China itself realizes that going out is an expensive strategy that buys little in security. Chinese state oil companies are generally well-run organizations; as they are forced to pay the real costs of capital and to compete in the marketplace, they won’t engage in these strategies. The best analog is Brazil’s experience, where its statecontrolled oil company has become ever smarter—and more market oriented—as the Brazilian government has forced it to operate at arm’s length without special favors. That has not only allowed Petrobras to perform better, but it has also made Brazil’s energy markets function better and with higher security.

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Russia wants Cooperation with the West (1/2)
Putin is encouraging cooperation with the west and sees no ideological differences or cold war between Russia and NATO countries Terence Hunt 06 April 2008 Bush and Putin rule out return to Cold War
http://news.scotsman.com/russia/Bush-and-Putin-rule-out.3952487.jp For his part, Putin made clear he was unhappy about the eastward expansion of the Western military alliance toward Russia. But he summed up his message to Bush and Nato on Friday: "Let's be friends, guys, and engage in an honest dialogue." It was a striking change from Russia's once-angry threats to target missiles on Western capitals and Putin's drive to clamp down on democracy, expand control of the government and the economy, and quash independent news media. After the talks in Bucharest, Bush flew to Croatia's capital, Zagreb, to celebrate Nato's membership invitations to the Balkan countries of Croatia and Albania and an expected future offer for Macedonia to join. In his toast at dinner to welcome Bush, Croatian President Stipe Mesic, a staunch opponent of the war in Iraq, appeared to take a jab at the president by insisting that problems like terrorism, global warming and environmental destruction must be addressed jointly. Bush, in his toast, congratulated Croatia on its Nato membership and praised it for sending troops to Afghanistan. At a square in downtown Zagreb – far from the heavily guarded venues being used for the Bush visit – about 250 people held an anti-war protest, holding banners reading 'USA Nato imperialism' and 'The United States of Aggression'. Bush was in Russia for a social dinner with Putin at the Black Sea resort of Sochi yesterday, and today they will meet for the last time before the Russian leader steps down on May 7. Putin's hand-picked successor, Dmitry Medvedev, will take part in some of the discussions. Putin is expected to continue to wield substantial power as Medvedev's prime minister. It was seven years ago in June that Bush famously declared he had looked into Putin's soul and found him to be honest, straightforward and trustworthy. Relations grew stronger when Putin stood with the US after the 9/11 attacks. But the era of cooperation quickly began to unravel. On Friday, Putin urged Nato leaders to listen to Russia's concerns, particularly its objections to Nato's plans to admit the former Soviet republics of Ukraine and Georgia. "The emergence of the powerful military bloc at our borders will be seen as a direct threat to Russia's security," said Putin. "I heard them saying today that the expansion is not directed against Russia. But it's the potential, not intentions, that matters. "The efficiency of our co-operation will depend on whether Nato members take Russia's interests into account. We want to be heard, and we want see problems that divide us solved." He ruled out a new Cold War, insisting that Moscow wants to be friends with Nato. "None of the global players – Europe, the United States or Russia – is interested in returning to the past," said Putin. "And we have no ideological differences." He highlighted Russia's agreement to facilitate transit of supplies for Nato forces in Afghanistan across Russian territory, while the White House said Bush repeated his frequent assurances that the Cold War is over and Russia is not the enemy. Bush and Putin are expected to announce a "strategic framework" to guide relations towards a less rocky future.

Tensions with Russia won’t undermine cooperation on critical issues Piontkovsky, executive Director of the Strategic Studies Center (Moscow), 07 (Andrei, U.S.-RUSSIAN
RELATIONS: IS CONFLICT INEVITABLE?, http://www.hudson.org/files/pdf_upload/Russia-Web%20(2).pdf) Despite the tension in U.S.-Russian relations, the Russia is a natural strategic ally of the West. Both Russia and the West are interested in halting the advance of radical Islam, stopping nuclear proliferation, and preventing the emergence of a Chinese superpower.

Russia will not enter into a conflict with the west, they want to be perceived as a global mediator Lilia Shevtsova, co-chairs the Russian Domestic Politics and Political Institutions Project (Lilia, U.S.-RUSSIAN
RELATIONS: IS CONFLICT INEVITABLE?, Summer 2007, http://www.hudson.org/files/pdf_upload/RussiaWeb%20(2).pdf) Today the Kremlin has decided to forge a more significant and ambitious role for Russia on the global scene. Hence, several ideas were introduced. First was the idea of Russia as an intermediary capable of resolving crises around the world. For the first time since perestroika, the Kremlin has publicly declared, through its foreign affairs minister Sergei Lavrov, that Russia cannot take sides in global conflicts, that it must act as a mediator. In other words, Russia is not going to join the West.

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Russia wants Cooperation with the West (2/2)
Russia has its own problems it must solve, not interested in going to war. CBC News February 14 2008 No new desire for new Cold War, says Russia’s Putinhttp://www.cbc.ca/world/story/2008/02/14/putin.html
During his marathon 4½-hour appearance before some 1,000 reporters, Putin also insisted Russia was not interested in an escalation of tension with the West reminiscent of the Cold War. Putin, who is scheduled to leave the Kremlin in May, said his country was instead focused on fixing its economic and social problems and boosting internal development. "To suppose that we aspire to return to the times of the Cold War is just too bold a supposition," Putin told reporters. "We are not interested in this."

Russia is keen on cooperation and will work through tough issues like missile defense U.S. Today 2/9/2008 Gates: Russia seeks missile defense solution http://www.usatoday.com/news/world/200802-09-gatesrussia_N.htm Without forecasting any breakthroughs, Defense Secretary Robert Gates said Saturday he believes Russia wants to resolve sensitive security disputes with the United States, including proposed missile defenses in central Europe. Gates also predicted Moscow would "react cautiously" if, as expected, Kosovo declares independence from Russian ally Serbia this month. Russia opposes Kosovo's independence, claiming it would set a precedent worldwide. The United States and many European nations support Kosovo's statehood. "My own view is, and it's just a personal opinion, that I think that the Russians — first of all, they are not going to like it (independence for Kosovo) — but I think that they will react cautiously," Gates told reporters after a private meeting with Sergei Ivanov, the Russian first deputy prime minister. Asked by a reporter if that meant he did not expect Moscow to make "too big of a fuss," Gates replied, "I didn't say that. I just said that I thought they would react cautiously." Gates and Ivanov met during a break in an international security conference. Both were scheduled to deliver speeches Sunday. Gates said his would focus on the challenge of stabilizing Afghanistan and would emphasize that Islamic extremism in the Afghanistan-Pakistan region is a serious threat to Europe. Kosovo's ethnic Albanian leadership has said that it will declare independence from Serbia "in a matter of days," but has never specified the exact date. Serbia regards the province as the cradle of its statehood, and expressions of nationalist anger have increased as the independence declaration approached. Gates said he and Ivanov did not discuss Kosovo, but did talk about other contentious issues, including the U.S. plan for placing missile interceptors in Poland and a tracking radar in the Czech Republic. This past week, Russian Foreign Minister Sergey Lavrov criticized the missile defense proposal. He said in an interview published in a Polish newspaper that the United States was expanding its missile defense system from U.S. territory to northeast Asia and now to European nations close to Russia's borders. This, he said, amounted to an American attempt to encircle its former Cold War adversary. "All of it is concentrating around our borders," Lavrov was quoted as saying. Nonetheless, Gates told reporters he is convinced that U.S.-Russian talks on such issues are worthwhile. "I think that regardless of what's said in public, I think there is still an interest (in Moscow) in pursuing the dialogue, and we are doing that," he said. As Gates and Ivanov posed for cameras before the meeting, they engaged in a bit of small talk that suggested room for humor despite their countries' disputes. Ivanov chuckled as he recounted the upshot of the conference's afternoon debate while Gates was absent. "Everyone pokes his finger at you and us — we are responsible for everything," Ivanov said. Gates laughed and replied, "As usual. Some things never change." Ivanov responded, "Cold War, no Cold War." In a brief interview with American reporters after his meeting with Gates, Ivanov gave no indication of acrimony. "We discussed a lot of serious issues, keeping in mind that we still have a lot in common," particularly with regard to limiting the spread of nuclear weapons and the missiles used to deliver them, Ivanov said. "Also, in the future, arms reduction talks and of course missile defenses" will be discussed further, he said. The missile defense
issue is particularly difficult. Russia has harshly criticized the plan as threatening Russian security. Washington has portrayed the Polish and Czech sites as key to defending Europe and the United States from a potential long-range missile attack by Iran, which currently has no such missiles. The United States is negotiating with the Polish and Czech governments over stationing missile defense components on their territory. At Saturday's conference, Polish Foreign Minister Radek Sikorski said the matter ultimately would be a decision for Poland, not Russia. But he also reiterated his country's position that more consultation with Russia was necessary. "More needs to be done to reassure Russia that the missile defense project does not threaten her," Sikorski said.

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Russia can’t start a war with the West
Russia lacks political and economic power, a opposing ideology, and lacks a different political system to attract anti-American regimes. This means no second cold war. Ingo Mannteufel 20.7.2007 Opinion: No Cold War Sequel http://www.dwworld.de/dw/article/0,2144,2698901,00.html Ingo is an editor for the online newssite deutsche world. In principle, differences of opinion and interests between states are nothing unusual in international politics, and luckily they don't lead to war most of the time. When Russia, the US and European states are feuding to such an extent, it immediately reminds people of the 40-year Cold War that took place in the second half of the last century. Putin's decision to pull out of the CFE treaty could be considered final proof for this since the 1990 agreement is seen as a symbol of the end of the East-West conflict. Despite this, there won't be a new version of the Cold War -- first and foremost because today's Russia, even as the important global energy supplier that it is, is far from having the political and economic power of a Soviet Union. What's decisive is that the philosophical and ideological undertone is missing in the current dispute between Russia and the West. In the confrontation between world communism and liberal democracy, Soviet leaders -- from a Marxist-Leninist viewpoint -- saw themselves on the side of history that would end in the victory of the international proletariat in the communist world revolution. Even if people can only laugh about this today, they shouldn't underestimate this decisive motive for the East-West conflict, as Cold War historians have shown in recent years. It was this opposition of systems that created the impression of a lasting confrontation that engulfed all aspects of life. Neither a functioning liberal democracy nor a market economy governed by rule of law have developed in Russia. But the current Russian system is not based on a carefully devised counter-ideology to western democracy. Quite to the contrary: President Putin is personally insulted when people don't see him as a clear-cut democrat or refuse to treat Russia on a par with G8 democracies, which are considered the club of global capitalism by many. The lacking ideological component in the current dispute between Russia and the West has yet another consequence: Russia has more trouble finding allies in the world as it no longer possesses the global power of attraction of a different political and economical system. Anticolonial liberation movements in developing countries or anti-American regimes no longer see their own future in the Russian role model. That's why Moscow has lost the opportunity to turn its own disputes with the US and Europe into a global confrontation in the sense of the historic Cold War.

Internal constraints prevent Russia from conflicts with the West Bremmer, president of the Eurasia Group, 07 (Ian, RealClearPolitics, April 3, “New Cold War for U.S. with
Russia or China Not on the Horizon”, http://www.realclearpolitics.com/articles/2007/04/new_cold_war_for_us_with_russi.html, 7/12/08) In sum, U.S. officials are likely in coming years to find themselves coping not with China's international strength but with its domestic vulnerabilities. The Soviet Union never faced threats quite like these, and Soviet domestic troubles did not have damaging cascading effects on the U.S. economy. Globalization is highly unlikely to have the same destabilizing effect on Russia, a state that sells enough oil and gas to fill state coffers, to resist the need for massive inflows of foreign investment, and to quell any near-term demand for political change. But the challenges Vladimir Putin's Kremlin now poses for U.S. policymakers will not evolve toward some new Cold War conflict, either.

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US-Russia Cooperation now (1/2)
Washington is committed to working out differences with Russia. Co-op means there will be no new cold war. Associated Press May 14 2007 Rice: No ‘new Cold War’ between U.S., Russiahttp://www.msnbc.msn.com/id/18655038/
Secretary of State Condoleezza Rice said Monday there’s no “new Cold War” between Washington and Moscow, though she acknowledged growing strains ahead of contentious talks with Russian President Vladimir Putin. “It’s time for intensive diplomacy,” said Rice, who meets face-to-face with the Russian president on Tuesday amid major differences over U.S. missile defense plans and Putin’s increasing criticism of American policy. Rice said Washington is committed to working through the differences, notably over U.S. plans for a missile defense system in Europe, Russia’s threat to suspend a major military treaty and Moscow’s opposition to a U.N. plan for Kosovo independence.

Cooperation over anti-proliferation and a pragmatic partnership usher in a new era of positive Russia-US relations Carnegie Endowment for International Peace, 06 (Carnegie Endowment for International Peace, "Nuclear Energy and U.S.-Russian Cooperation," 10-3-6, http://www.carnegieendowment.org/events/index.cfm?fa=eventDetail&id=918, 7-12-8)
On October 3, 2006, the Carnegie Endowment for International Peace hosted a meeting on the US-Russian nuclear energy cooperation with Ambassador Nikolay Spassky, Deputy Head of the Federal Atomic Energy Agency. Jessica Matthews, President of the Carnegie Endowment, chaired the session. The Status of US-Russian Bilateral Relationship Despite the popular narrative, US-

Russian relations are generally good. They have undergone and are undergoing dramatic changes, but the relationship is maturing from an overly romantic partnership to a more pragmatic one. Most people speak of
this change to a more “selective partnership” as a tragedy, but in reality, it is a natural evolution. During the 1990s and indeed continuing into the first terms of Presidents Putin and Bush, the US and Russia shared unrealistic visions of our countries as strategic partners and created an agenda that was beyond implementation. However, the false expectations created by this romanticism led to disappointment; both Russia and the US were unable to deliver on their promises. As Bush and Putin entered their second terms, it became clear that they could not continue to pretend that our countries shared a truly strategic relationship. A new, more

pragmatic partnership has emerged, centered on issues that matter to both of our countries: counterterrorism, non-proliferation, and most importantly energy security. Of course, defining this new
relationship was and still is difficult and presents a major challenge. In many ways, it was easier to maintain a relationship based on platitudes and false pretences, but the key to ensuring the health and stability of our partnership is not lies, but

rather, engagement on practical and technical issues, such as the challenges presented to us in the field of nuclear energy. This new pragmatic relationship has made me much more positive about our relations than I was three or four
years ago. Current Situation of Nuclear Energy The era of Chernobyl is over as two factors have forever changed the framework of the debate about nuclear energy. First, there is significant and growing demand for energy in general and nuclear energy in particular. It is estimated that over the next 20 years demand for energy will increase 50%. Secondly, there have been significant improvements in nuclear technology that have made the generation of nuclear energy far safer and more viable than in the past. The unprecedented growth in the demand for nuclear energy is inherently accompanied by an escalating threat of proliferation. Increasing reliance on nuclear power will require more production of nuclear fuel through enrichment or reprocessing technologies—two proliferation-prone points in the fuel cycle. It is not, therefore, subversive countries such as Iran and North Korea that threaten the current non-proliferation regime, but rather, the overall trends of nuclear technology. Some point to the inadequacy of the NPT as the source of the growing threat of proliferation and proclaim that the NPT is dead. However, the NPT is not dead; it is simply in the midst of a crisis. The crisis arose out of certain contradictions in the NPT that give all countries a right to a closed fuel cycle, while simultaneously producing a danger of more countries developing dual use technologies to meet their energy needs. Any resolution of the current contradiction and the threat of proliferation it causes will require the leadership of the US and Russia. However, we cannot impose limitations on countries seeking to develop nuclear programs; rather they must choose to forgo weapons enrichment voluntarily. Meanwhile, the seemingly easiest solution to the current contradictions, simply amending the NPT, is not a viable option because the NPT is not strong enough to survive the amendment process. It would be impossible to put together a large enough coalition for change, and the treaty would crumble. Nonetheless, in order to manage the unprecedented growth of nuclear technology, it is imperative to

institute voluntary limitations on the use of nuclear technology. The US, Russia, and other nuclear powers have offered new initiatives aimed at solving the main problem of proliferation under the current regime: convincing sovereign nations to forgo their right to enrichment. To succeed, however, any proposal must build trust among nations by envisioning a central role for the IAEA. Moreover, they must be commercially viable; countries will adopt a new structure only if it is profitable. Notwithstanding the differences in the substance of the US and Russian proposals, they both meet these requirements.

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US-Russia Cooperation now (2/2)
US-Russian determination to maintain peace reflected in cooperation over nuclear power United States Department of Energy, 07 (United States Department of Energy, "U.S. and Russia Cooperation Continues on Nuclear Security Newly Signed Fifth Bratislava Report Highlights Most Recent Advances in Nuclear Security and Nonproliferation," 6-28-7, http://www.doe.gov/news/5186.htm, 7-12-8)
WASHINGTON, D.C. – U.S. Secretary of Energy Samuel W. Bodman and Russian Federal Atomic Energy Agency (Rosatom) Director Sergey Kiriyenko today submitted to Presidents Bush and Putin the fifth report on nuclear security cooperation between the two countries. The report is known as the Bratislava Report after the 2005 historic nonproliferation agreement between the two presidents. It details significant work completed by the United States and Russia over the past six months in the areas of emergency response, nuclear security procedures and best practices, security culture, research reactors, and nuclear site security. “This latest report clearly shows that our joint efforts with Russia to secure and minimize the use of highly enriched uranium in research reactors are making the world safer,” Secretary Bodman said. “We are seeing steady progress on converting the world’s research reactors from using highly enriched uranium to using low enriched uranium that cannot be readily used in a nuclear weapon. In addition, work to improve security at facilities with nuclear material will be completed by 2008.” The report, which is delivered to each president two times a year, highlights discussions between the two countries on preparing for nuclear emergencies and developing a strong nuclear security culture. It also includes information about upcoming work to convert a research reactor in Vietnam so that the highly enriched uranium can be returned to Russia. It highlights future efforts to return Russian-origin highly enriched uranium from Poland, Kazakhstan, Hungary, Libya, Serbia, and the Czech Republic. The successful return of over 80 kilograms of United States-origin highly enriched uranium from Australia and Japan is noted in the report. One of the key aspects of the Bratislava agreement two years ago was the adoption of an accelerated schedule for upgrading security at sites with nuclear material in Russia. The report reaffirms each country’s commitment to the accelerated completion schedule and also highlights the recent Rosatom agreement regarding the sustainability of the U.S.-installed security upgrades. During the 2005 meeting in Bratislava, U.S. President Bush and Russian President Putin committed both governments to securing nuclear weapons and material to prevent the possibility that such weapons or materials could fall into the hands of terrorists. The presidents established a group of senior officials to work together on nuclear security issues who would report the status of cooperation to the presidents. The next report is due in December 2007.

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Alt Cause: NMD
The only chance for a cold war between the US and Russia is over the NMD system Russian News and Information Agency, 2007
(“No Cold War if US Keeps Out of Europe, Vows Ivanov” July 4th, 2007, http://en.rian.ru/russia/20070704/68350442.html, Date accessed: July 12, 2008) Russia's deputy prime minister said Wednesday the media could "forget the term Cold War" if the U.S. agreed to Russia's latest missile defense proposal to use a base in Russia instead of Central Europe. "If the proposal [on a new radar in Russia] is accepted, we will have no reason to deploy more missiles in our European regions," including the Kaliningrad Region, a Russian exclave bordering on Lithuania and Poland, Sergei Ivanov told reporters. "After that I will request that journalists forget such terms like 'Cold War'," Ivanov said.

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CP to solve Resource Wars
Only US policy changes can help ensure a lack of resource wars Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) IF RESOURCE wars are actually rare—and when they do exist, they are part of a complex of causal factors—then much of the conventional wisdom about resource policies needs fresh scrutiny. A fullblown new strategy is beyond this modest essay, but here in the United States, at least three lines of new thinking are needed. First, the United States needs to think differently about the demands that countries with exploding growth are making on the world’s resources. It must keep their rise in perspective, as their need for resources is still, on a per capita basis, much smaller than typical Western appetites. And what matters most is that the United States must focus on how to accommodate these countries’ peaceful rise and their inevitable need for resources. Applied to China, this means getting the Chinese government to view efficient markets as the best way to obtain resources—not only because such an approach leads to correct pricing (which encourages energy efficiency as resources become more dear), but also because it transforms all essential resources into commodities, which makes their particular physical location less important than the overall functioning of the commodity market. All that will, in turn, make resource wars even less likely because it will create common interests among all the countries with the greatest demand for resources. It will transform the resource problem from a zero-sum struggle to the common task of managing markets. Most policymakers agree with such general statements, but the actual practice of U.S. policy has largely undercut this goal. Saber-rattling about CNOOC’s attempt to buy Unocal—along with similar fearmongering around foreign control of ports and new rules that seem designed to trigger reviews by the Committee on Foreign Investment in the United States when foreigners try to buy American-owned assets— sends the signal that going out will also be the American approach, rather than letting markets function freely. Likewise, one of the most important actions in the oil market is to engage China and other emerging countries fully in the International Energy Agency—which is the world’s only institution for managing the oil commodity markets in times of crisis—yet despite wide bipartisan consensus on that goal, nearly nothing is ever done to execute such a policy. Getting China to source commodities through markets rather than mercantilism will be relatively easy because Chinese policymakers, as well as the leadership of state enterprises that invest in natural resource projects, already increasingly think that way.

The western world can ensure a lack of war through highlighting dangerous practices and increasing transparency Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) Beyond patience, the West can help by focusing the spotlight on dangerous practices—clearly branding them the problem. There’s some evidence that the shaming already underway is having an effect—evident, for example, in China’s recent decision to no longer use its veto in the UN Security Council to shield Sudan’s government. At the same time, the West can work with its own companies to make payments to governments (and officials) much more transparent and to close havens for money siphoned from governments. Despite many initiatives in this area, such as the Extractive Industries Transparency Initiative and the now-stalled attempt by some oil companies to “Publish What You Pay”, little has been accomplished. Actual support for such policies by the most influential governments is strikingly rare. America is notably quiet on this front.

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Warming increases cooperation over resources
Global warming causes increased cooperation- water proves Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) While there are many reasons to fear global warming, the risk that such dangers could cause violent conflict ranks extremely low on the list because it is highly unlikely to materialize. Despite decades of warnings about water wars, what is striking is that water wars don’t happen—usually because countries that share water resources have a lot more at stake and armed conflict rarely fixes the problem. Some analysts have pointed to conflicts over resources, including water and valuable land, as a cause in the Rwandan genocide, for example. Recently, the UN secretary-general suggested that climate change was already exacerbating the conflicts in Sudan. But none of these supposed causal chains stay linked under close scrutiny—the conflicts over resources are usually symptomatic of deeper failures in governance and other primal forces for conflicts, such as ethnic tensions, income inequalities and other unsettled grievances. Climate is just one of many factors that contribute to tension. The same is true for scenarios of climate refugees, where the moniker “climate” conveniently obscures the deeper causal forces.

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***Random Neg***

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High oil prices are driven by speculators (1/3)
Speculators are driving up the price of oil, there’s still an abundance of available oil Jackson, Agent France Presse economic editor, 08 (Roland, Agent France Presse/News.Com.Au, June 23,
http://www.news.com.au/business/story/0,23636,23906604-31037,00.html, 7/2/08) SAUDI Arabia's King Abdullah has condemned oil speculators at a summit on the spiralling price of crude which called for greater transparency in market dealings. Saudi output has risen to 9.7 million barrels a day (BPD), the king said, vowing to further increase production if necessary to defuse market tensions which have sent the price of a barrel of oil up to almost $US140 - sparking angry protests in several countries. The monarch, who said Saudi Arabia would give $US1.5 billion ($1.57bn) to efforts to ease energy shortages in poor nations, told the 36-nation summit his country was ``very concerned'' about consumers worldwide. He blamed increased oil consumption and taxes on fuel, but said: "Among other factors behind this unjust increase in oil prices is the abhorrent act of speculators acting for their own selfish interests". The summit in the Saudi Red Sea city of Jeddah was the scene of an international debate over the cause of the doubling of oil prices in the past year. The US and other Western powers blamed production shortfalls while Saudi Arabia and other Organisation of Petroleum Exporting Countries (OPEC) members said speculators had played a key role. The final communique by leaders and ministers from the 36 nations called for greater regulation of oil markets and greater investment in refinining capacity. "The transparency and regulation of financial markets should be improved through measures to capture more data on index fund activity and to examine cross-exchange interactions in the crude market,'' the statement said. "An appropriate increase in investment, both upstream and downstream, is necessary to ensure that the markets are well supplied in a timely and adequate manner.'' OPEC was split over whether to follow the Saudi lead in increasing output. Kuwait said it was ready to increase production but the OPEC president - Algeria's Oil Minister Chakib Khelil - insisted this was not necessary. . He told the meeting: "Market fundamentals show us that production has not kept pace with growing demand for oil, resulting in increasing - and increasingly volatile - prices.'' Warning that prices would almost certainly rise further, Mr Bodman said: "In the absence of any additional crude supply, for every 1 per cent increase in demand we would expect a 20 per cent increase in price in order to balance the market.'' German Economy Minister Michael Glos told the summit an increase in production would be "a strongly needed signal to the financial markets to not gamble any more on an increasing oil price". India's Finance Minister P. Chidambaram and Australia's Resources and Energy Minister Martin Ferguson also called for increased output. Kuwaiti Oil Minister Mohammed al-Olaim said OPEC members "will not hesitate'' to increase production if the market needed it. But Mr Khelil said there was enough oil to supply the market. "We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply.'' Mr Khelil said the 13-nation OPEC would consider a production increase at a meeting in September. "We believe speculation, in its noble and not noble terms, has its impact,'' the OPEC chief said, also blaming "uncertainties on the dollar'' for the soaring price. A Saudi source said there was scope for other countries to follow the production increase as there were up to three million barrels of spare capacity within OPEC nations. British Prime Minister Gordon Brown, senior Western leaders at the summit, called for a "new deal'' between consumers and producers. But like many Europeans at the meeting he said production shortages and speculation had to be studied. Mr Brown said the world was going through "the biggest of all three oil shocks'' in recent decades. Saudi Oil Minister Ali al-Nuaimi said the world had enough crude to last "many decades'' and Riyadh would invest $US129bn to be able to produce 15 million BPD. Mr Nuaimi said Saudi Arabia's production capacity would rise to 12.5 million BPD by the end of 2009 and another 2.5 million BPD could be added if demand warranted.

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High oil prices are driven by speculators (2/3)
Eliminating excess speculation would lower price per barrel to $65 AP, Associated Press, 08 (Associated Press, June 25, Speculators Deflect Blame for Oil Prices,
http://www2.tbo.com/content/2008/jun/25/bz-speculators-deflect-blame-for-oil-prices/?news-money, 7/2/08) WASHINGTON - Don't blame us. That's the message financial managers responsible for millions of Americans' retirement benefits delivered Tuesday to lawmakers who are increasingly blaming speculation for record fuel prices. Congress has zeroed in on institutional investors as the culprit for the $4-plus gas prices smothering U.S. businesses and consumers. Pension funds, Wall Street banks and other large investors that do not actually use fuel commercially have increasingly pumped money into contracts for oil as a hedge against inflation when the dollar falls. That transition from stocks, bonds and more traditional investments also has provided the so-called speculators with very healthy returns in recent years. A growing list of lawmakers is convinced the influx of speculative money has inflated actual prices to the point they no longer reflect true supply and demand. Previously silent on the issue, pension fund managers moved Tuesday to head off an effort to ban them from investing in commodities. Such a ban would be like "robbing Peter to pay Paul," by threatening "the retirement funds of the very workers the proposal is intended to help," said William Quinn, chairman for the Committee on the Investment of Employee Benefit Assets, which represents 110 private sector pension plans that manage $1.5 trillion. Senate Homeland Security and Governmental Affairs Committee Chairman Sen. Joe Lieberman, I-Conn., outlined several proposed restrictions on institutional investors, including prohibiting index funds from investing in commodity futures. Quinn said the pension plans have less than 1 percent of their assets in commodities. He added that pension funds make long-term investments in futures markets, and should not be compared with speculators. Pension plans for state and local government employees hold just 5 percent of their $3 trillion in assets in alternative investments such as commodities, according to data from the National Association of State Retirement Administrators. The group says more than 90 percent of members' assets are in stocks and bonds. The defense from pension fund managers may have come too late as many lawmakers appear to have concluded such investors deserve much of the blame for escalating commodity costs. At least nine bills aimed at curbing speculation in oil contracts have been introduced in Congress in recent weeks. Lieberman said Tuesday that he hoped to release his legislation after the July 4th recess. Many of the bills would require speculators to put more money upfront to trade futures contracts and close loopholes that allow investors to dodge U.S. regulations by using overseas exchanges or over-thecounter swap trades. Michael Masters, managing member of the hedge fund Masters Capital Management, said eliminating excessive speculation could lower oil prices from the current $138 a barrel to about $65, below where the commodity was trading a year ago. "Money moves prices and money moves markets," said Masters, whose fund does not invest in oil futures. "If you want to understand why markets are moving up, then you need to follow the money." In the last five years, investments in index funds tied to commodities grew to $260 billion from $13 billion, he said.

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High oil prices are driven by speculators (3/3)
Speculation of consumption going down causes the price of oil to plunge Leonard, Senior Editor, 06
(Andrew, How The World Works, “The Oil Bubble,” 10/21, http://www.salon.com/tech/htww/2006/08/21/oil_bubble/index.html, date accessed: 7/2/08) The theory goes like this: First, there's the supposition that some portion of the spike in oil prices over the last couple of years is speculator driven. Traders are stockpiling oil for sale to buyers at some later date, hoping that in the intervening period prices will continue to rise. Such speculation naturally pushes the price of oil even higher. This is a classic pattern in markets, going back at least as far as the great tulip mania of the 17th century, and there's no reason why oil should be any different from any other traded commodity. And as with all bubbles, once traders start thinking that the price might fall, whoooosh -- the air rushes out.

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A2: Speculators responsible for high oil prices (1/2)
Speculators not to blaim for high oil prices, uninformed government policy is Birger, Senior Writer, 08 (Jon, Fortune/CNN Money, July 2, Hunting for Oil Villians,
http://money.cnn.com/2008/07/01/magazines/fortune/birger_hunt.fortune/index.htm?postversion=2008070205, 7/2/08) NEW YORK (Fortune) -- "Make no mistake about it," U.S. Rep. Bart Stupak, D-Mich., said Monday while chairing a meeting of the House Energy and Commerce subcommittee on Oversight and Investigations. "Excessive speculation in commodity markets is having a devastating effect at the gas pump that is rippling through our entire economy." Here's a suggestion: The next time a Congressional committee wants to hold a hearing on how "speculators" are driving up oil prices, each committee member should first be required to demonstrate - preferably in their opening remarks - a basic understanding of the mechanics of futures trading. Even better, they should be required to explain in detail how it is that investors who never take delivery of a single barrel of crude - and thus never remove a drop of oil from the open market - are causing record high oil prices. If there were such a requirement, I guarantee we'd never again see a circus like the one Stupak presided over Monday. "Do I think [Washington politicans] understand the role of futures markets - how they facilitate price discovery and the transference of risk?" asks former U.S. Commodities Futures Trade Commission chief economist Gerald Gay. "No, they're clueless - at least most of them." Bad public policy If our representatives did understand the oil markets, they'd know that the true telltale sign of a speculative bubble is not rising trading volumes but rising oil inventories. Speculators would be hoarding oil building up inventories either in anticipation of higher prices or as part of a scheme to drive prices there. Yet according to the Department of Energy, U.S. oil inventories are now at below-average levels. U.S. oil stocks stand at 309 million barrels, versus 330 million in June 2005. So far, lawmakers have introduced nine different bills targeting oil speculators, though for the most part their prescriptions have been milder than their over-the-top rhetoric . Bashing futures traders may well be good politics, but it's stupid public policy. By providing a mechanism for locking in prices, the futures market makes it easier for oil companies to make costly investments in new production - which is the key to lowering prices at the pump. Futures trading also discourages hoarding in an otherwise tight market. Without speculators willing to take the other side of so many futures contracts, oil refiners and other end-users might be inclined to ramp up their spot-market purchases and store more oil as a hedge against further price increases. And, of course, any increased draw on current supplies would lead to even higher oil and gasoline prices. Indeed, without a futures market, I believe we'd be decrying oil at $200 a barrel oil instead of oil at $135. What do you think? Are 'speculators' scapegoats? A more basic misconception in Washington involves what these so-called speculators are really buying. They're not buying oil, they're buying futures, and this is a crucial distinction. A futures contract is an agreement between a buyer and a seller to deliver a set amount of oil - typically 1,000 barrels - at a specific price on a specific date. The value of that contract rises and falls, depending upon market conditions, right up until the date of delivery. Thing is, the pension funds, index funds, hedge funds and other so-called speculators almost never take delivery of any oil. The typical investment fund will buy, say, the August oil future and then sell it days before it comes due - typically rolling over the proceeds into the next month's contract. "For speculators to be propping up the price of oil, they somehow have to be taking physical oil off the market," says energy markets expert Craig Pirrong, a finance professor at the University of Houston's Bauer College of Business.

↓ Continued ↓

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A2: Speculators responsible for high oil prices (2/2) ↑ Birger Continued ↑
Pirrong points out that when the federal government decided to bolster cheese prices in the 1970s, it did so by purchasing warehouses full of cheese and keeping it off the market. "Well, where's the cheese now?" Pirrong asks. "Where's all the oil that the speculators have held off the market?" Even if you believe there's no way that oil trading volumes could be soaring without influencing oil prices, remember that influence then has to run two ways. If an index fund is indirectly driving up spot oil prices every time it buys a future, then the converse must be true, too - there must be an equal and opposite downward push on spot prices every time that future is sold. In other words, futures market critics can't have it both ways. There's something else politicians conveniently overlook: futures trading requires two to tango. For every investor who is betting oil prices will go up, there also needs to be an investor willing to take the opposite side of that bet. In the past, there have been times when the overwhelming majority of speculators were "longs" betting on higher prices, while their commercial-trader counterparts - i.e. traders working for oil refiners, airlines, and other end-users of oil - were the "shorts" betting prices would fall. But as New York Mercantile Exchange Chairman James Newsome explained to Stupak's Congressional committee, today's speculators are evenly split between shorts and longs. Moreover, the percentage of futures contracts held by speculators (as opposed to commercial traders) "actually decreased over the last year," Newsome told the subcommittee, "even at the same time that [oil] prices were increasing." It's time to find a new scapegoat. My own nominee: Congress. But that's another column.

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Gas Tax CP
CP: Huge oil tax combined with funds to prop up oil regimes during the transition Victor, professor at Stanford Law School; director of the Program on Energy and Sustainable Development; senior fellow at the Council on Foreign Relations, 07 (David G., The National Interest/Columbia International
Affairs Online, Nov/Dec, What Resource Wars?, http://www.ciaonet.org/cgibin/dkv/ciao/querystring.pl?rq=0&ht=0&qp=&col=ciao&qc=ciao&qt=india+resource+war&x=0&y=0, 7/3/08) With regard to the flow of resources to terrorists—who in turn cause conflicts and are often seen as a circuitous route to resource wars—policymakers must realize that this channel for oil money is good for speeches but perhaps the least important reason to stem the outflow of money for buying imported hydrocarbons. Much more consequential is that the U.S. call on world oil resources is not sustainable because a host of factors—such as nationalization of oil resources and insecurity in many oil-producing regions—make it hard for supply to keep pace with demand. This yields tight and jittery markets and still-higher prices. These problems will just get worse unless the United States and other big consumers temper their demand. The goal should not be “independence” from international markets but a sustainable path of consumption. When the left-leaning wings in American politics and the industrycentered National Petroleum Council both issue this same warning about energy supplies—as they have over the last year—then there is an urgent need for the United States to change course. Yet Congress and the administration have done little to alter the fundamental policy incentives for efficiency. At this writing, the House and Senate are attempting to reconcile two versions of energy bills, neither of which, strikingly, will cause much fundamental change to the situation. Cutting the flow of revenues to resource-rich governments and societies can be a good policy goal, but success will require American policymakers to pursue strategies that they will find politically toxic at home. One is to get serious about taxation. The only durable way to rigorously cut the flow of resources is to keep prices high (and thus encourage efficiency as well as changes in behavior that reduce dependence on oil) while channeling the revenues into the U.S. government treasury rather than overseas. In short, that means a tax on imported oil and a complementary tax on all fuels sold in the United States so that a fuel import tax doesn’t simply hand a windfall to domestic producers. And if the United States (and other resource consumers) made a serious effort to contain financial windfalls to natural-resources exporters, it would need—at the same time—to confront a more politically poisonous task: propping up regimes or easing the transition to new systems of governance in places where vacuums are worse than incumbents. Given all the practical troubles for the midwives of regime change, serious policy in this area would need to deal with many voids.

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

200 Oil Toolkit

Can’t replace Oil effectively
Oil has no replacement in terms of self-sustainability, price, and sheer volume Church, Independent Energy Analyst for Counter Currents, 06 (Norman, Powerswitch, "Major Problems of Surviving Peak Oil," 10-23-6, http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2026&It emid=2, 7-2-8)
The popular assumption is that these renewable energy sources will smoothly replace fossil fuels as these become scarce, thanks to our inherited technological expertise. However, although these all produce electricity they are not liquid fuels. On top of this we must remember that the energy budget must always be positive and output must exceed input. Too much tends to be expected of renewable energy generators today, because the contribution of fossil fuels to the input side is poorly understood. For example, a wind turbine is not successful as a renewable generator unless another similar one can be constructed from its raw materials using only the energy that the first one generates in its lifetime, and still show a worthwhile budget surplus. Or, if corn is grown to produce bioethanol, the energy input to ploughing, sowing, fertilizing, weeding, harvesting and processing the crop must come from the previous year's bioethanol production. Input must also include, proportionately, mining and processing the raw materials and building the machines that do the work, as well as supporting their human operators. There is nothing that can replace cheap oil for price, ease of storage, ease of transportation and sheer volumes in the timeframe we need.

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

201 Oil Toolkit

Energy Independence is Impossible
Energy independence bad, not only is it near impossible, if it is achieved it disrupts the entire global market Vanderkam Staff writer, ‘08 The American “The Myth of Energy Independence” February 27th 2008 http://www.american.com/archive/2008/february-02-08/the-myths-of-2018energyindependence2019 Accessed: 7/6/08
Americans disagree on taxes, the war in Iraq, and a host of other issues. But politicians of all stripes have embraced “energy independence” as a winner. In President Richard Nixon’s 1974 State of the Union address, he said that the United States should “not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving.” This sentiment has since been echoed by countless Republicans and Democrats. There’s just one problem, says Robert Bryce: “Energy independence is hogwash.” In his new book, Gusher of Lies (PublicAffairs), Bryce challenges the notion that America can ever be totally “independent” of the global energy market. It is neither practical nor desirable, he argues. Repeated ad nauseam as a campaign slogan, the concept of energy independence keeps us from having an honest discussion about globalization, economics, and foreign policy. Americans will be best served by embracing global interdependence, and getting government out of the energy business as much as possible. Bryce, a fellow at the Institute for Energy Research and the managing editor of Energy Tribune magazine, makes a convincing case. For starters, it’s unclear why “energy independence” should be prized above other forms of independence. Americans depend on global markets for the food we eat, the clothes we wear, and the raw materials used in everything from electronics to medicines. Like these other markets, the international energy market is highly intertwined and difficult for any single country to disrupt. The 1973 Arab oil embargo did not cause lines at U.S. gas pumps; Nixon’s price controls did. Iran has never had a problem finding a market for its oil, despite U.S. attempts to isolate the Islamic Republic since 1979. Indeed, even Saudi Arabia imports some of its energy. Americans don’t like this lack of control. That’s why we cheer when politicians talk about “energy independence.” But the reality, as Bryce quotes former UN secretary general Kofi Annan saying, is that “arguing against globalization is like arguing against the laws of gravity.” *Robert Bryce, the writer of the book in question is a fellow at the institute for energy research and the managing editor of energy tribune magazine

Gonzaga Debate Institute 2008
Lacy/Symonds/Bowen

202 Oil Toolkit

GW Fear / AE boost undermines Oil Refining
Turn: The belief in global warming causes gasoline prices to rise because it discourage investors from building petroleum refining capacity Marxsen, Associate Professor of economics at the University of Nebraska, Kerney, 2008 (Craig S, “Political
Contrived Gasoline Shortage,” The Independent Review, Vol. 12, Iss. 4, Spring 2008, pg. 537) The earth is hardly exhausting the resources to make abundant, affordable gasoline. The technology to make gasoline, even when oil wells run dry, already exists. Rising gasoline prices will automatically set the stage, so that synthesizing gasoline from a wide variety of source materials will become increasingly profitable. However, the enjoyment of plentiful gasoline may not be in our future in spite of its feasibility. Political interference with the construction and operation of refineries and synthesizing plants places the world at the mercy of those who believe they must deprive humankind of cheap fossil fuels. Their persistent obstruction of the construction and expansion of petroleum refineries has already proved capable of contriving a mild energy crisis. Because of the hidden causality of our presently looming, more serious energy crisis, such investment-inhibiting interventions are apt to go far beyond the imposition of deprivations that an enlightened public would willingly tolerate. The alarming rise in the price of gasoline and other motor fuels thus is hardly the result of running out of materials available in the earth's bounteous fossil deposits-the natural-resource exhaustion that The Limits to Growth predicted. Nor does the world face an imminent apocalypse from carbon dioxide "pollution." Substantial projected costs per capita from carbon dioxide emissions remain so remote that virtually zero discount rates are required to give them more than modest present values today. The imminent pollution crisis foretold in The Limits to Growth has proved to be a phantom. Ironically, gasoline prices are rising for the most part because of a belief in an almost self-fulfilling doomsday forecast. Devotees of the collapse hypothesis have helped propel a regulatory campaign to discourage investment in petroleum-refining capacity, naively hoping both to head off exhaustion of fossil resources and to prevent an alleged global-warming crisis they fear will come after the lifetimes of people now living. The real threat of economic collapse, however, springs from the fright-induced failure to invest in refining and fuel-synthesizing capacity. Belief in the catastrophists' collapse hypothesis thus itself threatens to bring real catastrophe to our modern industrial world.

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