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MSDI 2008 1

Louie/Oz Oil Disadvantage

Oil Disadvantage
***1nc’s***....................................................................................................................................................................3
Oil Prices 1nc..................................................................................................................................................................4
Renewables 1nc...............................................................................................................................................................5
***Links***....................................................................................................................................................................6
Reduce Demand Reduces Prices.....................................................................................................................................7
US Consumption Key.....................................................................................................................................................8
Small Change Hurts Economy........................................................................................................................................9
Perception Key to Prices...............................................................................................................................................10
US Key OPEC..............................................................................................................................................................11
US Key World Production.............................................................................................................................................12
***Russian Oil***........................................................................................................................................................13
Russian Economy Good................................................................................................................................................14
High Oil Prices Key Economy......................................................................................................................................15
Decrease Oil Prices Collapses Russian Economy.........................................................................................................16
Oil Key Russian Economy............................................................................................................................................17
High Prices Key Stability..............................................................................................................................................18
US-Russian Relations Impact Module.........................................................................................................................19
Nationalism Impact Module..........................................................................................................................................20
Russian Collapse Impact...............................................................................................................................................21
A2: Russia Has No Oil..................................................................................................................................................22
***Renewables***.......................................................................................................................................................23
Low Oil Dooms Renewables........................................................................................................................................24
US Modeled..................................................................................................................................................................25
US Action Jumpstarts Political Will..............................................................................................................................26
A2: China Alternative Causality...................................................................................................................................27
US Key..........................................................................................................................................................................28
***Affirmative Answers***.........................................................................................................................................29
***Oil Generics***......................................................................................................................................................31
No Internal: Price Volatility..........................................................................................................................................32
Oil 2ac...........................................................................................................................................................................33
Oil 2ac...........................................................................................................................................................................34
Oil 2ac...........................................................................................................................................................................35
Extend: Peak Oil...........................................................................................................................................................36
Extend: Global Demand................................................................................................................................................37
Extend: Commodity Exchange.....................................................................................................................................38
Extend: OPEC...............................................................................................................................................................39
Extend: China................................................................................................................................................................40
High Prices Inevitable – Terrorism...............................................................................................................................41
***Russian Oil***........................................................................................................................................................42
Russia 2ac.....................................................................................................................................................................43
Russia 2ac.....................................................................................................................................................................44
A2: Russian Economy...................................................................................................................................................45
A2: Russian Oil Price DA: Defense..............................................................................................................................46
A2: Russian oil price DA: Econ bounce back...............................................................................................................47
A2: Russian oil price DA: Numerous Checks..............................................................................................................48
Low oil prices good: Russian Economic Reform 1ar...................................................................................................49
High oil prices bad: Hurt Russian Economy ................................................................................................................50
***Renewables***.......................................................................................................................................................51
Renewables 2ac.............................................................................................................................................................52
A2: Warming.................................................................................................................................................................53
Renewbles Now Bad.....................................................................................................................................................54
Renewables Now bad: Not Enough Info.......................................................................................................................55
Now Not Key................................................................................................................................................................56
Renewables Fail............................................................................................................................................................57
Renewables Fail ...........................................................................................................................................................58

MSDI 2008 2
Louie/Oz Oil Disadvantage

Renewables Fail: Dependability...................................................................................................................................59
Renewables Fail: Dispatchability..................................................................................................................................60
Renewables Fail: Power Density..................................................................................................................................61
Renewables Fail: Not Competitive...............................................................................................................................62
Renewables Fail: Not Competitive...............................................................................................................................63
Renewables Fail: Not Competitive...............................................................................................................................64
Renewables Not Solve..................................................................................................................................................65
Renewables Not Solve Climate.....................................................................................................................................66
Renewables Not Solve Climate: 3rd World..................................................................................................................67

MSDI 2008 3
Louie/Oz Oil Disadvantage

***1nc’s***

since the structure of the Russian Federation makes it virtually certain that regional conflicts will continue to erupt. Reformers tout privatization as the country's cure-all. arms control initiatives that may have been unpalatable during the Cold War should now be reconsidered. To guard against a conflict in Saudi Arabia. Summer 2003 The improved appearance of Moscow (although not the rest of the country) is indisputable. Twenty-two percent of Russians live below the official poverty line (earning less than $ 70 a month). Washington must do more to reduce the amount of nuclear weapons and fissionable material that could be lost. and medical care. or used in the chaos of civil war. including the expansion of U. it reached 9. especially in an era of dollar-a-gallon gasoline.” High oil prices are key to the Russian economy. A new emphasis on domestic missions has created an ideological split between the old and new guard in the military leadership. Department of Energy releases its weekly figures on American oil use. however. Indeed. while Saudi oil is cheap and available). of political science at Johns Hopkins) 1999. Every dollar difference in the price of oil translates into roughly $1 billion in budget revenue.S. Three-quarters of them already have their own constitutions.personal friendships between government leaders and military commanders. With the economy collapsing. The United States should take action now to prepare itself for civil war in key states. Just as the sheer brutality of the last Russian civil war laid the basis for the privations of Soviet communism. but it is mainly a product of the high price of oil. A future conflict would quickly draw in Russia's military. For this reason. nor is anything left to chance. the United States should lead the effort to reduce Western dependence on Saudi oil. And it is hard to think of anything that would increase this threat more than the chaos that would follow a Russian civil war. but in a land without well-defined property rights or contract law and where subsidies remain a way of life. America should not worry about making a profit on the plutonium and enriched uranium it buys. it is not at all clear which side the military would support. The fragile Russian economy is the only thing holding back a Russian civil war and a worldwide nuclear war. price decrease will collapse the Russian ecconomy The National Interest. every oil state and company in the world keeps an unblinking watch on the United States and strains to find a sign of anything — from a shift in energy policy to a trend toward smaller cars to an unusually mild winter —that might affect the colossal U. Either way. The End of Oil. the prospects for transition to an American-style capitalist economy look remote at best. no decision of any significance is made without reference to the U. increasing the risk that disgruntled generals may enter the political fray and feeding the resentment of soldiers who dislike being used as a national police force. In the Soviet days civilian rule kept the powerful armed forces in check. republics feel less and less incentive to pay taxes to Moscow when they receive so little in return. unemployment scarcely existed. This does not mean. the GDP has fallen by 50 percent. Divining the military's allegiance is crucial. Draftees serve closer to home. groups and states. strategic oil reserves (which could be done now.5 percent in 1997 with many economists declaring the true figure to be much higher.S. Massive flows of refugees would pour into central and western Europe. pg. and oblasts grow ever more independent in a system that does little to keep them together. Modern Russia can neither collect taxes (it gathers only half the revenue it is due) nor significantly cut spending.S. Soldiers grow ever more dependent on local governments for housing. a second civil war might produce another horrific regime. Washington will need feasible evacuation plans for hundreds of thousands of Americans in that country. the outbreak of civil war itself may be discouraged. If the price should fall significantly and stay relatively low. the morale of Russian soldiers has fallen to a dangerous low. as it did in much of the 1980s and 1990s. and reviving moribund efforts to find oil alternatives. Newly enhanced ties between military units and local authorities pose another danger. Contingency plans for closing the Mexican-American border should be considered. krais.000 nuclear weapons and the raw material for tens of thousands more. Second. given the risk of accidental or unauthorized launchings. This will require a mixed strategy. Within Russia. a high price for oil has therefore become the key to the government's ability to balance the budget. Russia's condition is even worse than most analysts feared. Strong ethnic bonds promoted by shortsighted Soviet policies may motivate non-Russians to secede from the Federation. How and where the United States would enter the fray would of course be determined by circumstances.S. but just get the goods out of Russia as fast as possible. None of this will be easy. policymakers and academics has meant a lack of response and policy options. Such dispersal of nuclear weapons represents the greatest physical threat America now faces. mere perception of U. First. Russia's 89 republics. nearly all of which make some claim to sovereignty. American policymakers should contemplate agreements to reduce the total number of Russian (and American) nuclear weapons. Steven David (Prof. power devolves to the periphery. the world’s oil players watch the American oil market as attentively as palace physicians once attended the royal bowels: every hour of every day. the government has managed to prevent the loss of any weapons or much material. Armed struggles in Russia could easily spill into its neighbors. And the possibility of a Mexican civil war raises the issue of American intervention. when the U. in scores of sites scattered throughout the country. making weapons and supplies available to a wide range of anti-American Moscow's already weak grip on nuclear sites will slacken. however. Chechnya's successful revolt against Russian control inspired similar movements for autonomy and independence throughout the country. Russia will be plunged into a severe economic crisis. The Nunn-Lugar program. by contracting to store warheads away from missiles).MSDI 2008 4 Louie/Oz Oil Disadvantage Oil Prices 1nc Uniqueness: Oil Prices are high (Insert some evidence here that says oil prices are stabilizing at a high amount) Small changes to US consumption are key to international oil markets. Damage from the fighting. even the stoic Russian people will soon run out of patience. civil war is likely. energy expert and writer for Harpers. As the central government finds itself unable to force its will beyond Moscow (if even that far). To respond to conflict in Mexico. economic deterioration will be a prime cause.S. food. No nuclear state has ever fallen victim to civil war. Meanwhile. stolen. and should intensify efforts to develop an effective defense against missile attacks. Were a conflict to emerge between a regional power and Moscow. but it must be accelerated. For Russia. As a first measure. and wages. Doing so may require unambiguous and generous American support for a regime that finds itself under assault. however. Though the inadvertent side effects of internal conflicts cannot be deterred. Foreign Affairs If internal war does strike Russia. consumption. but it is not premature to give serious thought to the prospect. the difficulties of preventing internal war pale in comparison to the problems of coping with its effects.S. particularly attacks on nuclear plants. ten years ago. but even without a clear precedent the grim consequences can be foreseen. Or it may require Washington to ease out unsustainable leaders (the Philippines' Marcos or Indonesia's Suharto) once their time has clearly passed.even though in decline -. From 1989 to the present. America must reduce the chances that States. would poison the environment of much of Europe and Asia. American policymakers should work with governments of threatened states to prevent domestic conflict from erupting. but it makes more sense than continuing to rely on an energy source so civil conflict there will unleash nuclear weapons against the United vulnerable to the ravages of civil war. housing. “the market makes up its mind whether to be bearish or bullish. . Most alarming is the real possibility that the violent disintegration of Russia could lead to loss of control over its nuclear arsenal . Drastic cuts in spending mean inadequate pay. the consequences would be even worse. But with the Communist Party out of office. what little civilian control remains relies on an exceedingly fragile foundation -. market. 95 Within the oil world. Lack of attention to the threat of civil wars by U. As the massive devaluation of the ruble and the current political crisis show. and new laws have increased local control over the armed forces. If conditions get worse. to deprive the Russians of the ability to quickly launch a nuclear strike (for example.2004. Russia retains some 20. A Moscow responds with force. as one analyst puts it. If war erupts. In a society where. pay state employees and repay Russia's foreign debt. If these rebellions spread and the consequences for the United States and Europe will be severe. the most important day of the week for oil traders anywhere in the world is Wednesday. An embattled Russian Federation might provoke opportunistic attacks from major power like Russia -. locating new suppliers (such as the Central Asian republics). enemies such as China. oil use decrease will collapse prices Paul Roberts. that Washington can or should do nothing at all. Should Russia succumb to internal war. So far. is a good start. and when. under which the United States buys Russian nuclear material to use and store in America.does not suffer civil war quietly or alone.

and a phase-in of clean energy sources. the rise in sea level could then be a lot more than five or even ten centimetres. these estimates were a little overstated. scientists first started to predict that temperatures would increase somewhere in the order of between four and six degrees by 2080.. In the light of modern records.. 4/20. at one point even going beyond 28 dollars per barrel. like oxygen. principally carbon dioxide. according to Prof Benton. Finally. which cause global The end-Permian mass extinction is now thought to have been caused by gigantic volcanic eruptions. There needs to be an immediate phase-out of coal. the head of Earth sciences at Bristol University. 12/15/2003. "These instruments are quite precise and show that predictions of the consequences of global warming are certainly observable. It's estimated that fewer than one in ten species survived. and less is being removed by the rest of nature because. which today still are those in the Persian Gulf. cheap oil is a curse for them too.." says Norbert Allnoch. Up to six degrees of warming is now predicted for the next century by United Nations scientists from the Intergovernmental Panel on Climate Change (IPCC) if nothing is done about emissions of the greenhouse gases. oil and gas. Consumers will only turn to renewables if it is apparent that high oil prices are permanent Deutsche Presse-Agentur." environmentalists said yesterday they were appalled that a disaster of such magnitude could be repeated within this century because of human activities.or with the development of new oil regions. However. it increases consumer dependence on a limited group of countries with the lowest production costs. including solar cells.which are all very expensive -. there were roughly 280 parts per million (ppm) of carbon dioxide in the atmosphere.MSDI 2008 5 Louie/Oz Oil Disadvantage Renewables 1nc Low oil prices undercut investments in renewables Leonardo Maugeri. "Certainly in the past two decades we have now recorded rises in sea levels in the region of one or two millimetres a year which are measured by tide gauges at various sites." . "By the end of the century." Modern predictions of the apocalyptic consequences of global warming and climate change due to increases in carbon dioxide first began to circulate in the early 1980s. an author who has written extensively on global warming and recently travelled around the world cataloguing impacts of climate change. possibly due to human activity. Oil & Gas Journal Hysteria aside." He added: "Much Climate experts and land has in the past been reclaimed from the sea. and 45cm by 2070. a senior researcher with the Tyndall Climate Research Centre at the University of East Anglia. and it took 100 million years for species diversity to return to former levels. Reduction of vegetation. "Geologists are only now coming to appreciate the severity of this global catastrophe and to understand how and why so many species died out so quickly. which would today lead to the loss of animals such as hippos. according to new evidence. More carbon dioxide is being pumped into the atmosphere as the human population grows and turns to heavy industry. At the moment. Regenerative energy is a grab-bag term to cover a wide range of alternatives to fossil or nuclear fuels. "Each year is now pretty much an exceptional one by previous standards. in global terms. soil erosion and the effects of massively increased rainfall wiped out the lush "The end- diverse habitats of the tropics. It hampers any possibility of dealing with new energy alternatives to oil -. and loss of species diversity spread out from there. which warming. Only when the expectation sets in that "over the long term will there be higher oil prices" can a change in consumers' habits be expected. "This is a global emergency. and a member of the executive council of the Center for Social Investment Studies. it doesn't matter where this gas comes from. director of the International Economic Forum for Regenerative Energy (IWR). "We are heading for disaster and yet the world is still on fossil fuel autopilot. then that gives us the greenhouse effect and leads to the warming with all the other consequences. a senior fellow at the Foreign Policy Association. In the mid-1980s. Sea levels were also predicted to rise 20cm by 2030. triggered a "runaway greenhouse effect" and nearly put an end to life on Earth.will first set in when the 30 dollar (per barrel) mark is exceeded.of not promoting any form of energy-saving. "The sequence of what happened then is different from today because then the carbon dioxide came from massive volcanic eruptions. The new finding is revealed in a book by Professor Michael Benton. Researchers at Bristol University have discovered that a six-degree increase in the global temperature was enough to annihilate up to 95 per cent of species which were alive on Earth at the end of the Permian period. degree in petroleum economics and a PhD in international political economy. Mark Lynas. Dr Ian Brown. adds Allnoch of the Muenster-based think tank. "People can no longer ignore this looming catastrophe. such as in the Forth estuary. the heat produced can therefore not be re-radiated back into space. and while this is worrisome to most people. After the sun's rays have warmed the Earth and sea." he said. global vegetation which removes the damaging gas is in retreat. senior fellow at the World Economic Laboratory at MIT. it is probably in the order of about one and a half millimetres per year. one sector of German industry is expectantly rubbing its hands: the renewable energy companies.and particular those of the US -. Today. Carbon dioxide is. Shift to renewables or extinction James Reynolds June 18 2003 “EARTH 'IS HEADING FOR MASS EXTINCTION IN JUST A CENTURY”." Tropical latitudes were the first areas of the Earth to feel the effect of the warming. ENI SPA's senior vice-president of corporate strategies and international relations. However. 251 million years ago. "An increased use of regenerative energies and a change in consumer behaviour. When the industrial revolution began about 200 years ago. It maintains Western habits -. He added: Permian extinction event is a good model for what might happen in the future because it was fairly non-specific. hydroelectricity. said: "More or less every year now we have a temperature which is higher than the previous year and the Met Office has predicted this year that there is a 50 per cent chance it will be the warmest on record. "Sea-level rise is more complicated because we have a shorter record. Prof Benton said: "The end-Permian crisis nearly marked the end of life. there are 350ppm. elephants and all of the primates. the fact is that if it is pumped into the atmosphere in high volumes. and those areas are now looking increasingly vulnerable. whereas today it is coming from industrial activity. wind power and bio-gas. 2002 Oil prices have steadily risen since the start of this year. The Scotsman THE worst mass extinction in the history of the planet could be replicated in as little as a century if global warming continues. Conditions in what geologists have termed this "post-apocalyptic greenhouse" were so severe that only one large land animal was left alive. translucent to sunlight but opaque to infra -red radiation. cheap oil has always been and remains a curse for industrialized countries and the most elusive enemy of oil security. said the findings must be a wake-up call for politicians and citizens alike.

MSDI 2008 6 Louie/Oz Oil Disadvantage ***Links*** .

MSDI 2008 7
Louie/Oz Oil Disadvantage

Reduce Demand Reduces Prices
Fluctuations in US energy demand send oil prices into a tailspin
Paul Roberts, energy expert and writer for Harpers,2004, The End of Oil, p 14-15
In writing this book, I have focused on all aspects of the energy economy — the past and present of energy, the technology and business of
energy, and the major players. I’ve studied the big energy producers, like Saudi Arabia and Russia, who control most of the world’s oil reserves
and who will play a critical role in the transition to a post-oil economy. I’ve looked in depth at China and India, two energy paupers whose
enormous populations and growing economies will nonetheless make them the biggest energy players of the twenty-first century. I have
examined Japan and Germany, countries that, lacking their own domestic oil supplies, have adopted energy-efficient policies and have fostered
a culture that accepts if not embraces a low-energy way of life. But by necessity, much of this book will focus on the United States. For all that
the new energy economy is an international issue, no nation will play a greater role in the evolution of that economy than ours. Americans are
the most profligate users of energy in the history of the world: a country with less than 5 percent of the world’s population burns through 25
percent of the world’s total energy. Some of this discrepancy is owing to the American economy, which is bigger than
anyone else’s and therefore uses more energy. But it is also true that the American lifestyle is twice as energy-intensive as that in
Europe and Japan, and about ten times the global average. The United States is thus the most important of all energy players: its enormous
demand makes it an essential customer for the big energy states like Saudi Arabia and Russia. Its large imports
hold the global energy market in thrall. (Indeed, the tiniest change in the U.S. energy economy — a colder winter,
an increase in driving, a change in tax law —can send world markets into a tailspin.) And because American power flows
from its dominance over a global economy that in turn depends mainly on oil and other fossil fuels, the United States sees itself as having no
choice but to defend the global energy infrastructure from any threat and by nearly any means available — economic, diplomatic, even military.

Decreased US demand decreases oil prices and bankrupts states like Mexico and Algeria
Paul Roberts, energy expert and writer for Harpers,2004, The End of Oil, pg. 323
The last time the United States got really serious about energy efficiency after the 1974 oil price shocks U.S. oil
— —

use fell so low that OPEC was nearly wiped out. A more permanent reduction — even if partly offset by rising
demand in the fast-growing Asian economies —would completely change the global oil order. As oil prices fell to —

as low as fifteen dollars a barrel, some analysts say many big oil states would see their geopolitical status tumble.

Some, like Russia, Venezuela, Iran, and Qatar, which have enormous gas reserves, could compensate by stepping
up efforts to sell gas, especially to gas-hungry markets like China, India, and the United States. Other petrostates
— like Mexico and Algeria, for instance might be pushed into bankruptcy and would then require a massive, and

inevitably United States—led, bailout.

Reducing demand would cause prices to plummet
John Carey, writer for Business Week, 2/24/2003, http://www.globalexchange.org/campaigns/oil/722.html.pf
Yet reducing oil use has to be done judiciously. A drastic or abrupt drop in demand could even be
counterproductive. Why? Because even a very small change in capacity or demand "can bring big swings in
price," explains Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University's
Robinson College of Business. For instance, the slowdown in Asia in the mid-1990s reduced demand only by
about 1.5 million bbl. a day, but it caused oil prices to plunge to near $10 a barrel. So today, if the U.S. succeeded
in abruptly curbing demand for oil, prices would plummet. Higher-cost producers such as Russia and the U.S.
would either have to sell oil at a big loss or stand on the sidelines. The effect would be to concentrate power--you
guessed it--in the hands of Middle Eastern nations, the lowest-cost producers and holders of two-thirds of the
known oil reserves. That's why flawed energy policies, such as trying to override market forces by rushing to
expand supplies or mandating big fuel efficiency gains, could do harm.

MSDI 2008 8
Louie/Oz Oil Disadvantage

US Consumption Key
US consumption shapes world demand
Paul Roberts, energy expert and writer for Harpers,2004, The End of Oil, pg. 94
The geopolitics of oil are vast, complex, and ever-changing, but three elements are of absolute importance. The first is
the preponderant
role of the United States. Since the earliest days of the oil industry, the country has been the dominant figure, first
as the world’s largest producer of oil and other energy and now as its largest consumer. Today, one out of every
four barrels of oil produced in the world is burned in America, and this enormous, apparently limitless appetite
exerts a ceaseless pull on the rest of the world’s oil players and on the shape of the world political order.

Surging US demand is the key driver of OPEC and global oil markets
Joe Barnes, research fellow at the Baker Institute for Public Police at Rice, Amy Jaffe, Fellow for Energy Studies
at the Baker Institute, and. Edward L. Morse, Executive Adviser at Hess Energy Trading Company and was
Deputy Assistant Secretary of State for International Energy Policy in 1979–81, Winter 2003/2004, originally
printed in National Interest, http://www.saudi-us-relations.org/newsletter2004/saudi-relations-interest-01-06.html
Missing from this discussion are any serious measures to address the demand side of our reliance on Middle East
oil. Current U.S. oil demand is about 20 million bpd, of which only 40 percent is produced domestically. Indeed,
the consistent growth in U.S. oil imports is an overwhelming factor in global oil markets-one, which official
Washington refuses to recognize despite criticism from allies in Europe and Japan. U.S. net imports rose from 6.79
million bpd in 1991 to 10.2 million bpd in 2000. Global oil trade, that is the amount of oil that is exported from
one country to another, rose from 33.3 million bpd to 42.6 million bpd over that same period. This means that
America's rising oil imports alone have represented over one third of the increase in oil traded worldwide over the
past ten years-and over 50 percent of OPEC's output gains between the years 1991 to 2000 wound up in the United
States.

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Louie/Oz Oil Disadvantage

Small Change Hurts Economy
Small changes in oil prices cause massive economic disruptions
Paul Roberts, energy expert and writer for Harpers,2004, The End of Oil, pg. 93
The obsessive focus on oil is hardly surprising, given the stakes. In the fast-moving world of oil politics, oil is not
simply a source of world power, but a medium for that power as well, a substance whose huge importance
enmeshes companies, communities, and entire nations in a taut global web that is sensitive to the smallest of
vibrations. A single oil “event” — a pipeline explosion in Iraq, political unrest in Venezuela, a bellicose exchange
between the Russian and Saudi oil ministers — sends shockwaves through the world energy order, pushes prices
up or down, and sets off tectonic shifts in global wealth and power. Each day that the Saudi-Russian spat kept oil
supplies high and prices low, the big oil exporters were losing hundreds of millions of dollars and, perhaps,
moving closer to financial and political disaster — while the big consuming nations enjoyed what amounted to a
massive tax break. Yet in the volatile world of oil, the tide could quickly turn. A few months later, as anxieties over
a second Iraq war drove prices up to forty dollars, the oil tide abruptly changed directions, transferring tens of
billions of dollars from the economies of the United States, Japan, and Europe to the national banks in Riyadh,
Caracas, Kuwait City, and Baghdad, and threatening to strangle whatever was left of the global economic
recovery.

money. . or a hydrogen economy. or any of the potentially significant but speculative sources of energy. or about the much-touted energy security. They are not talking about fuel efficiency. In this bleak context.MSDI 2008 10 Louie/Oz Oil Disadvantage Perception Key to Prices Perception is key in energy policy—nations carefully monitor oil price volatility Paul Roberts. and the United States have such abysmal records when it comes to long-term energy planning or alternative energy. or solar power.” they are not talking about depletion curves. the actions. energy expert and writer for Harpers. and fear is growing among economists and policymakers that. pg. when nations discuss energy security today. it becomes easier to understand why nations as powerful and technologically advanced as Japan. Britain. about energy for the future. and alliances necessary to keep oil flowing steadily and cheaply through the next fiscal quarter. oil price volatility itself may eventually pose more risk to prosperity and stability and simple survival than terrorism or even war. Indeed. energy-intensive global economy.2004. Rather. what they are really talking about is the geopolitics of energy — and specifically. 93-4 So embedded has oil become in today’s political and economic spheres that the big industrial governments now watch the oil markets as closely as they once watched the spread of communism — and with good reason: six of the last seven global recessions have been preceded by spikes in the price of oil. in today’s growth-dependent. when the major nations speak of energy policy today. or fuel cells. The End of Oil.

S.79 million bpd in 1991 to 10. research fellow at the Baker Institute for Public Police at Rice. rose from 33.6 million bpd over that same period.saudi-us-relations. Fellow for Energy Studies at the Baker Institute. originally printed in National Interest. which official Washington refuses to recognize despite criticism from allies in Europe and Japan. Indeed. oil imports is an overwhelming factor in global oil markets-one. U. Amy Jaffe. Executive Adviser at Hess Energy Trading Company and was Deputy Assistant Secretary of State for International Energy Policy in 1979–81. Edward L.S.2 million bpd in 2000. This means that America's rising oil imports alone have represented over one third of the increase in oil traded worldwide over the past ten years-and over 50 percent of OPEC's output gains between the years 1991 to 2000 wound up in the United States.html Missing from this discussion are any serious measures to address the demand side of our reliance on Middle East oil. Current U. Morse. oil demand is about 20 million bpd.MSDI 2008 11 Louie/Oz Oil Disadvantage US Key OPEC Surging US demand is the key driver of OPEC and global oil markets Joe Barnes.3 million bpd to 42. Winter 2003/2004. Global oil trade. .org/newsletter2004/saudi-relations-interest-01-06. the consistent growth in U. that is the amount of oil that is exported from one country to another. http://www.S. and. of which only 40 percent is produced domestically. net imports rose from 6.

To the degree that Washington decides to take action to reduce the U. Foreign Affairs It would be more accurate. economy's dependence on oil. March/April 2002.MSDI 2008 12 Louie/Oz Oil Disadvantage US Key World Production US demand for oil determines world production Edward L. the size and value of that connection have been undergoing serious review since September 11. an investment fund active in eastern Europe. Russia. it can greatly affect the scale of increased oil production over the next few decades. Executive Adviser at Hess Energy Trading Company and Deputy Asst. and James Richard. Morse. It is because of that opportunity that the Russian challenge to Saudi Arabia has become tremendously important.S. In both countries. to see the common interests of Washington and Riyadh as the intersection of two large and unwieldy sets of goals. of State for Intl Energy Policy (79-81). and Central Asia. Sec. in sum. portfolio manager at Firebird Management. .

MSDI 2008 13 Louie/Oz Oil Disadvantage ***Russian Oil*** .

the number of people living in those dire circumstances has greatly decreased. Consumers are spending and cash registers are ringing. Today. The Russian economy is growing at nearly eight percent.” The numbers seem to back up Toropov's assessment. flows out of the country and dollars flow in. Inflation.msn. With a rising middle class.. and 14 years ago I would not have been able to celebrate it. Moscow now has more billionaires than any city in the world. . you're talking you need at least $1 million .” said Irina Zharova-Wright. “Today is my birthday.com/id/6063583/ And Russia is now one of the world's fastest growing economies. up to $2 million .” said 21-year-old Dimitri Toropov. Oil Prices Fueling Russian Economic Growth MSNBC News 3/21/2007 http://msnbc. The real estate market is on fire. still at 11 percent annually. Russia has huge reserves. Oil From the oil towns of Siberia to the streets of St. “Right now. a real estate broker for Intermark Group. “My parents and I would not have had the resources to afford it. adjusted for inflation. according to Forbes magazine. to find something decent in that area. retail sales have been growing about 20 percent a year. Petersburg to the new malls of Moscow. The fuel for this economic fire is oil.. is how the price has gone up.com/id/6063583/ the Russian economy is booming. and exports 6 million barrels a day.MSDI 2008 14 Louie/Oz Oil Disadvantage Russian Economy Good High oil prices have fueled a boom in the russian economy MSNBC News 3/21/2007 http://msnbc.msn. second only to Saudi Arabia.. Food stores are brimming and crowds of premium western shops line streets choked with European luxury cars.. has been halved in the past four years.

com/id/6063583/ Another big concern: How much the country's economic boom is tied to high oil prices. considering that the Russian Federation has only one-fifth the oil reserves of the Saudis and that old Soviet techniques have damaged many oil fields. This in turn has led some observers to envisage Russia as a future main supplier of Western oil needs. although Russia remains an excellent long-term opportunity for oil and gas companies. Thus.russiajournal.3% last year. In Russia's case. where oil costs are higher. energy exports accounted for some 90 percent of Russia's growth in GDP. displacing Saudi Arabia. Every 1 dollar prices go down costs Russia 2 Billion $.brookings. Oil revenues key to russian development Magueri (VP at Eni Italian Oil Company) July/Aug 2003 Foreign Affairs Ironically. a rise in consumerism and a more diverse economy.htm Gas and oil have been the mainstay of the Soviet and now Russian economy for decades.5-$2. Canada.on which the forecast for the country’s economic development in 2005 will be based. http://www. The rapid end to that crisis has been one of the main factors underpinning the popularity of President Vladimir Putin." During 1999-2000. Russia's own consumption. Gref. The figure is one of the strongest performances in five years of recovery from Russia's 1998 economic crisis. The Russian economy has never grown by more than five percent if oil prices are not rising.org/press/review/spring2002/hill. Russia is expected to export nearly $76 billion in oil this year. High prices fuel russian economic growth BBC News 2/3/2004 http://news. the fate of Russia remains closely tied to the outlook for oil. If oil prices were below $18 per barrel.msn.$28 per barrel . the output of the United States. international According to Mr. "Every dollar's increase in the price of a barrel of petroleum translates into roughly $1.0 billion of additional yearly export revenues.co. despite and expanding middle class.com/news/cnews-article.MSDI 2008 15 Louie/Oz Oil Disadvantage High Oil Prices Key Economy Russia needs high prices for oil The Russia Journal 8/19/2004 http://www.stm The Russian economy grew by 7. particularly once the current inflated outlook vanishes and legislation improves. a return to low oil prices would dampen any major leap forward by the Russian oil sector and thwart needed investments in its export infrastructure. and Russia would be partially displaced. Sustained high prices for oil. So. Russia. a recovery in the price of oil and natural gas has boosted oil output and revenues. are made possible by OPEC's production ceilings. it is reasonable to assume that current Russian oil production is inflated by specific circumstances that cannot last forever. Fiona Hill (Fellow at Brookings) 2002 Brookings Review. just under half of all exports.bbc. “There's this inherent instability that will always be existing as long as the economy depends excessively on one or two products. beating even the most optimistic official forecasts. However.shtml?nd=45104 due to instability on the global oil market caused by the situation in Iraq and some other factors. Thanks to high oil prices. organizations forecast oil prices in the range from $22 to $46 per barrel. Overall. which sustain oil prices. Norway. it is misleading to compare its potential role in the world oil market with that of the Saudis. Energy accounts for about half of Russian export earnings. According to Brookings economist Clifford Gaddy. the United Kingdom. Spring. who came to power in 1999. Russia's main export earner. have given the economy a lift. will recover and will absorb a growing part of domestic production. at the end of 2001 the economy had enjoyed its best three-year performance since 1966-69. Russian growth is dependant on oil income (A2: Oil Prevents Real growth) MSNBC News 9/21/2004 http://msnbc. new investments in non-OPEC areas.” said Christof Ruhl of World Bank. This allows the Russian Economy Minister to choose the optimal price for Urals oil . for instance. .uk/2/hi/business/3455417.

Well. the more somebody helps satisfy Chinese demand. puts it just about the level of Saudi Arabia. HAYS: And. the more we can consumer in this gas guzzling nation and it helps take a little bit of pressure off prices. And. not surprising. which would derail ambitious government plans to double the size of the economy in 10 years Loss of oil revenues devastates the Russian economy—20 percent of GDP/majority of revenues Analyst Wire 2004 “FINANCIAL FLASH”. MAASS: Right. if you take oil out of the Russian economy. share a border. HAYS: So very. And its production. Russia and China. because China s consumption has been growing so rapidly and Russian oils has had a lot to do with feeding that. it s not just the world reliance on Russia. you re almost devastating the economy. very important supplier. And Russia s even been considering building a pipeline so that it can directly funnel oil to China through the pipeline rather than through rail shipments. MAASS: Well. 2004 Exactly. Russia s almost become something of a oil state. Oil revenues account for about 20 percent of the Russian GDP and the vast majority of its revenues overall. . of course. And China has increasingly become one of Russia s larger clients. It s the second largest exporter of oil in the world. Well. actually. of course. which I understand has actually had a lot to do with meeting the increasing demand from China. Russia is vulnerable to an oil price slump. With the economy heavily dependent on oil exports. basically. So.MSDI 2008 16 Louie/Oz Oil Disadvantage Decrease Oil Prices Collapses Russian Economy Decrease in prices derails the russian economy The Daily times (Pakistan) 9/23/2004 The debate about what to do with the oil bonanza goes to the heart of the dilemma facing Russian policy makers. August 3. But I guess that s the issue because Russian oil is so important to the Russian economy that it has become quite a political football. Russia has oil reserves that are about 60 billion barrels. of course.

org. given the way in which Russia's economy is currently organized. The economy is growing and it's developing in the right direction.worldbank. or additional structural changes and changes in the economy. but domestic demand is not yet high enough to ensure self sustained growth at current rates (higher than 5 percent) if the oil price stays constant. the data indicate that currently it will be possible to maintain this rate of growth only if oil price continues to rise (which has happened in the last six months due to evident geopolitical developments).ru/ECA/Russia.nsf/0/F90DB9754A7A53D6C3256DA9004BE05C Q: Has the Russian economy been always so dependent on oil and gas prices? Christof Ruehl: If one looks backwards over the last three to four years and asks the same question. This leads to the believe that. we observe an interesting fact: since the crisis. .MSDI 2008 17 Louie/Oz Oil Disadvantage Oil Key Russian Economy Russian Growth Dependant on Oil Revenues World Bank Economic Report August 2003 http://www. or if the productivity of the non-oil sectors goes up. growth rates of above 5 percent will require either an additional increase in the oil price. In other words. which in the long term is unlikely. which requires that structural reforms continue. Russia's economy has only grown faster than 5 percent when the oil price was increasing at the same time.

law enforcement agencies.MSDI 2008 18 Louie/Oz Oil Disadvantage High Prices Key Stability High russian oil prices are key to political and economic stability AME Middle East financial Network.com/news/Detailed/35292. electoral commissions and the judicial system.ameinfo. Ongoing political centralization in Russia will prevent any significant decline of international oil prices 2004. underpinning Russian asset values.html) By controlling both oil production and exports. President Putin's centralization project has tamed the country's oligarchs and extended the government's power over Russia's media. Maintaining high international oil prices is critically important to economic restructuring in Russia and long-term political and social stability. 2/24/2004 http://www. Moscow's increasingly autocratic tilt has not gone unnoticed in Washington . Russia can strongly influence international oil prices.

Malaria. . the drug trade. and scientific advances that expand the capability for the deliberate manipulation of pathogens are all cause for worry that the problem might be greater in the future than it has ever been in the past. cheerleaders of a new Russian-American oil partnership fail to understand that there is not much that the two governments can do to influence the global energy market or even investment in Russia's oil sector. the human body has developed physical barriers and a biochemical immune system whose sophistication and effectiveness exceed anything we could design or as yet even fully understand.org/publication/9997/) U.S. The two governments have created a special working group on energy cooperation. and Russian oil executives in Houston. tight energy markets. and the war in Chechnya. American and Russian diplomats have been searching for a special relationship between their countries to replace Cold War animosity. has suggested that the United States and Russia could sideline the Organization of Petroleum Exporting Countries (OPEC) as the arbiter of world oil prices.5 million people currently dying of aids each year. and human trafficking. These problems are more manageable when the United States has Russia on its side rather than aligned against it. the proliferation of weapons of mass destruction. Thus. head of Yabloko. however. as a result of Russia's weak institutions and faltering economy.Senior Fellow at Brookings Institution. including nearly one-quarter of Western Europe's population at the time.4 million worldwide. Since its recognized appearance in 1981. “Biological weapons: A plague upon all houses. But evolution is a sword that cuts both ways: New diseases emerge. A collapse of oil prices in the aftermath of an invasion of Iraq may soon lay bare Washington's and Moscow's divergent interests. there have been epidemics during which human immunity has broken down on an epic scale. Throughout history. with 1. whereas U. some 20 variations of the HIVvirus have infected an estimated 29. policy would be largely unaffected by falling energy costs. the unprecedented freedom of movement across international borders. the potential of new oil ties has attracted extensive media coverage and political speculation.S. one of Russia's leading opposition parties. Grigory Yavlinsky. Relations are critical to prevent the spread of infectious disease Sestanovich 2006 (Stephen. at the first-ever summit of U. In Moscow. Russia needs high oil prices to keep its economy afloat. Russia's energy minister. An infectious agent believed to have been the plague bacterium killed an estimated 20 million people over a four-year period in the fourteenth century. climate change. At a Kremlin summit in May 2002. infectious diseases. but a fundamental security problem for the species as a whole. On issues such as the expansion of NATO. "energy" has become the new special topic in Russian-American relations.cfr. Nor have the two nations developed much economic interaction.Senior fellow for Russian and Eurasian Studies. tuberculosis. The threat of infectious pathogens is not just an issue of public health. stabilizing Yugoslavia. Moreover. so far.S. Bush and Vladimir Putin pledged to work together to reduce volatility in global energy markets and promote investment in Russia's oil industry. For instance.-Russian cooperation can help the United States to handle some of the most difficult challenges it faces: terrorism. Security matters have not yielded much. http://www. This enthusiasm is misplaced. and Russia will host the next commercial energy summit in 2003. especially. the main lines of defense against this threat have not depended on explicit policies or organized efforts. As we enter the twenty-first century.-Russian relations David Victor (Analyst at CFR) 2003 Foreign Affairs Ever since the Iron Curtain came crashing down. Infections disease spread risks global extinction Steinbruner 1998 (John D. changing conditions have enhanced the potential for widespread contagion. In the long course of evolution.S.MSDI 2008 19 Louie/Oz Oil Disadvantage US-Russian Relations Impact Module High prices key to U. Igor Yusufov. March. Washington and Moscow have sought each other's tolerance more than cooperation. by default. while old diseases mutate and adapt. and cholera-once thought to be under control-are now making a comeback. reiterated this goal. The rapid growth rate of the total world population. “Russia's Wrong Direction: What the United States Can and Should Do”. Soon after. Council on Foreign Relations. Presidents George W.” Foreign Policy) It is a considerable comfort and undoubtedly a key to our survival that.

Low oil prices have cut Russia's hard currency income to starvation levels. the people are left with only abundant nuclear devices to sell in order to survive. Washington Times. such as lack of a universal definition of terrorism. Americans were stunned by the unprecedented tragedy of 19 al Qaeda terrorists striking a devastating blow at the center of the nation's commercial and military powers. It is not surprising. the religionization of politics. . The primary purchasers for these goods are various Middle Eastern and other unfriendly countries that sponsor terrorism. thus far at least. contemporary terrorists have introduced a new scale of violence in terms of conventional and unconventional threats and impact. Unlike their historical counterparts. of Inter-University for Terrorism Studies. and the exploitation of the media by terrorist propaganda and psychological warfare. 2001. Likewise. primarily because our aggressive. Cheap oil is literally promoting terrorism against this country. militaristic foreign policy towards them (with a military budget 1600 times that of all our "enemies" combined) leaves only this response available to them.the impact is nuclear terrorism Oil and Gas Journal 3/8/1999 Russia is very dependent on petroleum exports and is now in the depths of a terrible depression that could well return it to a totalitarian government.MSDI 2008 20 Louie/Oz Oil Disadvantage Nationalism Impact Module Low prices risks authoritarianism and nuclear prolif.g. as well as scores of other countries affected by the universal nightmare of modern terrorism surprised by new terrorist "surprises"? There are many reasons. biological. nuclear and cyber] with its serious implications concerning national. regional and global security concerns. They sponsor terrorism in vengeful retaliation. Even the United States and Israel have for decades tended to regard terrorism as a mere tactical nuisance or irritant rather than a critical strategic challenge to their national security concerns. that on September 11. Terrorism ensures extinction Alexander 2003 (Yonah prof and dir. August 28) Last week's brutal suicide bombings in Baghdad and Jerusalem have once again illustrated dramatically that the international community failed. to understand the magnitude and implications of the terrorist threats to the very survival of civilization itself. despite the collapse of the Oslo Agreements of 1993 and numerous acts of terrorism triggered by the second intifada that began almost three years ago. double standards of morality. therefore. weak punishment of terrorists. The internationalization and brutalization of current and future terrorism make it clear we have entered an Age of Super Terrorism [e. radiological. including misunderstanding of the manifold specific factors that contribute to terrorism's expansion. chemical. Israel and its citizens. are still "shocked" by each suicide attack at a time of intensive diplomatic efforts to revive the moribund peace process through the now revoked cease-fire arrangements [hudna]. Why are the United States and Israel.

the West could not shield itself from similar developments in the vast Eurasian territory stretching from Ukraine to the Pacific Ocean. If it collapses. rudimentary instruments of destruction. By contrast. Peaceful Russian relations with what used to be its provinces and are now independent neighbors depend on the maintenance of a tolerant regime in Moscow. By contrast. The Russian economy deserves urgent western attention and substantial western resources. with its 300 million people. and support for Yeltsin means western assistance in addressing the problem that has strengthened his political adversaries: the growing Russian economic catastrophe. All are represented in the government of Boris Yeltsin. difficult. of westernization. aside from the grim spectacle they present on television and the refugees they have generated. the former Soviet Union is the site of thousands of nuclear weapons. The Balkan carnage is the work of what are. by the standards of the late 20th Century.MSDI 2008 21 Louie/Oz Oil Disadvantage Russian Collapse Impact Russian collapse causes nuclear conflict Mandelbaum (Professor of Political Science at John Hopkins) 4/5/1993 Newsday. painful transitions: from multinational empire to nation-state. It must therefore be the highest priority of American foreign policy to do whatever is possible to keep the three great Russian transitions on course. Support for democracy in Russia means support for Yeltsin. and from a centrally planned to a free-market economic system. of free markets and of democracy in Russia. But two important differences distinguish the former Soviet Union from the former Yugoslavia. The three are closely linked. The best strategy for doing so is to support the forces of moderation. l/n Russia is in the midst of three enormous. . That in turn depends on a successful economic transition. they have had only a modest impact on the rest of Europe. from totalitarian to democratic rule. it could plunge Russia into the chaos that has overtaken the Balkans. And the Balkan horrors have thus far been contained. But that transition is going badly.

And it may only have just begun. leading to higher prices. Analysts think untapped Russian oil reserves may be much larger than current estimates. is the largest field tapped in Russia since the fall of the Soviet Union. In Russia. probably a couple of million barrels a day. we'd have had definitely a much tighter supply situation. 1 producer.msn. an oil analyst at Brunswick UBS. It's oil from places like Priobskoye that's fueling the economic revolution back in Moscow. across the tundra of western Siberia.000 barrel a day gusher.asp Some 1.com/content/CNBCTV/Articles/TVReports/P94992. "The reserve numbers are being revised upwards.MSDI 2008 22 Louie/Oz Oil Disadvantage A2: Russia Has No Oil Russian reserves will double or triple within the next decade CNBC News 9/20/2004 http://moneycentral.200 miles east of Moscow. prosperity is spelled O-I-L." says Paul Collison. an oil expert at United Financial Group. lies the secret behind Russia's return to the ranks of oil superpowers. "Without the increase in output from Russia over the last three or four years. It has helped the country push oil output above 9 million barrels a day. a 400." says Stephen O'Sullivan. "We believe that over the next 10 or 15 years a double or triple (in reserve estimates) is feasible. The Priobskoye field. from just 7 million in 2001." . Russia now rivals Saudi Arabia for the title of the world's No.

MSDI 2008 23 Louie/Oz Oil Disadvantage ***Renewables*** .

effectively destroying any chance at meeting a carbon target. According to one study. pg. not to mention add significantly to pollution and other oil-related problems — among them. .S. such as solar or wind. a scenario in which prices averaged twenty-three dollars a barrel would encourage so much additional energy use that U. such as Iraq and Iran.2004. more cars. energy expert and writer for Harpers. or “business-as-usual’ forecasts. Such an increase would put an enormous strain on oil producers. CO2 emissions would jump 50 percent by 2035. Oil prices. at least in the short term. could just as easily fall. low prices discourage conservation and fuel efficiency. especially if countries with enormous reserves but little current production. or renewable energy. The End of Oil. such mitigating factors run up against a powerful array of economic and political forces — countervailing influences that steadily push up energy demand and favor expediency at the expense of fuel efficiency. As we have seen. obtain the investment they need and start adding supplies to the world market. greater suburban sprawl.MSDI 2008 24 Louie/Oz Oil Disadvantage Low Oil Dooms Renewables Low oil prices guarantee increased use of fossil fuels Paul Roberts. 161-2 Yet as we have seen with the United States and other developed nations. By one estimate. world oil demand will surge to 124 million barrels a day by 2020 — around 20 million barrels more than in average. as well as reliance on alternatives like natural gas or hydrogen. for example. and a far slower emergence of even such conventional alternative technologies as gasoline-electric hybrids. if oil prices fall to fifteen dollars a barrel and stay there until 2020 (a scenario fervently desired by the Bush administration).

initiating a “domino effect” in energy that could ultimately change everything from emissions and energy use in the developing world to our oil- dominated geopolitical order. 323 It is important to note that the impact of an American bridging strategy would go well beyond the U. while using its vast political and diplomatic influence to help ensure that other nations stuck to their reduction goals. pg. Because the United States is so large a market for world energy products. As we have seen.S.2004. role as self-appointed policeman of global energy markets is beyond dispute. a U. the United States could anchor any international initiative to reduce CO2 emissions. Likewise. car market. energy economy.S. even a small move by the United States toward improved energy efficiency in the American power sector could set off a revolution that would utterly remake global energy politics.MSDI 2008 25 Louie/Oz Oil Disadvantage US Modeled Even small US energy legislation is modeled globally Paul Roberts (energy expert and writer for Harpers) 2004. . and the U. The End of Oil.S. What matters equally. is the enormous ability the United States has to influence change in the global energy system. 288 Last and certainly not least on the map of energy politics is the United States. with its unrivaled economic muscle and technological capabilities. US action causes a domino effect Paul Roberts. The giant U. however. could be a catalyst for a cleaner auto industry. American prowess in both energy consumption and CO2 emissions is second to none. pg.S. for example. The End of Oil. energy expert and writer for Harpers. energy revolution would function as a catalyst in the transformation of the global energy economy. Undoubtedly.

“the United States could really shape a global climate policy.2004. far more effectively than your cockamamie Kyoto protocol.MSDI 2008 26 Louie/Oz Oil Disadvantage US Action Jumpstarts Political Will A US energy policy would force producers to change and would give us the political clout to succeed where Kyoto failed Paul Roberts. aggressive American energy policy would give a warning to international businesses. energy expert and writer for Harpers. energy policy would send a powerful message to the rest of the players in the global energy economy.S.”’ . — — with differing demands and product requirements.S. pg. ‘Here is an American answer to climate that is far better than Kyoto. Just as a carbon tax would signal the markets that a new competition had begun. With a carbon program and a serious commitment to improve efficiency and develop clean-energy technologies. climate expert. 325 Politically. says one U. so a progressive. We could basically say to Europe. The End of Oil. Above all. Here are the practical steps we’re going to take to reduce emissions. a new U. many of which now regard the United States as a lucrative dumping ground for older high-carbon technology. a progressive energy policy would not only show trade partners in Japan and Europe that the United States is serious about climate but would give the United States the leverage it needs to force much-needed changes in the Kyoto treaty. It would signal energy producers companies and states that they would need to start making investments for a new energy business.

MSDI 2008 27 Louie/Oz Oil Disadvantage A2: China Alternative Causality US action increases pressure on China to address climate issues Paul Roberts. Flavin says. it has the basis for a large-scale wind industry — something the right push from the West could set in motion. Flavin says. and a strategic desire to become a high- tech economy. As James MacKenzie. intran sigence as an excuse for their own inaction. told me. Chinese climate researchers and policymakers know precisely what China must do to begin to deal with emissions but have thus far been able to use U. a resource China has in abundance. given China’s urgent air quality problems. Indeed. thinks not. The End of Oil. China could move away from its “destiny” as a dirty coal energy economy. which is in short supply. when the United States won’t take the same steps itself?” Western support causes a Chinese energy transition Paul Roberts. the United States would finally have the moral credibility to win promises of cooperation from India and China. for one. the former White House energy analyst who now works on climate issues for the Washington-based World Resources Institute. a growing middle class that will demand environmental quality. Beijing is essentially already under great domestic pressure to look beyond coal and is already turning toward alternatives — gas. is confident enough of its business prospects in China that it now has its own vehicles in Beijing. They ask. energy expert and writer for Harpers.” asks Flavin. Flavin was elated: “At least one leading renewable-energy company. but also renewables.2004. Flavin was pleasantly surprised to find in his hotel parking lot a truck owned by NEG Micon. a Danish company that is one of the world’s largest wind turbine manufacturers.2004. especially wind. During a visit two years ago to lobby reluctant Chinese government officials to invest in renewable energy. The End of Oil. energy expert and writer for Harpers. “As China moves forward.” . the renewables optimist at World Watch Institute. hightech. Once China’s growing expertise in technology and manufacturing and its cheap labor costs are factored in. “Whenever you bring up the question of what the Chinese should be doing about climate. ‘Why should we in China listen to the United States and take all these steps to protect the climate.S. pg. “is it really likely to do something that no other country has ever done: run a modern. 325-6 Similarly. located halfway around the world. pg. they just smile. postindustrial economy on a hundred-year-old energy source?” Flavin. 326 With a nudge from the United States. argues Chris Flavin.

or holdouts like Russia.S. The End of Oil.” or limits for various industrial sectors. . such as utilities and manufacturers. America is not only the biggest CO2 emitter but probably is the only party capable of bankrolling the programs — or persuading China and India. and perhaps more important. Europeans have grown tired of waiting for Washington to join in and have begun imple- menting Kyoto without the United States. to join the process. the more it becomes clear that the one country that could make the biggest difference —in reducing emissions but also.2004.MSDI 2008 28 Louie/Oz Oil Disadvantage US Key International climate change solutions are useless without the US Paul Roberts. Yet everyone understands that the programs are of limited value without U. pg. energy expert and writer for Harpers. Countries like Germany and England have carbon budgets and are implementing carbon “caps. in using its wealth and technology to lead the way to a postcarbon energy order — has become the biggest obstacle to any meaningful progress. participation. 138-9 The more the United States resists a coherent climate policy.

MSDI 2008 29 Louie/Oz Oil Disadvantage ***Affirmative Answers*** .

MSDI 2008 30 Louie/Oz Oil Disadvantage .

MSDI 2008 31 Louie/Oz Oil Disadvantage ***Oil Generics*** .

http://www. high seasonal volatility and some “negative gamma” effects.Oil prices are so high right now that even the price drop of 30 dollars/barrel will just bring oil prices to the level your link cards are saying oil prices are. Long-dated oil prices have increased considerably in recent weeks driving the rally in spot prices. The move in long-dated oil suggests the market has once again focused its attention on escalating costs and the need to expand investment in the oil industry.asp?id=12123 Oil prices have traded range bound around $95/bbl in the past two weeks with a few short-lived attempts to rise to the $100/bbl mark and to fall below $90/bbl.MSDI 2008 32 Louie/Oz Oil Disadvantage No Internal: Price Volatility You will not be able to win a threshold to your internal link. resulting from the combination of a mixed fundamental picture. .00/bbl. The potential for long-dated oil prices to remain at current levels or higher. price volatility has been extremely high with average daily price moves of over $2. High oil prices mean daily volatility is over 2 dollars/barrel Daily Estimate 11/13/2007 “Goldman says oil market seeking new equilibrium”. As a consequence. presents upside risk to our current forecast. daily volatility has been at its some of its highest levels in the past few years and the intra-day volatility has been considerable.com/article. Despite the limited change in levels. as further cost inflation gets priced in.dailyestimate.

S. I would bet that if prices do fall sometime soon. So I think a possible reduction in the oil price next year would be shallow and would likely be followed by a counter trend leg up that will probably bring the price well above $100. Marion King Hubbert. The Saudis and the Iraqis have both managed to increase production by roughly 500.S. They also know that due to tight global supplies relatively minor production cuts are sufficient to raise prices. perhaps in the Spring or Fall of 2008. that is. pressure forces out some of the contents. 2008. http://seekingalpha. Such thinking has helped propel crude to the $100 per barrel level it touched yesterday. production now seems to be running in excess of 87 mb/d as shown in this chart: Yet the price of oil refuses to sink. UAE. http://www. exporters will then be slow to raise production. particularly KSA. exporters today have their hands on a hair-trigger for raising the oil price and they will not hesitate to pull it if the price falls much below $85. exporters will cut back fairly quickly to try to keep the price above $80 or so. Finally they now believe that oil in the out years will only get more expensive. Conventional oil fields are like champagne bottles: once "opened". "the peak is nigh" does not pack the same doom-laden punch as a promised "end". barring using such techniques as re-injecting gas.ft. they are not willing to see falling oil prices endanger those commitments. output inevitably declines. My thesis is based in part on the hoarding mindset that now dominates the oil market and is hardly ever discussed. This is a chart that indicates the tightness of U. I summarize this series of attitudes on the part of oil exporters as the “hoarding mindset.to within a few years . Except. Thus near term production cuts will also be rewarded because the oil not sold now can be sold later for more money. when prices eventually begin to rise again. Kuwait. but I wouldn’t bet on it. The "Hubbert curve" is a totem of peak oil theorists. crude oil inventories keep sinking – they are now the lowest in nearly three years. Oil resources are finite.when output in the US's lower 48 states would peak (it was 1970). Further. Eventually field pressure drops and.com/cms/s/1/7e1b5d1e-b99e-11dc-bb66- 0000779fd2ac.com/article/58567-what-the-fundamentals-say- about-future-oil-prices All this looks right on paper and it may well happen. (Jim Kingsdale). and Venezuela) are now addicted to high and rising oil prices. a US geoscientist. having just experienced lower prices. .000 b/d helping to cause the 85 mb/d global production plateau that has existed for nearly two years to be eclipsed during the past few months. oil supplies measured in days of inventory: Prices Won’t Fall: (A) Peak Oil Financial Times. correctly forecast . Exporters (read OPEC. "Peak No Evil" 3 Jan. In summary.MSDI 2008 33 Louie/Oz Oil Disadvantage Oil 2ac Oil producers will keep prices high regardless—increased supply won’t depress prices Seeking Alpha 12-30-2007. Back in the 1950s.html As millenarian prophecies go. in oil circles. Each time oil goes into the high $80s it seems to bounce right back in the face of tight inventories. "Peak oil" theorists posit that about half of all the world's crude has been used and that output will soon peak prior to an irreversible decline. Their ever increasing cash flows from oil have led to their making huge future capital commitments. U. maybe after the peak winter demand season.” Meanwhile global oil production is now at an historically high level but still does not seem to be able to satisfy demand.

major oil companies have invested billions of dollars to bring in more supplies. Americans’ appetite for big cars and large import as much oil as the United States and Japan do today. supply side. At the time. low prices were devastating oil-producing areas in the US. with people there buying more cars and moving to cities to seek a way of life long taken for granted in the West. high prices have set off a frenzied search for new sources around the world. the Nynex Commodities Exchange. and companies have been hobbled by higher costs. 24 Oct. For example: In 1986 George H.70 a barrel in today’s money.46 on the New York Mercantile Exchange yesterday. the higher oil prices are used as an excuse to raise prices at the pump or home heating oil levels. the world is running on a limited cushion of spare capacity. a senior energy analyst at BNP Paribas in New York. and consumer goods and can increasingly afford to compete with the West for access to resources. The cost of drilling rigs.com/2007/11/09/business/worldbusiness/09oil. because it is an unregulated exchange. Major OPEC producers don't want a price so high it encourages non-OPEC production and real conservation. chief economist at the International Energy Agency. If the Chinese and Indians consumed as much oil for each person as Americans do. For most of the 20th century.” (C) Commodity Exchange Marti Ouimette. As it turned into a global economic behemoth over the last decade. China represents the scope of that challenge. This makes oil price futures go up and as a result. Already. At the time. has doubled in recent years. Even in the oil business. oil is cheaper than imported bottled water. On the term. 2003. We haven’t seen that yet. But not by OPEC. whether from hurricanes or armed conflict. More realistically. Changes in the price of oil work this way. oil jumped to the equivalent of $101. citing a figure that seemed an impossibly high price for oil only a few years ago.)Pretty simple.csmonitor. then vice president. They prefer price stability. Analysts say it will take time. houses has pushed up oil demand steadily in this country.com/2004/0603/p17s01-wogi. Cook. But rapid industrialization has come at a price: oil demand has more than tripled since 1980. or milk. lifting nearly 300 million people out of poverty. “These prices are too high and will end up hurting everybody. . in just nine weeks.html?_r=1&oref=slogin&pagewanted=print This is the world’s first demand-led energy shock. India and China are home to about a third of humanity. There are a couple around the world but the most important one is in the US. we’re seeing it is struggling to keep up.html Why? Because governments crave stability in energy prices. turning a country that was once self-sufficient into a net oil importer. reached in April 1980 in the aftermath of the Iranian revolution. is likely to tax the world’s ability to pump more oil out of the ground. http://www. But as prices rise. Will Gasoline Prices Fall?" The Christain Science Monitor. By 2030.com/writing/2003/10/repeat_after_me. India and China together will While demand is growing fastest abroad. the big oil company. In the mid-eighties oil prices began to be determined by the commodities Exchanges. down nearly 1 percent from the day before. Many of these geopolitical factors have Recently.” said Linda Z. the basic tool of the trade. oil jumped from $75 to $95 a barrel for little contributed to a political risk premium variously estimated at $25 to $50 a barrel. The Nynex unregulated commodities exchange is the force that determines oil prices. How convenient.” said Thomas Bentz. I might add. Goldstein said. “Fifty-dollar-a-barrel oil seems so far away at this point. (D) OPEC David Francis. . instead of the 85 million barrels it is today. an economist at the Energy Policy Research Foundation of Washington. according to Yamani. and many analysts expect the psychologically important $100-a-barrel threshold to be breached sometime in the next few weeks. as it transformed the modern world. 2007. meaning consumers should brace for an era of significantly higher fuel costs. producers and consumers alike.typepad. “Today’s markets feel like the crowds standing up in the final minutes of a football game shouting: ‘Go! Go! Go!. At the root of the stunning rise in the price of oil. In doing so. W. Bush. apparent reason. The trouble is that these big new developments take a long time. Its economy has grown at a furious pace of about 10 percent a year since the 1990s.’” said Daniel Yergin. No expert regards that global demand is expected to rise to about 115 million barrels a day by 2030." Essay and Effluvia. Even at today’s highs. By turning the spigot on and off. The increase so far does not appear to be hurting economic growth. any interruption in supplies. Demand from China and India alone is expected to double in the next two decades as their economies continue to expand. China consumes only a third as much oil as the United States. But the price has become volatile. asked Saudi Arabia to raise the price of oil.nytimes. “People seem almost more relaxed about $100 than they were about $60 or $70 oil." The New York TImes. a board member of Royal Dutch Shell. Supplies have also been hampered by political tension in the Persian Gulf. cars.The way oil companies fix/manipulate oil prices is that they ban together as a group and excessively buy oil futures contracts. Oil futures closed at $95. a consulting firm.MSDI 2008 34 Louie/Oz Oil Disadvantage Oil 2ac (B) Global Demand Jad Mouawad. has jumped to 21 million barrels a day this year. is a positive development: an unprecedented boom in the world economy. you don't have to be a rocket scientist to figure that one out.” said Fatih Birol. 9 Nov. or even lower. but new supplies will eventually work their way to market. causes prices to spike. Even the stock exchanges continue to be manipulated to a degree. “The concern today is over how will the energy sector meet the anticipated growth in demand over the longer “Energy demand is increasing at a rate we’ve not seen before. "If Saudis Pump More Oil. Oil consumption in the United States. And OPEC has become a welcome though imperfect regulator of world oil prices. the two Asian giants are profoundly transforming the world’s energy balance. 3 Jun.” More than any other country. which burns a quarter of the world’s oil each day. too. for example. Today. People there are demanding access to electricity. For oil companies. rather than the volatile prices associated with unmanaged output of a commodity. Does it ring a bell to anyone? Of course oil prices are manipulated just like the stock exchanges were before the 1929 market crash. the world’s oil consumption would be more than 200 million barrels a day. By hook or by crook. but many economists wonder how long that will last. That’s the energy challenge. Virtually no one foresees a return to the $20 oil of a decade ago.” said Lawrence Goldstein. http://www. where gasoline is far cheaper than in Europe. (Since the exchange is unregulated it is a perfect place to laundry money. up 56 percent this year and 365 percent in a decade. the cartel tries to manipulate prices. which would cost $180 a barrel. such as Texas. from about 17 million barrels in the early 1990s.” Oil is not far from its historic inflation-adjusted high. Some analysts see them falling next year to $75. small cars and efficient public transportation."Repeat After Me: Oil Price Rises are not a tax increase. devastating hurricanes in the oil-producing Gulf of Mexico. the war in Iraq. a level that level of production as conceivable. at $150 a barrel.html Of course oil prices are fixed and manipulated. "Rising Demand For Oil Provokes New Energy Crisis. the global economy is entering uncharted territory. 2004. After a long lull in investments through most of the 1990s because of low prices. China also became a major energy user. http://bigpicture. few want a truly free market. Thoughts of Enron and those futures traders saying "burn baby burn" comes to mind. production difficulties in Venezuela and violence in Nigeria’s oil-rich province. Europe has managed to rein in oil consumption through a combination of high gasoline taxes. while a few project $120 oil. investors (I prefer to call many onf them manipulators) buying oil futures contracts make the price of oil go up and selling oil futures contracts make the price go down. Forecasts of future oil prices range widely.” Mr. an oil historian and the chairman of Cambridge Energy Research Associates. Throughout the 1990s oil prices averaged $20 a barrel. “We don’t have any shock absorbers. for example. but Americans have not. oil was cheap and abundant. “Oil will stop rising when we see demand destruction.

" 24 May 2004. China is now the world's fastest growing major importer of oil.demand/index. figures from the International Energy Agency (IEA) show.cnn. While speculative buying on heightened tension in the Middle East is seen as the reason oil futures touched a 21-year high of $41. "China Factor Driving Oil Prices. oil experts insist the price rises are driven primarily by demand growth -. some experts say.html Surging Chinese demand is underpinning the recent spike in the price of oil. http://edition. . An energy exporter until just a few years ago.oil. This "China factor" has more bearing on oil prices than the "risk factor" coming from global tensions.com/2004/BUSINESS/05/24/china.MSDI 2008 35 Louie/Oz Oil Disadvantage Oil 2ac (E) China CNN.about half of which is coming from China.85 a barrel in New York earlier this month.

He was saying that "we only find a new barrel of oil for each four we produce". Way before that happens.MSDI 2008 36 Louie/Oz Oil Disadvantage Extend: Peak Oil Peak Oil is driving up prices Pepe Escobar. according to whom high technology and the invisible hand of the market must guarantee discovery and exploitation of reserves virtually forever. "when production will start to fall and reserves will begin to dwindle at a rate of 3% a year". Campbell was charging that "oil giants are fooling the planet" and that everybody was myopic .html According to HSBC.5 million barrels. 2008. the energy forum for 26 industrialized consumer nations.will be extinguished by 2054. of course.cms. This is leading analysts in Dubai to predict that demand . the numbers indicate that the peak indeed occurred in 2006.8 million barrels per day in 2006 and then declined to 84. Additionally.a PhD in geology at Oxford University in England and former chief executive for BP.and counting .15 million barrels per day in 2005. Much of modern industrialized civilization has been built upon cheap. (Founding Director of the Maitreya EcoVillage in Eugene). abundant oil. http://www. . It turns out that Campbell might have been wrong by a margin of only a few months: he was betting on a new oil shock by 2005. supplies will decline about 3 percent annually. Texaco. the peak oil bell curve will be well established. 24.while the price curve will be going up. And more than a year ago. The oil-supply bell curve inexorably will be going down .” Unless some new production comes online soon.atimes. The world currently consumes 81. The food we eat.62 million barrels per day during the first 10 months of 2007." The Asia Times. Amoco and Fina . or around the corner in 2005. The United States - with 5% of the world's population .has been a lonely voice contradicting the supremely powerful oil lobby. Aug. He is sure that the world has already consumed half of its proven oil reserves.at the best-estimate level . toward $100 a barrel and beyond.will reach 120 million barrels a day in 2020. http://www. Campbell . 2 Jan.more expensive than before September 11.com/atimes/Global_Economy/FH24Dj01.cls?cid=43204&sid=5&fid=1 With oil nearing $100 a barrel. "Oil's Slippery Slope. For years. we will reach what experts define as "peak oil". It happened in 2006. oil is now 136% . and he is sure that the Middle East will again manipulate oil prices. peak oil is already here. Sustainability analyst Lester Brown released an update recently that ran through the figures: “After climbing from 82. The ramifications of a 3 percent annual decline in production are staggering. "Peak Oil Is Here. A few months ago.com/csp/cms/sites/dt.especially producing countries. But the really alarming figure is 84 million barrels of oil a day: according to the IEA. Colin Campbell makes no bones about it: for him. the IEA said we would reach 84 million barrels a day only by 2007 or 2008.with no return in sight .6 million barrels a day.on a very optimistic scenario .registerguard. according to the International Energy Agency (IEA).support. output only increased to 84.2 million barrels per day in oil production and 2009 sees 83. If 2008 sees 84. I’m writing to announce that the all-time peak of global petroleum production is behind us.2 million barrels of oil a day (1 barrel = 159 liters). Once on the downhill slope of the oil production bell curve. Already in 2000.viewStory.9 million barrels per day in 2004 to 84." The Register Guard. Robert Bolman. all proven oil reserves in the world . the same IEA was saying that demand in 2005 would be of only 82. 2004. the products we buy and our transportation are all heavily dependent on oil. The oil peak has hit. 2001. this should mean that if demand continues to grow at the current frenetic level.gobbles up no less than 26% of the world's oil production. this will be the global demand by 2005.

"Rising Demand For Oil Provokes New Energy Crisis.nytimes. Many of these geopolitical factors have contributed to a political risk premium variously estimated at $25 to $50 a barrel. 2007. production difficulties in Venezuela and violence in Nigeria’s oil-rich province. citing a figure that seemed an impossibly high price for oil only a few years ago." The New York TImes.” . the war in Iraq.MSDI 2008 37 Louie/Oz Oil Disadvantage Extend: Global Demand Prices won’t fall unless demand does. Recently. 9 Nov. “Oil will stop rising when we see demand destruction.html?_r=1&oref=slogin&pagewanted=print Supplies have also been hampered by political tension in the Persian Gulf.” said Thomas Bentz. http://www. devastating hurricanes in the oil-producing Gulf of Mexico. oil jumped from $75 to $95 a barrel for little apparent reason. We haven’t seen that yet. in just nine weeks.“Fifty-dollar-a-barrel oil seems so far away at this point. a senior energy analyst at BNP Paribas in New York. Jad Mouawad.com/2007/11/09/business/worldbusiness/09oil.

If there really was a supply and demand reason for oil prices to shoot up to $60.MSDI 2008 38 Louie/Oz Oil Disadvantage Extend: Commodity Exchange Oil traders will ensure that the price of oil does not fall. They will fall back to $30 as soon as there is a Democratic president. but oil traders keep it up at $60. these traders act as a choke point that controls the whole market. in this manner Oil supply and demand is nearly perfectly inelastic. While players upstream and downstream may have limited market shares.com/coyote_blog/2007/06/wither_supply_a.html Oil prices are set at the whim of oil traders in London and New York. In Favor of the Oil Trading Cabal?" Dispatches from a small business. . Coyote Blog.coyoteblog. then why aren't we seeing any shortages? Oil prices only rise when Texas Republicans are in office. The natural price of oil today should be $30 or $40. All commodity markets are manipulated. oil prices fell from $60 to $45 on that day. "Wither Supply and Demand. and then went right back up. On the day oil executives were called to testify in front of the Democratic Congress recently. or at least manipulatable. who are controlled by US oil companies. http://www. June 2007.

http://www.htm OPEC policy alone cannot be blamed for single-handedly causing the current high prices.MSDI 2008 39 Louie/Oz Oil Disadvantage Extend: OPEC OPEC will keep consumer stocks tight no matter what – this prevents price collapse. 20 Oct. OPEC policy will keep prices high.jcpa.org/brief/brief004-6. Much of the increase reflects surging demand from China and elsewhere." Jerusalem Issue Brief. Jerusalem Center for Public Affairs. has embarked on an oil policy designed to maximize export revenues by keeping consumer stocks as tight as possible. Antoine Halff. combined with endemic infrastructure capacity constraints and persistent fears of supply disruptions. Jerusalem Center for Public Affairs. Institute for Contemporary Affairs.jcpa.htm However. (Principal Analyst for the Oil Industry and Market Division of the International Energy Agency)"Instability in the Gulf and the Threat to Oil Stability. But those factors would not have caused prices to surge if OPEC policy had not helped deplete the market's safety cushion . it is clear that OPEC.org/brief/brief004-6. 2004. in an economic sense. Institute for Contemporary Affairs." Jerusalem Issue Brief. thereby fostering price volatility and global oil market instability. Antoine Halff. http://www. 20 Oct. 2004. Gulf oil policy may have become a greater source of market instability than in the past. while Middle East producers may have buried the oil hatchet in a political sense. (Principal Analyst for the Oil Industry and Market Division of the International Energy Agency) "Instability in the Gulf and the Threat to Oil Stability. but it is a key contributing factor. Although Gulf regimes may have renounced using oil as a political weapon. Oil prices have recently hit highs that we hadn't seen since the first Iraq war. . led by Saudi Arabia.just as OPEC's price ambitions would not have been met without those external developments.

India and China together will import as much oil as the United States and Japan do today. Skip to next paragraph Enlarge This Image Hiroke Masuike for The New York Times Traders at the New York Mercantile Exchange Thursday. "Rising Demand For Oil Provokes New Energy Crisis. India and China are home to about a third of humanity. Demand from China and India alone is expected to double in the next two decades as their economies continue to expand. “This is the world’s first demand-led energy shock. while a few project $120 oil. At the root of the stunning rise in the price of oil.html?_r=1&oref=slogin&pagewanted=print More than any other country. today’s high prices are causing anxiety and pain for consumers. up 56 percent this year and 365 percent in a decade. this time prices have been rising steadily as demand for gasoline grows in developed countries. and consumer goods and can increasingly afford to compete with the West for access to resources. Unlike past oil shocks. Virtually no one foresees a return to the $20 oil of a decade ago. In doing so. 2007. Today.com/2007/11/09/business/worldbusiness/09oil. Some analysts see them falling next year to $75. which burns a quarter of the world’s oil each day." The New York TImes. turning a country that was once self-sufficient into a net oil importer.html?_r=1&oref=slogin&pagewanted=print With oil prices approaching the symbolic threshold of $100 a barrel. or even lower. China represents the scope of that challenge. Jad Mouawad. meaning consumers should brace for an era of significantly higher fuel costs.com/2007/11/09/business/worldbusiness/09oil. the two Asian giants are profoundly transforming the world’s energy balance. . 2007. But rapid industrialization has come at a price: oil demand has more than tripled since 1980. 9 Nov. the world is headed toward its third energy shock in a generation. and igniting wider fears about the impact on the economy. Its economy has grown at a furious pace of about 10 percent a year since the 1990s. which were caused by sudden interruptions in exports from the Middle East. Chinese Demand is driving oil prices. http://www. an economist at the Energy Policy Research Foundation of Washington." The New York TImes.nytimes. Forecasts of future oil prices range widely. As it turned into a global economic behemoth over the last decade. with broad and longer-lasting global implications. But today’s surge is fundamentally different from the previous oil crises.46. 9 Nov. By 2030. China also became a major energy user. lifting nearly 300 million people out of poverty. Jad Mouawad. China consumes only a third as much oil as the United States. http://www. where the price for a barrel of crude oil settled at $95. Related Times Topics: Oil and Gasoline Just as in the energy crises of the 1970s and ’80s. cars. People there are demanding access to electricity.nytimes.MSDI 2008 40 Louie/Oz Oil Disadvantage Extend: China Chinese and Indian demand will continue to drive up global oil prices. "Rising Demand For Oil Provokes New Energy Crisis. with people there buying more cars and moving to cities to seek a way of life long taken for granted in the West.” said Lawrence Goldstein. as hundreds of millions of Chinese and Indians climb out of poverty and as other developing economies grow at a sizzling pace. is a positive development: an unprecedented boom in the world economy.

http://www. al-Qaeda leaders bragged that the consequent rise in oil prices caused Americans to suffer. It is much easier for terrorists to blow up an oil facility or take out a tanker somewhere in the world than to infiltrate into the United States and blow up the World Trade Center.org/article/653 The steeply rising demand for oil today means that the disruption of petroleum production causes oil prices to rise. Gal Luft. refineries." 16 Oct.MSDI 2008 41 Louie/Oz Oil Disadvantage High Prices Inevitable – Terrorism Terrorists will attack oil infrastructure which makes high oil prices inevitable.jcpa. America's Islamist foes are aware of this reality and view it as America' Achilles' heel." Middle East Forum. and take them off the market. Saudi Arabia. . this translates immediately into a price rise in all the markets. 27 Oct. tankers. Gal Luft." After the terrorist attack against oil employees in Khobar. 2005.org/brief/brief005-7. the s October 2002 attack on a French oil tanker off the coast of Yemen was a victory against the "Crusader nations. pumping stations.meforum. The terrorists believe that the best way to hurt the global Western economy is to go after its oil. 2004 http://www. They realize that when they blow up a pipeline in Iraq or in Sudan or anywhere in the world. to blow up pipelines.htm This environment of very strong demand and very little spare capacity offers a huge opportunity to the radical jihadists. According to an al-Qaeda spokesman. Threat of terrorist attack on pipelines keeps prices up. "The World Oil Crisis: Implications for Global Security and the Midle East. "Ending America's Dependence on Middle East Oil.

MSDI 2008 42 Louie/Oz Oil Disadvantage ***Russian Oil*** .

Russia became a net exporter of grain. Since Putin's reelection in March. But it's not just that. President Vladimir Putin's economic adviser Andrei Illarionov defied the conventional wisdom that Russia's continued recovery depends on keeping oil prices high. without gas and with problems with the electricity” said Belyaninov.) Russian economic trouble is inevitable because of EU expansion Journal of Commerce 4/26/2004 The darkest cloud on Russia's economic horizon is the European Union's expansion on May 1. when 10 Eastern European countries will join the bloc. they have also strengthened the ruble in real terms.html Also speaking on 29 January. Instead.html But theworrying signs don't stop there.S. it has actually risen in comparative value when inflation is taken into account. the foreign reserves of $85 billion . He says Putin is becoming ever more dependent on the security services and their allies at the large state companies and banks. telecommunications and aerospace are becoming competitive. 6.com/news/item/30311.MSDI 2008 43 Louie/Oz Oil Disadvantage Russia 2ac 1.” said Zbigniew Brzezinski of CSIS. Petersburg — much of the country is still in a mess. with the exception of two major cities — Moscow and St.the same percentage as in 1989.Every sector other the oil is doing miserably MSNBC News 9/20/2004 http://www. “If you travel 20 miles outside Moscow — with all the Moscow fancy cars an boutiques and all this stuff — you'll find people are living in the houses without running water. Still. Sure. Aslund said. Aslund said. The EU's expansion means that Russian steel and chemicals exports to the new EU members will be blocked. 4. Page 20). Such moves are badly needed to diversify and strengthen the Russian economy. Marshall said. some long for the stability of a Soviet past.msnbc. but not completely. Currently. These 10 former allies of the Soviet Union will be bound by EU rules that currently restrict the entry of some Russian-made products. the EU's expansion also could benefit Russia over the long term as manufacturing costs rise in those Eastern European countries (See article. . second only to Saudi Arabia. "Yes. The argument may be hard for Russian consumers to understand.) Their David evidence is empirically denied: The Russian economy went through half a decade of drudgery with no impact 3. and exports 6 million barrels a day." 5. the industrial sector is in a bad shape. the RIA-Novosti news agency reported. Although oil revenues have helped Russia to pump up its revenues and Central Bank reserves. To promote liberalizing reforms. argues Carnegie's Aslund. such as measures to help small businesses by cutting back on red tape.com/id/6056060/ Russia has huge reserves. "The EU's eastward expansion is quite bad for Russia" in the short term. Not surprisingly.) Russian Growth Effects a small few.and its proximity to the huge European market . “The agricultural sector is in bad shape. Another 15 percent of Russia's exports are destined for the 10 new EU member-states.has helped.because of high energy prices . But many observers question what strength the country has beyond natural resources.) Low prices prevent ruble appreciation making russian producers more successful Michael Leylved 2000 http://www. head of research at Russia's Alfa Bank. hardly anything has been done to push promised liberal economic reforms. they are still heavily dependent on energy. but it is likely to have a profound effect on their economy this year. business is cowed and its political influence weakened. "The reforms haven't happened. While reports have focused on the ruble's falling value in exchange with the dollar since the start of last year. which is "mind-boggling" to Marshall. Last year.msn. Russian companies in such sectors as information technology.) Russia’s economy has diversified: no impact Journal of Commerce 4/26/2004 Although Russia's remoteness from the U. 2. Illarionov argued that low oil prices would now benefit the economy more.) Putin is failing on reforms now.zeromillion. Even Russia's agriculture sector is becoming viable. Putin would need the support of private business lobbies to push back against the bureaucrats. . and there's no evidence they're about to happen. But following the attack on Yukos. nothing defines Russia now better than the gulf between the haves and the have- nots." says Chris Weafer. 35 percent of Russia's exports go to the EU .his authoritarianism is preventing effective rule Russian Independent Internet Digest 9/21/2004 http://putinru. posing a risk for Russian manufacturers and exports. who remembers the ineptitude of the Soviet era.com/econ/lower-prices. In fact.limits its potential as an economic partner.

While high world energy prices such as were experienced in 2000 may be good for Russian oil majors and natural-gas monopoly Gazprom. The former is poison for Russia's recovering industry and the latter leads to sizeable inflation.lowering prices key to Russian economy. . mainly amid worries about Russia's ability to meet future debt repayments. Worse. The explanation is simple. Russia ran a current-account surplus of around $46 billion (roughly 18 percent of GDP) in 2000. Choosing between these two evils. At least this is the impression one gets from reading the Russian and international press. Such an imbalance is huge by any standards and either induces a rapidly appreciating real exchange rate or forces the Central Bank to print money on a large scale to buy up the incoming dollars.its the only way to solve inflation St. lower oil prices would be a great boon for the Russian economy. not be able to maintain this course indefinitely without creating a major inflation problem. Petersberg Times 10/23/2001 THE world's biggest problem at the moment is terrorism. It will. Hence. in the longer term they are clearly bad for the rest of Russia. even financial markets have started to worry and the RTS has recently been falling in parallel with the oil price.) Turn. however. Russian media and politicians continue to fret about the impact of a global slowdown on oil prices.MSDI 2008 44 Louie/Oz Oil Disadvantage Russia 2ac 7. At prices around $26 for a barrel of Urals blend. the Central Bank has so far rightly chosen a small dose of the former. and a good dose of the latter. and Russia's is falling oil prices. This does not reflect much consideration of the longer term.

international investors yanked their capital out of all emerging markets — from Latin America to East Asia— causing world interest rates to spike. Long Term Capital Management. The ruble collapsed and debt payments to foreigners were frozen. 1998 were little more than a very large bump in the road. Wall Street lost billions of dollars. The banking system now functions better. in part. He is doing this not simply to placate the international lending community but also to restore Russia's place in the global order. August. Evidence to justify the former is dubious.nato-pa. international markets quickly righted themselves. The lessons of this "crisis that wasn't" are now clear: Russia is not too big to fail (the volume of its debts do not dictate special treatment by its creditors). But the crisis was cathartic. August 17 to be precise. . the events of August. one of the world's biggest hedge funds." Council on Foreign Relations.MSDI 2008 45 Louie/Oz Oil Disadvantage A2: Russian Economy The Russian economy is resilient. much to the surprise of most economic pundits. a senior associate at the Carnegie Endowment for International Peace in Washington.5 billion loan to Russia by the International Monetary Fund— reflecting Washington's gratitude for Moscow's help in Kosovo. Bruce Stokes. government-directed lending. had to be taken over by its bankers.org/publication/3225/dont_ignore_the_russian_bear." NATO Parliamentary Assembly. Real wages fell 41 per cent. President Putin is evidently set on making the Russian economy more resilient and growth more sustainable. to avoid global economic collapse. But the impending $4. "THe Russian Economy Under President Putin.html A little less than a year ago. But. "Don't Ignore the Russian Bear. is whether growth will improve the material conditions of enough Russian people to give them a solid sense of ownership in the transition process and the many tough decisions that still need to be made to advance this process. 1998 exposed that rationale as a charade. continued fear of Russian nuclear proliferation and concern about Russia's internal political stability— demonstrates that Russia still remains too important for the world to ignore. the financial world can cope with such failure. 2008." 5 Nov.asp?SHORTCUT=361 Despite these serious problems. And. 2004. The ruble fell by more than 70 per cent in a couple of weeks. The economy shrank by 4.int/default. Russia is now better placed than it ever has been to deepen its economic development by embracing the global market economy from which it had long excluded itself. The Russian economy proved far more resilient than anticipated. the Clinton Administration argued that aid to Russia was needed. Last summer's fleeting economic fright reflected Russia's staggering economic collapse. http://www. the post-Cold War Russian economic experiment imploded. http://www.3 per cent. Up until a year ago. Barter is declining. The Russian economy is resilient." said Anders Aslund. but still too big to flounder— highlights the friction inherent when economic policy is used to further geo-political goals.cfr. Harry Cohen. Once burned. there has been no reversion to central planning. The global economy teetered on the edge of depression. Its time to own up to the latter. This contradiction— not too big to fail. Now American support for assistance to Russia can only be justified for two reasons: to reinforce Russia's transition to a market economy or as ransom in Moscow's continued strategic blackmail of the West. industrial subsidies or government reliance on simply printing money. A key question. though. Most important. in retrospect. and the Russian economy can bounce back without much overt help from the West. "The shock accomplished what reform was intended to achieve.

And it would take even longer for any balance-of-payments crunch to occur. "Only 20 percent of Russia's businesses are connected to the oil sector. Petersburg Times Another argument invoked to support a policy that favors the natural resources sector is the threat of a balance-of- payments constraint. . Should prices fall precipitously say. pg." said Illarionov. Fellow for Energy Studies at the Baker Institute. Morse. More strategically. To make matters worse. Edward L. “Our budget would collapse. in order to raise prices. Energy companies from all three countries had concluded with the Hussein regime a number of multibillion-dollar oil contracts. research fellow at the Baker Institute for Public Police at Rice.html A number of Russian observers believe that their oil industry can weather such a price war. Winter 2003/2004. This is easy to say with prices above $25 per barrel. 262-3 Oil interests also partly accounted for the antiwar positions of France. Russian state budget is calculated assuming oil prices at 23 dollars per barrel Lutz Kleveman. The New Great Game. has been calculated in expectation of an oil price of twenty-three dollars per barrel. October 29. 2003. Russia will be faced with both plummeting revenues and declining investment. to below $15 per barrel. China. http://www.MSDI 2008 46 Louie/Oz Oil Disadvantage A2: Russian Oil Price DA: Defense Russia can weather a price decline as long as prices are above $25 a barrel Joe Barnes. the Russian government abhorred the thought that a “liberated” Iraq would flood the world market with cheap oil. on assumed strong real appreciation. Amy Jaffe. free-lance journalist (has worked for CNN. even at much lower oil prices. deputy chairman of the Duma’s defense committee. The Russian state budget. companies. high production costs in Siberia could cause Western oil corporations (whose capital Russia tries to attract) to invest in a reopened Iraq instead.saudi-us-relations. originally printed in National Interest. reducing the market share for Siberian oil. Export growth will depend on growth in energy and metals exports over the medium term. which is financed almost entirely through oil and gas export revenues. UPI. Executive Adviser at Hess Energy Trading Company and was Deputy Assistant Secretary of State for International Energy Policy in 1979–81. August 06. Moscow will be sorely tempted to cooperate on production levels with Riyadh. Whether this is the reason that Moscow and Riyadh recently signed an agreement to cooperative on oil price stability is an open question. St. and particularly Russia. director for Central and Eastern Europe at the Economist Intelligence Unit. better conditions will be created. Illarionov maintains that potential drops in oil prices will not affect Russia's performance. given reduced external debt service and increasing levels of foreign direct investment. it would be some years before Russia's current account surplus disappears. only to offer them to U. Russia’s economy is self-sufficient.” Aleksei Arbatov. Import growth projections depend in part.S. Newsweek) and book author. as it did in 1999-2000. described the consequences. Second. and assuming only modest export growth. which they feared a new Iraqi government indebted to Washington would declare null and void. 2001. 2004. however. Russia could survive dramatically lower oil prices Laza Kekic. For 80 percent of the firms that are in no way dependent on the export of oil. and. Though many link the growth of Russia's economy with high oil prices in the world market. Only 20% of Russian businesses are connected to oil.org/newsletter2004/saudi-relations-interest-01-06. Daily Telegraph.

by an estimated one fourth of a percentage point of GDP per dollar. The St. confirms that decreases in oil prices have no negative impact on real GDP growth.and-gas industry in GDP is not very large in real terms. If there were a sharp drop in oil prices. However. developed for the Economic Development and Trade Ministry.MSDI 2008 47 Louie/Oz Oil Disadvantage A2: Russian oil price DA: Econ bounce back There’s no impact to oil price drops—the Russian economy will bounce back. October 23. a rapidly appreciating exchange rate or fast-increasing inflation would have a negative impact on the whole economy. that lower oil prices will have a negative impact on economic growth. A full-scale macroeconomic model of the Russian economy.a moderate depreciation of the ruble should be enough to keep the current account sufficiently in surplus. and in particular to pay back its debt. Even if oil prices were to fall to historic lows and stay there for a prolonged period .something that is unlikely to happen . is equally unfounded. The second concern. the negative impact on government revenues should not be too large and the necessary adjustment should be easy to make.would be economically feasible. as long as a fall in oil prices is not extreme. there is a grain of truth. Here.provided the political will was there . The share of the Russian oil. Moreover. at least. . Third is the concern that with lower oil prices the Russian government will be unable to collect enough revenue to meet its budget obligations. Falling oil prices decrease government revenues from oil and gas exports. 2001. the adjustment could be painful. but . Petersburg Times.

. March/April 2002. of State for Intl Energy Policy (79-81). But unlike OPEC countries. while capital investment flows are sheltered from price volatility.MSDI 2008 48 Louie/Oz Oil Disadvantage A2: Russian oil price DA: Numerous Checks Numerous checks prevent damage to Russia from low oil prices Edward L. it depends on revenues from export taxes. portfolio manager at Firebird Management. Like OPEC exporters. Sec. the situation is more complex. Thus the major question is whether Saudi Arabia can afford a sustained price war to block Russian and CIS oil development. Foreign Affairs The cost structure of the Russian energy industry is a significant factor in the equation. That feat might require oil at $ 10 a barrel for two years or more -. and James Richard. For the Russian government.a situation as frightening for Riyadh as it is for other OPEC countries. and Central Asia. Morse. Executive Adviser at Hess Energy Trading Company and Deputy Asst. Russian industry is protected from low oil prices. an investment fund active in eastern Europe. Russia. but Russia is also more sheltered from low oil prices than are other exporting countries. As long as costs are largely ruble-denominated and the ruble is stable. it also takes in significant revenue from domestic sales and from taxes on huge natural gas exports to Europe.

50." notes Vladislav Oreshkin. and a good dose of the latter.7 billion and natural gas $20. How low the prices would have to go is debatable. Oleg Vyugin. according to the latest data. lower oil prices would be a great boon for the Russian economy. While high world energy prices such as were experienced in 2000 may be good for Russian oil majors and natural-gas monopoly Gazprom. without threatening public finances or risking overheating in the economy. first deputy chairman of Russia's central bank. Russia also continued building its foreign currency and gold reserves. was cautious about the record high reserves. the ruble would probably then devalue in real terms. The former is poison for Russia's recovering industry and the latter leads to sizeable inflation.9 billion for all of 2003. This does not reflect much consideration of the longer term. With oil at $16 a barrel or less. according to one economist. signaling that investors have more confidence in the economy. the oil magnate Mikhail B. Hydrocarbons and oil products accounted for $74 billion of that. Another positive factor was that less money is leaving Russia. January 7.5 billion the previous week. moreover. . Russia's economy could still grow a healthy 5. Arvedlund. Even if high oil prices help in the short term. $14.5 percent even if the price of Brent crude fell to $23 a barrel this year. crude oil exports $39. the country's net capital flight slowed to $2. up from $74. Such an imbalance is huge by any standards and either induces a rapidly appreciating real exchange rate or forces the Central Bank to print money on a large scale to buy up the incoming dollars. he added. Despite the arrest last fall of Russia's richest man.4 billion. "That could maintain growth in 2004 and create the basis for a sustainable long-term growth trend. and $20 billion a year reportedly was sent abroad in the 1990's amid the post-Soviet economic collapse. but some analysts said that Russia could withstand a serious crisis as long as oil remained above $13. Russian media and politicians continue to fret about the impact of a global slowdown on oil prices. In 2001. it’s clear that low oil prices are the best long term way to save the Russian economy.8 billion as of Dec.The explanation is simple. Oreshkin said. from $8.8 billion left Russia." Only if the average Brent price collapsed. would Russia's economy deteriorate in 2004. Choosing between these two evils. Russia has a budget surplus. 2001 THE world's biggest problem at the moment is terrorism. 2004. he added. falling below $13. Russia ran a current-account surplus of around $46 billion (roughly 18 percent of GDP) in 2000. Business/Financial Desk Oil helped Russia set an export record of $134. Hence. which totaled $77.50 a barrel. attributing the numbers to "hot money. and would still have balanced accounts even if the price of oil fell to $21 a barrel. The St.1 billion in 2002. Energy products accounted for virtually the entire surplus. an economist with the UFG investment bank in Moscow. not be able to maintain this course indefinitely without creating a major inflation problem. At least this is the impression one gets from reading the Russian and international press. "Russia may face a balance-of-payments deficit for the first time since 1998.MSDI 2008 49 Louie/Oz Oil Disadvantage Low oil prices good: Russian Economic Reform 1ar Russia could survive a serious drop in oil prices. At prices around $26 for a barrel of Urals blend." Analysts say only one thing could push Russia off its cloud: a plummet in oil prices.1 billion. in the longer term they are clearly bad for the rest of Russia. the Central Bank has so far rightly chosen a small dose of the former. October 23. lower oil prices would even yield healthy long-term growth Erin E. however. 26. one analyst said. The New York Times Section W. Column 3. and Russia's is falling oil prices. Worse. mainly amid worries about Russia's ability to meet future debt repayments. up 25 percent from 2002. It will. Petersburg Times. However. even financial markets have started to worry and the RTS has recently been falling in parallel with the oil price. Khodorkovsky. central bank officials said on Monday. Mr.

Also. But when oil revenues flood a nation with a fragile system of democratic checks and balances. Thus. But Russia is not Nigeria and has yet to become a full-fledged petro-state. and this inescapable geological fact will determine many of the policy choices available to its leaders. and a petro-state emerges." The arrest of oil magnate Mikhail Khodorkovsky sparked a debate over what kind of country Russia will be. Petro-states also suffer from a narrow tax base. tourism--less internationally competitive and hinders their growth. corruption. owners and managers acquire enormous political clout. Oil and gas now account for roughly 20 percent of Russia's economy. volatile economic growth. while the Khodorkovsky affair may temporarily scare away some investors. In the future. The political consequences are also corrosive. manufacturing. Oil generates export revenues and taxes for the state. complex country with a highly educated population. a "petro-state. as the link between the electorate and government spending is indirect and tenuous. inefficiency. In turn. inequality. whereas policymakers can choose their ideology. A strong democracy could help Russia compensate for the economic and political weaknesses that plague all countries dominated by oil. rife with poverty. Russia already experienced this effect in 1998 when the drop in oil prices sparked a financial crash. It already supplies 30 percent of Europe's gas needs. which know how to operate profitably in countries with weak property rights and unstable politics. Russia is the world's second largest oil exporter after Saudi Arabia. The busts lead to banking crises and public budget cuts that hurt the poor who critically depend on government programs. No petro-state has succeeded in converting oil into prosperity for the majority of the population. and a high concentration of power and wealth. That Russia has lots of oil is old news. and 40 percent of its total tax revenues. and energy markets have given to its petrolcum sector. It is a large. and can dominate other weak public institutions. petro-states suffer constant and debilitating economic boombust cycles. In Russia. To energy companies worried about growing domestic instability among the major oil exporters of the Middle East. a poorly functioning public sector. A strong democracy and an effective public sector explain why oil has not distorted the United States or Norway as it has Nigeria and Venezuela. In this discussion. Regardless of its political turmoil. Russia will continue to appeal to oil companies. This overvalued exchange rate makes other sectors--agriculture. and corruption. Thanks to the inevitable concentration of the oil industry into a few large firms. Throughout the 1990s. . dysfunctional politics and economics ensue. Nigeria and Venezucla are good examples. Russia's oil and gas industry employs only around 2 million workers out of a total workforce of 67 million. In petro-states. 55 percent of its export earnings. Russia risks becoming. Their population is chronically frustrated by the lack of proportion between their nation's oil wealth and their widespread poverty. as a handful of politicians and government regulators make decisions that are worth millions to these companies. Petro-states also have jobless. Petro-states are oil-rich countries plagued by weak institutions. as unbridled private monopolists can be as predatory as public ones. Weak governmental accountability is a typical side effect of this dependency. but it creates few jobs. Privatizing the industry without strong and independent regulatory and tax agencies is also not a solution.MSDI 2008 50 Louie/Oz Oil Disadvantage High oil prices bad: Hurt Russian Economy Sustained high oil prices would turn Russia into a petro-state. Russia's oil and gas industry will become even more important. Russia's characteristics as a petro-state deserve as much attention as its factional struggles. bitter fights over the control and distribution of the nation's oil rents become the gravitational center of political life. corruption often thrives. A lot of oil combined with weak public institutions produces poverty. grow as rapidly. as no other sector can be as internationally competitive. An economy that relies mostly on oil exports inevitably ends up with an exchange rate that makes imported goods less expensive and exports more costly. It is no accident that the current crisis in Russia hinges on control of the country's largest oil company and the political uses of its profits. the 10 largest companies account for more than half of total tax revenues. they don't have much leeway when it comes to geology. Let's hope it will also be able to avoid the crippling effects of its geological present. Unfortunately. and an inevitably collapsing economy Moises Naim (Editor) Jan/Feb 2004 Foreign Policy Russia's future will be defined as much by the geology of its subsoil as by the ideology of its leaders. and in many respects may already be. Russia's beguiling geology will eventually attract energy companies that cannot afford to be left out of some of the world's richest oil reservoirs. and politicization. with the bulk of government revenues coming from just a few large taxpayers. Nationalizing the oil industry fails to solve these problems: State-owned oil companies quickly become relatively independent political actors that are rife with corruption. It also undermines democracy. or be as profitable. and a still somewhat diversified economy. privatization in Russia and innovations in exploration and drilling technologies brought into production oil fields that had hitherto been underperforming or completely off-limits. and its subsoil contains 33 percent of the world's gas reserves. If oil prices fall below $20 a barrel. oil technology. Russia has a lot of oil. a relatively strong technological base. Despite its economic heft. Russia is still struggling to overcome the crippling effects of its ideological past. Russia became an even more attractive hedge. Thus. Russia will surely face another bout of painful economic instability. because the international price of oil is volatile. What's new is the dramatically enhanced role that changes in Russian politics.

MSDI 2008 51 Louie/Oz Oil Disadvantage ***Renewables*** .

6-21-07.com/articles/2005/08/26/news/edbremmer. petro-states are rethinking their assumptions about the elasticity of global demand for oil. generate a much desired regime change.and hurt their bottom lines .iht. Prices will not fuel the transition. without (so far) a sharp drop in demand. http://www.com/ens/jun2007/2007-06-21-04. 2005. introducing the report Wednesday. this outcome could be achieved before Iran becomes a nuclear power. protecting the West against supply disruptions.asp While the report finds that high oil prices have driven investors into the renewable energy market.as importing states actively looked for new sources of oil. executive director of Institute for the Analysis of Global Security. 27 Aug. . Renewable development is not dependent on high oil prices Environment News Service. This increased pressure on the Iranian regime could. When oil sold for $30 a barrel.htm To insulate the U.MSDI 2008 52 Louie/Oz Oil Disadvantage Renewables 2ac Security concerns drive renewable development Gal Luft. Ian Bremmer. energy-exporting states are changing their minds. Some now believe they can push the price still further and increase profits without a drop in demand. Applied in unison." International Herald Tribune. If Washington executes this strategy with expediency and determination.S. over time. "One of the new and fundamental messages of this report is that renewable energies are no longer subject to the vagaries of rising and falling oil prices . http://www. http://www. energy alternatives and other ways to cut fossile-fuel consumption. communities and countries irrespective of the costs of fossil fuels.ens-newswire. UNEP Executive Director Achim Steiner says many investors are choosing renewables regardless of oil prices. The President also seeks to reduce America's oil dependence through increased efficiency and to shift to alternative fuels.php Second. "Prices Transform Oil Into A Weapon. President Bush seeks to double the size of the American oil reserve in the coming years. 7-5-07. said UNEP Executive Director Achim Steiner. and limiting the flow of petrodollars to Tehran. they accepted the conventional view that substantial price hikes might lower demand . these tactics advance the strategic goals of reducing global energy prices.they are becoming generating systems of choice for increasing numbers of power companies. Now that oil sells for well above $60 a barrel.org/n050707. further.iags.

" he said. Mark Hertsgaard.com/cgi-bin/article." The San Francisco Chronicle. which comes into force internationally (but without U.com/cgi-bin/article.sfgate. Mark Hertsgaard.000 scientific and technical experts from around the world. upped the ante. Rajendra Pachauri. 2005. Politicians won't say it because then they'd have to do something about it. the accumulation of evidence led Pachauri to embrace apocalyptic language: "We are risking the ability of the human race to survive. the primary greenhouse gas. the hard fact is that a certain amount of global warming is inevitable.DTL Contrary to the impression given by some news reports.S.MSDI 2008 53 Louie/Oz Oil Disadvantage A2: Warming Warming is inevitable – renewable transition cant solve.DTL At the core of the global warming dilemma is a fact neither side of the debate likes to talk about: It is already too late to prevent global warming and the climate change it sets off. In its 2001 report. 2005. for pushing too hard for action. So even if humanity stopped burning fossil fuels tomorrow. the problem is bound to get worse. with increasing urgency for many years. perhaps a lot worse. 13 Feb.for example.cgi?f=/c/a/2005/02/13/INGP4B7GC91. Environmentalists won't say this for fear of sounding alarmist or defeatist. the United Nations Intergovernmental Panel on Climate Change. coal and gas.cgi?f=/c/a/2005/02/13/INGP4B7GC91. But prevention is no longer a sufficient option. and much sooner than expected. participation) on Wednesday. before it gets better. The world's top climate scientists have been sending this message. however. http://www. http://www. Even if we stopped pumping all carbon dioxide tomorrow – we would not see change for 100 years. 13 Feb. Until now. "It's much too lake to sweat global warming. "It's much too lake to sweat global warming. . There is a lag effect of about 50 to 100 years. the panel said that human-caused global warming had already begun." The San Francisco Chronicle.sfgate. That's how long carbon dioxide. Since 1988. What's more. home furnaces and industrial smokestacks. by implementing the Kyoto Protocol. Last month. comprised of more than 2. the climate change panel's chairman. most public discussion about global warming has focused on how to prevent it -. No matter how many "green" cars and solar panels Kyoto eventually calls into existence. the planet would continue warming for decades. Robert Watson. global warming is not like a light switch that can be turned off if we simply stop burning so much oil. has conducted the most extensive peer- reviewed scientific inquiry in history. remains in the atmosphere after it is emitted from auto tailpipes. Although Pachauri was installed after the Bush administration forced out his predecessor.

multinational efforts to reverse climate change and it turns out these steps have been ineffective. energy expert and writer for Harpers. security threats. “Some sort of strategy is required to combat climate change. “must be a hedging strategy because. says Lahneman.S. “These conditions pose a dilemma for policy makers~’ notes Bill Lahneman. Whatever course of action we choose today will need to be modified. the climate crisis will be considerably more dire. then it will be difficult to recover and begin to take the proper measures. we have a little room to breathe.MSDI 2008 54 Louie/Oz Oil Disadvantage Renewbles Now Bad Lack of knowledge prevents solvency and means we’ll have to change our policies down the road – action now risks counterproductive policies and saps our ability to take corrective action in the future Paul Roberts. 129-30 In short. In this sense. but our understanding of climate change and its costs — and therefore our certainty about the “best” solution — will surely continue to evolve. pg. but any comprehensive strategy would be quite expensive to implement.2004. or even sooner. head of the Washington-based National Intelligence Council. which is handy. within the decade. because at present we have very little sense of what the ultimate climate solution will be. perhaps substantially. Not only are we depending on energy technologies yet to be invented. climate policy is a kind of gamble: ten years from now. but we will also know vastly more about the severity of the problem and our options for solving it. What if such strategies turned out to be inappropriate because global warming phenomena were misunderstood at the time the strategies were devised and implemented? The world would have devoted large amounts of scarce capital [to] the wrong fixes.” . leaving [fewer] resources available to combat global warming effectively once the process became better understood. if the world’s nations devote too much wealth to large-scale. which advises intelligence agencies on energy and other U. The End of Oil.” Climate policy.

global C02 emissions contributed to an increase in atmospheric concentrations of less than 0.T. 2 a small increase compared to the 20 percent to 200 percent increase in concentrations that researchers often propose as a possible long. Senator Thomas observed that in his view.org/697int. the future benefits of efforts to reduce emissions will be nearly the same whether the reductions.5 percent. Chairperson Council Of Economic Advisers. Economic Growth. accessed 8/26/02 In his remarks. and Margo Thorning Senior Vice President and Director of Research.I. it would be silly to do nothing until you actually see flames. and U. Bloomfield. "It is too early to enter into new agreements on climate change because we do not have good science to back up the agreements and because we do not know what impact the agreements might have.MSDI 2008 55 Louie/Oz Oil Disadvantage Renewables Now bad: Not Enough Info Long-term nature of emissions impacts makes short-term changes dangerous and unnecessary R. “Book Introduction Climate Change Policy. Instead. In 2000. occur today or years in the future. 2002.Chairman. July 11. President. Mark A.S. a serious but measured first step is in order. Federal Document Clearinghouse Congressional Testimony A distinguishing characteristic of climate change is that any successful effort to address the potential risk of climate change from most greenhouse gases will stem from cumulative efforts over decades. economist Richard Schmalensee and his colleagues: If you smell smoke in your house. The uncertainty surrounding the ultimate consequences of climate change and the necessity of a long-term effort to address it combine to suggest that severe and costly near-term measures to reduce emissions are not warranted.” June 1997. A helpful analogy is posed by M. http://www. It’s too early to have this debate—there’s no good science available Charls E.accf." He added that it is not fair to penalize the United States relative to other countries.htm. Glenn Hubbard. but you also should not hose down the house after one whiff of what might be smoke. ton for ton. Walker. not just a few years. As substantial changes in concentration only result from cumulative emissions over a period of decades.term stabilization goal. Risk Prioritization. for example. .

” The report went on to state that “There is time for climatological research in coming years to provide a firmer basis for the consideration of global strategies. but that’s not true. Executive Vice President of the American Petroleum Institute. O’Keefe.” Industry has often been accused of wanting to delay all action until the scientific questions are answered. pg. The U. 1997 Global Warming Opposing Viewpoints.S. Congress’s Office of Technology Assessment concludes that “initial delays of ten or 20 years in implementing emission stabilization will have little effect on ultimate atmospheric carbon concentrations. 118 To expect the citizens of this nation.MSDI 2008 56 Louie/Oz Oil Disadvantage Now Not Key We can wait to act on warming William F.” These conclusions mirror those of leading academics at in- stitutions like MIT who have been pursuing the climate issue in a rigorous and scholarly manner. to implement actions that disrupt their economies without solid answers to the most pressing questions ignores the limits of what is at best a forced consensus among a well- organized and vocal minority. The prestigious Marshall Institute recently released a report unambiguously stating that “no scientific justification now exists for economically punishing policies aimed at global reductions in the emission of carbon dioxide. The irony is that emerging scientific information has so far reduced the magnitude of the threat. although considerable uncertainties remain. Especially when there will not be a serious penalty for waiting until we know more. . or any nation.

2004. fish. breaching dams in some areas. wood. wind and solar power would lose much of their cost advantage. Automotive fuel cells are still many times more expensive than even a vintage gasoline engine. Renewables are also extremely vulnerable to energy price swings: if gas prices were to come down. Although wind and solar are getting cheaper.MSDI 2008 57 Louie/Oz Oil Disadvantage Renewables Fail Renewables won’t catch on – 4 reasons (wind. 201-2 Other problems become more apparent when we look more closely at cost. Federal Document Clearinghouse Congressional Testimony Renewables.13% of US electricity generation in 2000 and are not expected to reach a 3% contribution by 2020. such as the significant scenic impairment cause by windmills in some areas . b. geothermal. 2002. it is important to recognize that all the generous subsidies now being provided for "renewable" energy -.and coal-fired technologies that will grow more efficient and less expensive and less polluting by the year. as well: if wind or solar were to lose their government subsidies. energy expert and writer for Harpers. solar. and municipal solid wastes) supplied only: . the tables show that all non-hydro renewables combined (wind. biomass. Beyond questions of cost. vulnerable to price swings.hydro "renewables. proponents often overlook the fact that their competitors are also getting cheaper and will continue to do so. Solar power. Non-hydro "renewables" will provide little usable energy. skittish investors) Paul Roberts.wind. still costs five times as much as coal-fired power." Furthermore. wood.merely shift costs from renewable energy developers to consumers and taxpayers . the current boom in new installations would come to a screeching halt: the mere threat of such a loss has many potential investors looking elsewhere. The End of Oil. president of Energy Market and Policy Analysis. Many people like the sound of getting energy from "renewable" energy but.3.2004. it is necessary to be realistic and look at the facts. pg. . geothermal. Just as fuel cells must compete with a constantly improving internal-combustion engine. over 7% of the nation's electricity. again.2. and they may require decades of work to be competitive. even after nearly thirty years and many billions of dollars in R & D.g. energy expert and writer for Harpers. that could keep them from assuming a dominant share of the future energy mix. Despite considerable development. and the slow pace of re-licensing of existing hydropower projects.67% of US overall energy requirements in 2000 and may reach only a 4. pg. DOE has spent hundreds of millions in tax dollars on renewable energy R&D during the last 20 years. most alternative technologies really aren’t ready for prime time. Advocates of "renewable" energy do not like hydropower despite the fact that it is the one "renewable" energy source that is providing a significant contribution. For example. there is opposition to expansion and the very real possibility that the contribution from hydropower could be reduced in the future. . Renewables are politically vulnerable. The small role that non-hydro renewable energy sources can be expected to play in supplying our energy and electricity requirements during the next 20 years is demonstrated clearly in the two tables. For all their huge potential. solar) (fossil fuels are getting cheaper. 191-2 But there are other reasons for the slow rise of alternative energy —reasons that go beyond the greed and duplicity of individuals or an entrenched system. The End of Oil. shown on the next page. essentially. The non-hydro renewables . solar. these technol ogies may still face inherent limits in the quality of the energy they produce. July 16. They favor only the non. recreation)." Furthermore. wind and solar will have to battle with gas..even though the huge structures produce very little electricity. Reductions could come from diversion of water around dams to serve other needs (e. renewables will not significantly contribute to energy production Glenn Schleede. in fact. waste. based on EIA data. biomass (including wood and wood wastes) and municipal solid wastes (5) are. These small but realistic forecasts by EIA take into account the enormous federal and state subsidies now being provided some renewables such as "wind energy. Despite decades of (R&D)research and development — and despite recent growth rates that rival that of computers and cell phones — nearly every major alternative technology still suffers from serious engineering or economic drawbacks. Renewables can’t compete Paul Roberts.and hide those costs in tax bills and monthly electric bills. niche technologies that are not likely to ever make a significant contribution towards supplying US energy requirements. Some of these technologies have negative environmental implications that are only now being recognized.57% contribution by 2020.and others being contemplated such as federal "renewable portfolio standards" -. for example. Hydropower is the only significant source of economical renewable energy. a. the potential for an increased contribution from hydropower is limited because few sites are available. and where and when they can be used. politically vulnerable.

president of the Institute for Energy Research. p.org/pubs/pas/pa-280. 226-227 To soft energy advocates. Bradley Jr. director of natural resource studies at the Cato Institute and adjunct scholar at the Institute for Energy Research. But some perspective is necessary Total private- sector investment in solar." with limited capacity. falling output. . Biomass is also uneconomic and an air-pollution-intensive renewable. almost all the growth in new electricity capacity over the next 15 years will come from natural gas turbines. environmental complications.MSDI 2008 58 Louie/Oz Oil Disadvantage Renewables Fail Renewable energy sources don’t work well Robert L.S. Most importantly. August 27.cato. According to projections by the U. at least when relied on for central-station or grid electricity generation. wind and biomass in 1995. is not environmentally benign on a total fuel cycle basis and is highly uneconomic.html Wind power is currently the environmentalists' favorite source of renewable energy and is thought be the most likely renewable energy source to replace fossil fuel in the generation of electricity in the 21st century. Renewable energies are expensive and ineffective Jerry Taylor. and Peter VanDoren. even before adjusting for government subsidies. for instance. spotty power output. even the most cost-effective soft energy sources are three times more expensive on the spot market than the least-costly fossil fuels. Fall 1999. editor of Regulation magazine. renewable energy is competing against continuously plunging fossil fuel prices and rapidly advancing technologies—primarily natural gas turbines—that result in electricity costs of 2 to 3 cents per kilowatt-hour if the waste heat from the natural gas turbines is also used for heating and cooling. Geothermal has turned out to be "depletable. was less than 1 percent of total world energy investments. is only half its budget for developing three deepwater off-shore oil rigs in the Gulf of Mexico. heavy corporate investment in renewable energy technologies is evidence of the potential competitiveness of alternative fuels in the near future. Most renewable energies have similar common denominators: extremely high capital costs.. http://www. Journal of International Affairs. land intensive. the most recent year in which data are available. serious NIMBY opposition (the Not In My Back Yard” phenomenon) and struggling economics. Hydropower has lost favor with environmentalists because of the damage it has done to river habitats and freshwater fish populations. 1997. Indeed. and modest new investment. Energy Information Administration. Shell’s highly-publicized plan to spend $500 million over five years on renewable energy. Solar power. and thus a fringe electric power source for the foreseeable future.

wind) Paul Roberts.2004. The End of Oil. gas. both solar and wind suffer from intermittency: they are not available twenty-four hours a day. but generally closer to 33 percent — or about a third the capacity of a gas-fired power plant. 365 days a year. or “base load. . actually delivers i megawatt only during high winds. energy expert and writer for Harpers. or “capacity. coal. where utilities are no longer required to carry so much surplus generating capacity. pg. over the course of a year. because average wind speeds are lower. nuclear power. nor do they always deliver their maximum power.or gas-fired power plant designed to deliver 1. This extra capacity is called overbuild. its average production will be considerably lower. Such year-round. if a utility wants to add 100 megawatts of wind capacity to its portfolio. A 1-megawatt wind turbine.” may be just 45 percent in high-wind regions like Spain or in Wyoming. Thus. Solar power has an even lower capacity — around 20 percent — meaning that to produce a steady 100 megawatts of solar power actually requires the installation of 500 megawatts of PV cells. Factoring in this variability. or hydropower is that these power sources are dependable. and hydropower for their constant. for example. One of the main reasons that utilities prefer coal. day-and-night dependability is why utilities tend to rely on gas. are the easy challenges. A nuclear power plant delivers 80 percent. By contrast. deliver an average of 90 percent of its listed capacity. 202 And these. it actually needs to install closer to 250 megawatts in new turbines: a huge additional expense.MSDI 2008 59 Louie/Oz Oil Disadvantage Renewables Fail: Dependability Renewables fail – dependability (solar.200 megawatts will. and it poses a huge problem for energy advocates — especially in an era of deregulated power sectors. A coal.” requirements — the steady demand for power that exists twenty-four hours a day. it turns out. a wind farm’s average production. nuclear energy.

Wind is even less dependable. a renewables expert with the Bonneville Power Administration (BPA).2004. Although meteorologists are getting better at forecasting the average amount of wind on a given day in a given region. neither wind nor solar is so reliable.MSDI 2008 60 Louie/Oz Oil Disadvantage Renewables Fail: Dispatchability Renewables fail – dispatchability Paul Roberts. “we still can’t guarantee that it will blow at io:oo A. energy expert and writer for Harpers. regardless of weather. Both solar and wind power also lack a quality known as dispatchability: unlike a coal-fired plant. tomorrow~’ says Tom Osborn. to cure renewables’ many weaknesses would take more than building more wind turbines or PV arrays to compensate for this lower capacity. The End of Oil.M. pg. 202-3 Here we begin to see the first cracks in the rosy renewables scenario. a federal power supplier in the Pacific Northwest. Solar is simply unavailable at night or on cloudy days. Even if utilities were willing to overbuild. . which can be called upon for power day or night.

With a power-dense fuel — coal. points out. energy expert and writer for Harpers. And. Power density is. MacKenzie. most often in high rises and densely packed housing. By contrast. “Supplying those buildings from locally generated renewable energies is either impractical or impossible’ Smil writes. as Vaclav Smil. a three-hundred-megawatt wind farm like Stateline may cover as much as seventy square miles. one of the greatest weaknesses of renewables like solar and wind. “We could do it. The End of Oil. a solar-powered hydrogen economy in the United States alone would require the construction of tens of thousands of square miles of PV panels — at an astonomical cost — while the new electrolyzers would increase water demand nationally by 10 percent. 206 Even if money were no object. has calculated that on the basis of current PV technology. ultimately. “but it would be expensive.” Solar is even worse.” . centralized power plants. most of the world’s population will live in urban areas of ten million or more. the sheer physical scale of the enterprise would be daunting.2004.” MacKenzie told me. power produced per square foot of facility — than coal technology. with the World Resources Institute. for example — you can generate an enormous amount of power quickly. trying to power a large city with renewables would require huge tracts of land: a moderate-size city of a million homes would need as much as a thousand square miles of wind farms. and then distribute it to urban consumers. an expert in energy economics at the University of Manitoba. This is because wind technology has a far lower “power density” — that is. While a six-hundred- megawatt coal-fired power plant requires a few dozen acres.MSDI 2008 61 Louie/Oz Oil Disadvantage Renewables Fail: Power Density Renewables fail – power density Paul Roberts. pg. in relatively small. The “power density mismatch is simply too large.

[wind." Concluded the Yergin task force. the United States can "free ride" by importing the technology or equipment. the US can free- ride on others innovations Robert Bradley (president of the Institute for Energy Research. The saved resources (land. . development. The fundamental law of economic efficiency--"employ[ing] the available means in such a way that no want more urgently felt should remain unsatisfied because the means suitable for its attainment were employed for the attainment of a want less urgently felt" --is violated. and capital) would have gone to a more competitive source of electricity or. labor. If U. less renewable energy infrastructure would have been built and consumers would have had lower cost electricity. not a positive. The American Wind Energy Association trumpets the fact that about $3. Subsidizing renewable energy for its own sake is akin to "creating" jobs by digging holes and filling them back up. would have incremental savings to spend elsewhere in the economy. In 1994. subsidies contract.S. actively marketing products internationally.html A jobs-creation rationale for wind power is marshaled by supporters. and the price of wind-power energy is substantially higher than the price of electricity from other sources.S. Proponents of renewable subsidies argue that if the subsidies do not continue.S.S. export market. U. http://www. If it becomes a relevant market.-based firms in international sales activity is clearly vital. Should foreign subsidies result in major technological breakthroughs to make wind power economically and environmentally viable in niche markets. creating thousands of jobs for American communities. given electricity-generation overcapacity. however. Prices reflect relative scarcity.S.5 billion is invested in the U. Warnings that foreign companies will replace U. companies are finding the best markets abroad where electricity is more scarce and the cost of new power is higher. Not “Green.-subsidized experiment as in the past. U. The result of wind-power investments in California is the existence of an uneconomic renewable energy industry and an underused natural gas infrastructure. where watt-for-watt.power] industry. less than 50 percent is in the United States today. more likely.S. ratepayers and taxpayers would be spared.S. Whereas almost 80 percent of the world's wind-power capacity was based in the United States in 1990. Not surprisingly. that investment creates more jobs than any other utility-scale energy source. the wind-power industry will likely be a foreign-subsidized experiment rather than a U. Continued cost reductions fostered by [DOE's] strategic research.S. wind turbine and component manufacturers contributed directly to the economies of 44 states. U.S.” Cato Policy Analysis No. Tax incentives and government grants are sparking new wind-power capacity in a variety of countries. utility companies argue that the public should compensate them for those now uneconomic investments) in the restructuring period. Resources devoted to wind power are thus wasted in an economy where wants are greater than the resources available to meet them.org/pubs/pas/pa- 280. . The subsidies have resulted in "many strong European and Japanese competitors in the market place . to a different endeavor entirely. almost as a last line of defense.cato. A $500 million annual renewable export industry accounts for under 1/10 of 1 percent of the total U. adjunct scholar of the Cato Institute) August 27 1997 Renewable Energy: Not Cheap. aspect of the industry. Without subsidies. renewable energy companies just when commercialization is in sight have been heard since the 1980s --another argument that is wearing thin. 280. .S. The establishment of footholds by U. Consequently. or both. and better alternatives are forgone. in turn. and. firms will lose out to foreign firms whose governments will continue to subsidize them. it has contributed to artificially high rates and a substantial ratepayer surcharge for stranded cost recovery (jargon for generation facilities and third-party contracts incapable of delivering power at competitive prices in a restructured market. Today's renewable export industry is a very small portion of total U. Unwise and uneconomic subsidies abroad do not justify unwise and uneconomic investments at home. U. and deployment activities can ensure the United States a place in an emerging multibillion- dollar clean energy market. Electricity consumers.MSDI 2008 62 Louie/Oz Oil Disadvantage Renewables Fail: Not Competitive Renewables will never be a large market. consumers would have been advantageously subsidized by foreign taxpayers or ratepayers. The high-cost propensity of wind power is a negative.S. energy-related export activities. dollar-for-dollar. in fact.

org/pubs/pas/pa- 280.org/econup/econ3-12-00.5 cents per kWh in select regions such as the Pacific Northwest. and falling gas prices and electricity prices from gas-fired generation are lowering wind turbine costs as well.globalwarming.MSDI 2008 63 Louie/Oz Oil Disadvantage Renewables Fail: Not Competitive Traditional energy generation methods will stay ahead of renewables in the long-term Robert Bradley. Long-term fixed-price wind contracts are available at about 3 cents per kWh (nominal) in prime areas. But even if the gap were cut in half. as discussed). between $400 and $500 per kW.cato. [36] The energy-efficiency factors of gas turbines have increased from just above 40 percent in the early 1980s to nearly 60 percent today. August 27. One forecast is that new gas-fired generation of virtually any capacity will cost from $200 to $450 per kW. http://www. a 50 percent premium for new wind capacity is substantial. adjunct scholar of the Cato Institute.html Is alternative energy the panacea that will save us from global warming at no cost? Not according to the Department of Energy. Tom Sarkus. translating into an all-inclusive price of 5 to 6 cents per kWh (a price that factors in the tax preferences and other implicit costs. Indeed.html It is erroneous to conclude that even if wind is not competitive now. leading to a thirty percent decrease in electricity prices. 2000. 280. compare the most recent nominal levelized prices of advanced wind technologies operating in prime wind areas with new- generation gas turbines. He estimates that "one-third of the projects have failed and others just redefined existing technologies or spawned other ideas that do not show up on the DOE’s return" (Greenwire. technological change can be congruent between different energy technologies.” Cato Policy Analysis No. where natural gas prices are the lowest.8 billion investment since the mid-1980s on 40 experimental power projects. generating power at 2 cents per kWh. http://www. says that the DOE has received a scanty $1. Renewable energy empirically can’t compete in free markets Global Warming Information Page. according to the World Wildlife Fund. March 8. In Germany. it soon will be. In Europe. The cost of gas-fired combined-cycle plants--the most economical electricity-generation capacity for central-station power at present--has fallen in the last decade because of improving technology and a 50 percent drop in delivered gas prices adjusted for inflation. . Renewable Energy: Not Cheap. To illustrate the point. bringing electricity below 3 cents per kWh and even below 2. Forecasts by the DOE and other sources expect continued efficiency improvements in the years 2000 through 2015 for gas-fired generation. 9 cogeneration plants have closed and more are in danger of closure. 2000). Wind is competing against improving technologies and the increasing abundance of natural resources. Cogeneration plants – which combine heat and power plants – are under "serious threat of closure" in the Netherlands. March 13. 1997. notes Greenwire. That suggests that the historic delivered-price discrepancy still holds and may continue to hold. The price of combined-cycle gas turbines in 1996-97 also has reached new lows. a director at the DOE’s National Energy Technology Laboratory. president of the Institute for Energy Research.5 million return on a $1. alternative energy has not been able to compete since the European Union deregulated electricity markets. Not “Green.

particularly wind and solar. Even improved new generation renewable capacity is. . Renewable Energy: Not Cheap. raise electricity rates. has resulted in major economic costs and unintended environmental consequences. biomass for air emissions. on average. The uncompetitiveness of renewable generation explains the emphasis pro-renewable energy lobbyists on both the state and federal levels put on quota requirements. 1997. Not “Green. Current state and federal efforts to restructure the electricity industry are being politicized to foist a new round of involuntary commitments on ratepayers and taxpayers for politically favored renewables. Wind power is the closest to the double-triple rule.html A multi-billion-dollar government crusade to promote renewable energy for electricity generation. Yet every major renewable energy source has drawn criticism from leading environmental groups: hydro for river habitat destruction. as well as continued or expanded subsidies. adjunct scholar of the Cato Institute. and create new "environmental pressures. August 27. twice as expensive as new capacity from the most economical fossil- fuel alternative and triple the cost of surplus electricity.org/pubs/pas/pa- 280. and geothermal projects are less uneconomic. http://www.” Cato Policy Analysis No.MSDI 2008 64 Louie/Oz Oil Disadvantage Renewables Fail: Not Competitive Renewables are uncompetitive and unuseful Robert Bradley. increase electricity-generation overcapacity in most regions of the United States." given the extra land and materials (compared with those needed for traditional technologies) it would take to significantly increase the capacity of wind and solar generation. wind for avian mortality. and geothermal for depletion and toxic discharges. 280. biomass.cato. solar for desert overdevelopment. Yet new government subsidies for favored renewable technologies are likely to create few environmental benefits. hydroelectric power. now in its third decade. president of the Institute for Energy Research. Solar power for bulk generation is substantially more uneconomic than the average.

according to all observers. the economic and political costs of which we can only imagine. know that the Kyoto Protocol—bitterly hard fought though it’s been. actually stopping any further global warming—assuming the median predictions of present climate models—would require a 70 percent reduction of present emissions. Ph. journalist and businessman. candidate in the Energy and Resources Group at UC Berkeley. p. and this fact remains: Kyoto only imposes emissions caps on the industrialized countries. http://www. roughly the equivalent of completely abandoning the use of fossil fuels. “might take another thirty Kyotos over the next century. it will make virtually no difference to our planetary climate.” Indeed. The entire world would have to abandon fossil fuels to solve warming Jerry Taylor. director of natural resource studies at the Cato Institute. That.cato. ultimately. and suffering still a deeply uncertain future—is nevertheless only a small preliminary step. Dead Heat: Global Justice and Global Warming. accessed 9/10/02 The reason is that.” Winter 1998. though. 2002. and these are entirely inadequate to the scale of the problem. according to Jerry Mahlman. environmentalists are frequently quoted as saying that. society will need to be completely restructured around the objective of energy efficiency and sustainability. some of the best. These are good questions. “CLOUDS OVER KYOTO THE DEBATE OVER GLOBAL WARMING.org/pubs/regulation/regv21n1/21- 1f6.MSDI 2008 65 Louie/Oz Oil Disadvantage Renewables Not Solve Only massive. there is little point in even bothering to sign the Kyoto agreement because. For the moment. total global greenhouse gas emissions must soon drop to 60 to 80 percent below their 1990 levels. actually. and we’re going to take a stab at answering them. Peel away millions of words of criticism and commentary. Unless the American people are prepared to see that journey to its completion. director of the Geophysical Fluid Dynamics Laboratory at Princeton.pdf. . massive drops in global emissions will be sufficient to halt warming Paul Baer. Most all the scientists agree: In order to prevent devastating climate shifts worldwide. and Tom Athanasiou.D. in and of itself.

says Stokes. Joint Global Change Research Institute. Instead. are nowhere near becoming feasible and to all intents and purposes haven’t even been imagined.MSDI 2008 66 Louie/Oz Oil Disadvantage Renewables Not Solve Climate Changes that don’t totally and globally end reliance on fossil fuels don’t bring atmospheric C02 levels below the necessary 550 ppm Paul Roberts.2004. and the ramifications are alarming. the somewhat pessimistic director of the U. according to IPCC forecasts. Stokes and his colleagues readily admit. 139-40 In short. energy expert and writer for Harpers. we re going to need a set of energy-related technologies that ba- sically emit nothing into the atmosphere” — technologies that. . our energy technology is being outpaced by the very economic success it engendered. pg. As we’ve seen. The End of Oil.S. even with enormous improvements to existing fossil fuel energy technology — including steady improvements in energy efficiency and a gradual shift toward nonfossil fuels in the power sector — the resulting emission reductions will still not be sufficient to sta- bilize atmospheric CO2 at 550ppm by midcentury.

The End of Oil. regardless of what happens with population or energy technology. or any easily constructed system. demand for energy services will probably climb until the end of this century. even if population levels off or begins to decline. for example. To begin to bring even a fraction of these people up to modern energy standards — by providing them with coal-fired power plants. but people there have the furthest to go to reach even a modest living standard — a fact with two disheartening implications. First. In a strange way. . 245 In a terrifying way. this is the good news.2004. world energy demand — driven mainly by growth in the third world — will continue to climb inexorably. pg. even achieving an adequate energy standard for the existing population of the developing world would require more energy than our current system. Not only is the population of the developing world growing rapidly. or the equivalent of France’s in the 1960s — the results for the world would be staggering. could produce. even after we stabilize emissions. or steady supplies of diesel or stove fuel — would add enormous stress to the global energy system. as the developing world “catches up” to the industrialized West. To bring all of them along would change the world in ways we have trouble imagining. energy security is analogous to the climate problem: just as CO2 concentrations in the atmosphere will continue to rise for decades. Nearly three billion people in effect live outside the modern energy system: they subsist on wood and other biomass and have little influence on the global dynamics of supply and demand. Second. For if poor nations do find ways to obtain adequate energy — by which I mean simply raising their energy standards to today’s global average.MSDI 2008 67 Louie/Oz Oil Disadvantage Renewables Not Solve Climate: 3rd World Emissions will continue regardless of their policy as the 3rd world increases development Paul Roberts. as all the poor continue to push for a twentieth-century energy existence. energy expert and writer for Harpers.