SDI 2008 Closing Randomness: Burk/Stone/Walters Lab

SDI 2008 closing randomness
Burk/Stone/Walters Lab
BSW - CLOSING RANDOMNESS
BSW - CLOSING RANDOMNESS......................................................................................................................................................1

A/T: Capitalism K – Perm Best .............................................................................................................................................................2
A/T: Capitalism K – Cap = Freedom ....................................................................................................................................................3
A/T: No Value to Life.............................................................................................................................................................................4
WARMING IMPACT – Terrorism ........................................................................................................................................................5
High Oil Prices → Recession.................................................................................................................................................................6
Oil Prices - Perception Key ...................................................................................................................................................................7
High Oil Prices → Recession.................................................................................................................................................................8
AT: Oil Price Forecast............................................................................................................................................................................9
A/T: High Oil prices will hurt Economy..............................................................................................................................................10
Non-Unique: Oil Price Fluctuations ....................................................................................................................................................14
Economy Resilient – U.S.....................................................................................................................................................................15
Economy Resilient – World ................................................................................................................................................................16
Econ ↓ ≠ War........................................................................................................................................................................................17
US Econ ≠ Global Econ.......................................................................................................................................................................18
LOST not solve Arctic Conflict ..........................................................................................................................................................19
Low Oil Prices  Gulf Upheaval .......................................................................................................................................................20
1
A/T: Capitalism K – Perm Best
Resistance is possible from within capitalism – The perm is the best option.
Monthly Review ‘02

[February 20, v53 i9 p1 (14)]
The future is open because for all its coherence, capitalism is itself not a closed system. It allows for private and public spaces
that can nurture resistance (and are the results of prior resistance). It includes its own ideological and material contradictions
that can be, and have been, used to create further openings. Struggles as heightened moments with openings to new experiences
and awareness, are themselves ways of standing outside of the system, even if only partially and temporarily, to create a
measure of liberated space.
2
A/T: Capitalism K – Cap = Freedom
Only Capitalism allows for full freedom. Alternative to Capitalism is totalitarianism and the Gulag
Heffer '8
[Simon, "If trust in capitalism is gone, we're doomed," The Telegra ( ), March 22, 2008
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/03/22/do2201.xml download date: 3-23-08]
There is no political system without flaws: however, some have more flaws than others. It has always struck me that
capitalism is by far the best of the lot. It is the only way to allow personal freedom its most complete expression, and to
build prosperity. The state of the Soviet bloc by the time the Iron Curtain fell, or of China at Mao's death, should make the
case against the alternative more powerfully than I ever could. As the American writer and philosopher Ayn Rand once put it:
"The difference between a welfare state and a totalitarian state is a matter of time."
The difficulty with capitalism is that some capitalists do dirty things with other people's money: such as the scam this week, in which someone
may have walked off with £100 million profit after spreading false rumours about the state of HBOS. We reported yesterday the existence of a
dirty tricks department in a hedge fund that tried, maliciously, to move markets. The authorities here rightly come down heavily on such practices
- or say they do. But capitalism is global. The HBOS scam is thought to have originated in the Far East, possibly in Singapore. Punishing people
who commit crimes in our jurisdiction is one thing. Punishing those who do it abroad, but affect us here, is less easily handled.
Many seem to think that dishonest practices such as these have only been invented since capitalism entered its latest, rampant phase since the late
1980s. I'm afraid this is not so. At Easter, we might remember Christ throwing the moneylenders out of the temple; or the expulsion of the Jews
from England by Edward I in 1290, partly because they were accused of clipping the edges off coins, putting them back into circulation and
melting down the parings into bullion. More recently, insider trading was considered quite normal until a few years ago. It was indeed disclosed -
though, sadly, not until after his death in 2005 - that Sir Edward Heath had benefited from this in the 1960s, becoming rich thanks to share tips
given him by insiders who wished to curry favour with him when he led the Tory party.
But now that almost all of us have a stake in this system - whether directly through investments that we hold, or through our pension funds and
life assurance policies - it matters more than ever that capitalism should be run fairly. If confidence in capitalism is destroyed by thieves and other
brands of criminal, then we are finished. I am in no doubt that anyone found to be running a dirty tricks department within British jurisdiction
should be prosecuted and, if convicted, sent to prison and fined a sum relevant to the proceeds of their theft. We deserve no less from justice.
But what if the originators of such crimes are abroad? If they are in a jurisdiction that understands the importance of upholding the rules (and I
suppose Singapore, which did for Nick Leeson and Jim Slater, is one such), then I trust we can rely on the co-operation of authorities in those
countries to come down heavily on transgressors. Some jurisdictions may not be so willing to enforce the rules, and in that case we have to get
nasty. Strict economic sanctions by all developed nations against such states, of the sort America has operated for half a century against Cuba,
may be the only way to deal with it. In the internet age, policing becomes a nightmare.
It is, however, only because capitalism is now global that our prosperity is now so significant. It brings with it risks other than those simply of
economic judgment. If we have the will to punish the crooks the means ought to follow. And if we still think capitalism isn't worth the
candle, let us recall that the alternative ends in the gulag.
3
A/T: No Value to Life
___. Existence is the biggest impact – there can be no value to life without life in the first place
BOSTROM, Philosophy Professor, Yale, ‘02

[Dr. Nick, Department of Philosophy @ Yale University "Existential Risks: Analyzing Human Extinction Scenarios and Related
Hazards," Journal of Evolution and Technology, Vol. 9 - March 2002, http://www.jetpress.org/volume9/risks.html ]
Existential risks are distinct from global endurable risks. Examples of the latter kind include: threats to the biodiversity of Earth’s
ecosphere, moderate global warming, global economic recessions (even major ones), and possibly stifling cultural or religious eras such as the “dark ages”, even if
they encompass the whole global community, provided they are transitory (though see the section on “Shrieks” below). To say that a particular global risk is
endurable is evidently not to say that it is acceptable or not very serious . A world war fought with conventional weapons or a Nazi-style
Reich lasting for a decade would be extremely horrible events even though they would fall under the rubric of
endurable global risks since humanity could eventually recover. (On the other hand, they could be a local terminal risk for many individuals
and for persecuted ethnic groups.)
I shall use the following definition of existential risks:
Existential risk – One where an adverse outcome would either annihilate Earth-originating intelligent life or permanently and drastically curtail its potential.
An existential risk is one where humankind as a whole is imperiled. Existential disasters have major adverse
consequences for the course of human civilization for all time to come.
2 The unique challenge of existential risks
Risks in this sixth category are a recent phenomenon. This is part of the reason why it is useful to distinguish them from other risks. We have not evolved
mechanisms, either biologically or culturally, for managing such risks. Our intuitions and coping strategies have been shaped by our long experience with risks such as dangerous animals,
hostile individuals or tribes, poisonous foods, automobile accidents, Chernobyl, Bhopal, volcano eruptions, earthquakes, draughts, World War I, World War II, epidemics of influenza,
smallpox, black plague, and AIDS. These types of disasters have occurred many times and our cultural attitudes towards risk have been shaped by trial-and-error in managing such
hazards. But tragic as such events are to the people immediately affected, in the big picture of things – from the perspective of humankind as a whole – even the worst of these
catastrophes are mere ripples on the surface of the great sea of life. They haven’t significantly affected the total amount of human suffering or happiness or determined the long-term fate
of our species.
With the exception of a species-destroying comet or asteroid impact (an extremely rare occurrence), there were probably no significant existential risks in human history until the
mid-twentieth century, and certainly none that it was within our power to do something about.
The first manmade existential risk was the inaugural detonation of an atomic bomb. At the time, there was some concern that the explosion might start a runaway chain-
reaction by “igniting” the atmosphere. Although we now know that such an outcome was physically impossible, it qualifies as an existential risk that was present at the time. For there to
be a risk, given the knowledge and understanding available, it suffices that there is some subjective probability of an adverse outcome, even if it later turns out that objectively there was
no chance of something bad happening. If we don’t know whether something is objectively risky or not, then it is risky in the subjective sense. The subjective sense is of course what we
must base our decisions on.[2] At any given time we must use our best current subjective estimate of what the objective risk factors are.[3]
A much greater existential risk emerged with the build-up of nuclear arsenals in the US and the USSR. An all-out
nuclear war was a possibility with both a substantial probability and with consequences that might have been persistent
enough to qualify as global and terminal. There was a real worry among those best acquainted with the information available at the time that a nuclear Armageddon
would occur and that it might annihilate our species or permanently destroy human civilization.[4] Russia and the US retain large nuclear arsenals that
could be used in a future confrontation, either accidentally or deliberately. There is also a risk that other states may one day build up large nuclear arsenals. Note
however that a smaller nuclear exchange, between India and Pakistan for instance, is not an existential risk, since it would not destroy or thwart humankind’s potential permanently. Such a
war might however be a local terminal risk for the cities most likely to be targeted. Unfortunately, we shall see that nuclear Armageddon and comet or asteroid strikes are mere preludes to
the existential risks that we will encounter in the 21st century.
The special nature of the challenges posed by existential risks is illustrated by the following points:
*Our approach to existential risks cannot be one of trial-and-error. There is no opportunity to learn from errors. The
reactive approach – see what happens, limit damages, and learn from experience – is unworkable. Rather, we must take a proactive
approach. This requires foresight to anticipate new types of threats and a willingness to take decisive preventive action
and to bear the costs (moral and economic) of such actions.
*We cannot necessarily rely on the institutions, moral norms, social attitudes or national security policies that
developed from our experience with managing other sorts of risks. Existential risks are a different kind of beast. We
might find it hard to take them as seriously as we should simply because we have never yet witnessed such disasters .[5]
Our collective fear-response is likely ill calibrated to the magnitude of threat.
*Reductions in existential risks are global public goods [13] and may therefore be undersupplied by the market [14]. Existential risks are a menace for everybody and may require acting
on the international plane. Respect for national sovereignty is not a legitimate excuse for failing to take countermeasures against a major existential risk.
*If we take into account the welfare of future generations, the harm done by existential risks is multiplied by another
factor, the size of which depends on whether and how much we discount future benefits [15,16].
4
WARMING IMPACT – Terrorism
Warming effects increase Terrorism worldwide
Trevelyan ‘7
[Mark, Security Correspondent for Reuters, “Climate change seen fanning conflict and terrorism,” January 24, 2007,
http://today.reuters.com/news/articlenews.aspx?type=scienceNews&storyid=2007-01-24T205957Z_01_L24304978_RTRUKOC_0_US-CLIMATE-
SECURITY.xml&src=rss
Global warming could exacerbate the world's rich-poor divide and help to radicalize populations and fan terrorism in the
countries worst affected, security and climate experts said on Wednesday.
"We have to reckon with the human propensity for violence," Sir Crispin Tickell, Britain's former ambassador to the United Nations, told a London conference on
"Climate Change: the Global Security Impact".
"Violence within and between communities and between nation states, we must accept, could possibly increase, because the precedents are all around."
He cited Rwanda and Sudan's Darfur region as two examples where drought and overpopulation, relative to scarce resources, had helped to fuel deadly conflicts.
Experts at the conference hosted by the Royal United Services Institute said it was likely that global warming would create huge flows of
refugees as people tried to escape areas swamped by rising sea levels or rendered uninhabitable by desertification.
Tickell said terrorists were likely to seek to exploit the tensions created.
"Those who are short of food, those who are short of water, those who can't move to countries where it looks as if everything is marvelous are going to be people
who are going to adopt desperate measures to try and make their point."
BIN LADEN ON CLIMATE CHANGE
John Mitchell, chief scientist at Britain's Met Office, noted al Qaeda had already listed environmental damage among its litany of grievances against the United
States.
"You have destroyed nature with your industrial waste and gases more than any other nation in history. Despite this, you refuse to sign the Kyoto agreement so that
you can secure the profit of your greedy companies and industries," al Qaeda leader Osama bin Laden wrote in a 2002 "letter to the American people".
Paul Rogers, professor of peace studies at Bradford University, said any attempt by countries to build fortress walls to keep out climate change refugees -- what he
called the "barbarians at the gate" mentality -- was doomed to fail.
"If you just take the example of Bangladesh, if 60 million of 140 million people could not survive in Bangladesh yet they were kept there, you would have A)
gigantic human suffering and B) progressive very deep radicalization -- very, very angry people -- and that is not in anybody's security interest."
Bangladesh, with a 580 km (360 mile) coastline on the Bay of Bengal, is acutely vulnerable to rising sea levels, cyclones and droughts.
Climate scientist Mitchell said the Mediterranean and Middle East were likely to receive less rainfall as a consequence of climate change, adding to existing
tensions over water.
John Ashton, special representative for climate change at Britain's Foreign Office, voiced concern that this could further destabilize a region already beset by
conflict.
"Given the volatile nature of that region, given the global consequences of that volatility, yes I'm hugely worried by that," he told Reuters.
5
High Oil Prices → Recession
Continued high oil prices will cause a deep recession
Schoen '08
[John W., Senior Producer at MSNBC, "Oil price spike has wide economic impact,"
http://www.msnbc.msn.com/id/24778287/ download date: 7-2-08]
As dire forecasts about runaway oil prices become reality, it’s impossible to know how much higher they’ll go. But the
impact of the price
surge already is being widely felt. And if prices go much higher, the damage to the U.S. economy will be deeper and
wider than the fallout from the run-up so far.
Oil prices have doubled in the past year and have shot up nearly 50 percent since January to a record $135 a barrel. Much of the rise appears to be
driven by speculators betting that tight supplies — or outright shortages — will push prices even higher.
Consumers — already hit with rising prices and flat wages — are being stretched further. As the Memorial Day weekend
kicks off the summer driving season, gasoline prices are at record levels, reaching a national average above $3.83 a gallon. Some analysts predict
the average will break past $4 as early as next week. In some parts of the country, prices are already closing in on $5.
“We're already in a mild recession,” said Lakshman Achuthan, an economist at the Economic Cycle Research Institute. “I
think if we go towards $150 (a barrel), we start talking about something worse than a mild recession.”
The surge in oil prices is hitting some parts of the economy harder than others. Companies that use lots of oil have already been hurt; the recent
surge will only make matters worse.
Airlines have been struggling to make a profit, even as they cut jobs and flights. American Airlines became the latest to
announce it was tightening its belt another notch, saying Thursday that it plans to shrink capacity by as much as 12 percent and cut thousands of
jobs.
To offset the rapid rise in jet fuel prices, the airline also said it plans to start charging passengers $15 to check the first bag of luggage for each
passenger. United Airlines said it’s considering a similar move. The carriers already charge $25 for a second bag.
“(Higher oil prices are) going to send some smaller airlines into bankruptcy," said Nick van den Brul, an airline analyst at the
French investment bank, Exane BNP.
Surging gasoline prices are further dampening sales at U.S. carmakers, whose product lines are more heavily oriented
toward higher-profit, lower-mileage trucks and SUVs than their foreign competitors.
Ford Motor Co. said Thursday it’s cutting production by 15 percent in the second quarter of this year and another 15 to 20 percent in the third
quarter. Ford now says it won’t hit its target of getting back in the black by next year and may have to lay off more workers and close more
plants.
Overall, Higher Prices are a net negative for the U.S. economy
Schoen '08
Some parts of the economy will hold up relatively well; companies and regions that produce oil will do better. Oil companies are
enjoying a spike in profits because production costs have not risen nearly as rapidly as market prices. Those higher profits could help boost local
economies in regions where oil and natural gas are produced.
But those benefits will be more than offset by the negative effects of the surge in energy costs. Higher oil prices have
already begun to spill over into higher costs for a variety of products and services, including food prices.
6
Oil Prices - Perception Key
Perception and Psychology determine oil prices – shifts can be quick and large
Schoen '08
So far, there seems to be enough oil and gasoline to go around: Refineries are still adequately supplied with crude, and gas
stations aren’t
running out of fuel.
Prices are surging as traders see an increased risk of that happening. But that so-called panic buying could quickly
reverse, sending oil prices sharply lower.
“This is all about psychology, and we are not very good at oil companies about forecasting the psychology of prices,"
Jeroen van der Veer, CEO of global giant Royal Dutch/Shell, said on CNBC Thursday. “So we'd better prepare ourselves for
more volatility because if this is psychology, it can change very quickly.”
7
High Oil Prices → Recession
Higher Oil Prices pushes Fed Reserve to raise interest rates, and that brings economic slump
Schoen '8
The threat of higher inflation makes life even more complicated for policymakers at the Federal Reserve, who have
been slashing rates for nearly a year to try to offset the fallout from the housing slump and turmoil in the credit
markets.
The surge in oil prices could force the Fed to reverse course and begin raising rates — before the benefits of those rate
cuts have had time to take hold. Minutes of the Fed's April policy meeting, released Wednesday, indicated that the central bank could start
raising rates in the fall.
8
AT: Oil Price Forecast
No internal link: Oil price forecasting is bunk – too many factors. Economists predict a lasting boom
just to keep their jobs
Lidstone ‘7
[Digby, "Why predicting oil prices is a mug's game,” October 28, 2007, Gulf Daily News: The Voice of Bahrain
http://www.gulf-daily-news.com/Story.asp?Article=198038&Sn=BUSI&IssueID=30222 accessed: 10-28-07]
A few days ago Shaikh Yamani gave a rare interview to the BBC. In it the former Saudi oil minister predicted that oil prices might peak at more than $100 a barrel,
but in the long term they could just as easily drop back to the sort of low levels seen in the 1990s.
This is about as far from received opinion as you can get.
Most economists have been talking for a while of "a new paradigm" - a world in which oil prices settle into a stable price band of $50-60 a barrel.
But then again, these same economists were confidently predicting a $20-25 price bracket back in 2003, before oil prices started to
climb. And climb. And continue to climb.
From the Gulf to the East Coast of the US, senior bank economists and oil market wonks scrambled to revise their forecasts.
With oil prices now edging into the 90s, you can hear the collective scratching of heads again. Should they hoist the price band higher? To $60-70, perhaps?
Whatever figure they pluck out of the air, you can be sure there will be a whole list of reasons they give to support their forecast.
On the one hand, there are the factors that keep oil prices high. These include declining fuel stockpiles in the US, the onset of winter or the American "driving
season", political tensions, the growth of the Chinese economy and so on.
On the other hand, there are the factors that help bring prices down: an increase in Opec production, for example, or a declining US economy.
And just to complicate matters, there are the numerous unforeseen factors that keep oil markets on their toes: hurricanes in the Gulf of
Mexico, or workers' strikes in Nigeria.
The list gets longer all the time.
Back in Shaikh Yamani's heyday - during the first oil boom and the 1973 Arab oil embargo - oil prices tended to reflect a simple formula of supply and demand.
Globalisation has complicated matters. These days, markets are generally more complex and have much fuzzier boundaries.
The use of futures contracts makes the picture fuzzier still. Because no trader really knows what events might influence the cost of oil three months down the line,
any and every little piece of news today can have an effect.
Like the proverbial butterfly that sets off a tornado with one flap of its wings, a Turkish air raid in Iraqi Kurdistan can add 12 cents to the cost of a barrel.
At the end of the day, predicting oil prices is a mug's game.
Yet no economist would ever admit this. For a start, they would be out of a job. Because their real purpose is not to spin accurate
forecasts, it is to conjure an atmosphere of confidence and calm.
Companies or governments need to be reassured that their latest multi-billion-dollar refinery or real estate project is going to work. They
need to know the oil boom will last. They need to hear oil price predictions given in a strong, confident voice.
So it takes someone with the long experience and independent-mindedness of Shaikh Yamani to say that prices could just as easily go up as they could go down - to
admit, effectively, that he has no idea what direction they might go in. But you can be sure he will say it in a strong and confident manner and he will charge you a
hefty fee for his services.
9
A/T: High Oil prices will hurt Economy
Oil prices will NOT crush the economy – US is less dependent, more efficient now
NPR ‘7
[by Eric Weiner, "$100-a-Barrel Oil? Perhaps, But Don't Panic," National Public Radio (on-line), October 31, 2007,
http://www.npr.org/templates/story/story.php?storyId=15816615 accessed: 10-31-07]
Oil prices have risen steeply in recent months, from $69 a barrel in late August to around $90 barrel today. The days of $100-a-barrel oil may not be far
off, analysts warn. Does this signal economic disaster?
Probably not, according to most economists.
True, American consumers are almost certain to pay more for gasoline, heating oil, airline tickets, food and goods that have to be transported great distances. And,
yes, the economy is already sputtering in the face of a faltering housing market and a weak dollar. It may slip into recession, but it won't be oil prices alone that are
responsible, economists say. That's because the U.S. economy is much better positioned to weather an oil shock now than it was in the 1970s
and '80s.
Certainly, higher oil prices complicate life for Ben Bernanke, the chairman of the Federal Reserve. On Wednesday, he cut a key interest rate by a quarter-point, the
second rate reduction this year. He did so in hopes of driving economic growth, but the specter of inflation now looms larger, since high oil prices tend to push up
prices for a wide range of goods and services.
Higher Prices — and Not Just at the Pumps
Higher oil prices mean higher gas and heating prices, of course, but also higher food prices. That's because it costs more to transport the food to grocery stores.
Also, farmers spend more on diesel for their tractors and fertilizer for their crops — higher costs they pass on to consumers.
Not all industries are affected equally by the higher fuel prices. The airline industry is especially vulnerable. This year, jet fuel surpassed labor as the industry's No.
1 expense. Every dollar increase in the price of a barrel of crude oil translates into about $470 million a year in additional jet fuel costs for U.S. airlines as a whole
— an additional expense the anemic industry can ill afford.
Airlines try to cope with rising fuel costs by bumping up fares and tacking on surcharges. But prices can only rise so far before they hurt demand. Passengers have
grown accustomed to relatively inexpensive fares and are not likely to accept steep increases.
Consumer Confidence Slips
One potentially worrying sign: consumer confidence fell more than expected for the month of October, according to The Conference Board, a New York group that
tracks the statistic. Consumer spending accounts for two-thirds of all economic activity.
In the past, the oil shocks were caused by a lack of supply — the OPEC embargo in 1973, the Iranian revolution in 1979, the Iran-Iraq war in 1980. Today, prices
are soaring because of increased demand. Also, high oil prices are blamed for sparking global recessions in 1973 and 1980, but that's not
likely to happen this time, most economists say. For one thing, Americans, on average, earn more money and spend less on energy than
they did 30 years ago.
Overall, the U.S. economy is significantly less dependent on oil — and, in fact, on all forms of energy. In 1981, the country
devoted nearly 14 percent of its overall gross domestic product to energy, according to the Energy Information Administration. By 2006 that
number had fallen to about 9 percent.
"We're in much better shape than we were 30 years ago," says Lester Lave, a professor of economics at Carnegie-Mellon University. High oil prices are like a
headwind that slows the economy, he says, and that headwind is about half as strong as it was in the 1970s.
No Left Turns
Why the shift? Partly because the U.S. economy is less dependent on manufacturing, which consumes more oil than service
industries. The biggest reason, though, is efficiency. Cars and airplanes are more fuel-efficient than ever (though some would argue that
they still have a long way to go.) Businesses are also doing a better job of trimming their energy costs.
For instance, UPS, the delivery company, is using new software that maps routes so that drivers can avoid left turns, since those turns eat up lots of gasoline. The
system saves the company hundreds of million of dollars each year, according to spokesman Norman Black
Businesses don't like high oil prices, of course, but what they really despise is fluctuating prices. "When oil prices start to yo-yo, people don't quite know what to
do," says Lave. "Businesses hate variability." Companies would rather endure a relatively high but stable oil price than a widely fluctuating one.
10
High Oil prices NOT hurt economy
Schoen ‘7
[John W. Schoen, Senior Producer, MSNBC, “Soaring oil prices have yet to derail economy,” October 16, 2007
Download date: 10-25-07, http://www.msnbc.msn.com/id/21325407/ ]
With oil prices touching new highs above $88 a barrel Tuesday, the financial markets and the economy seem to be largely unfazed — at
least so far. And despite the rapid run-up in the cost of crude from about $60 just two months ago, motorists have been watching pump prices fall. What’s going on
here?
The question is all the more puzzling because, while strong demand and limited production have kept oil supplies tight for much of the decade, current
inventories appear to be adequate to keep the market supplied. U.S. inventories have been falling recently but remain above the five-year average
level for this time of year.
Crude oil deliveries to refiners, meanwhile, have been declining as they usually do this time of year when demand for gasoline makes its seasonal move downward
following the end of the summer driving season. Retail gasoline prices have fallen from the peak of $3.22 a gallon in May to $2.76 a gallon as of this week,
according to the Energy Department.
To be sure, some consumers are beginning to feel the pinch. The price of heating oil is expected to rise more than 16 percent this winter, although a mild winter
could send prices tumbling again as they did last January.
“Our (crude) inventory situation is pretty much in line with where it’s been,” said George Winslow, a heating oil dealer in Manchester, N.H. “So you scratch your
head and say, ‘Why is the price where it is?'”
One big reason for this apparent paradox is that much of the run–up in prices is being fueled by demand from investors, not consumers. Investors have stocking up
on oil futures for a variety of reasons. Earlier this summer, many were betting a strong hurricane or two in the Gulf of Mexico could lead to Katrina-like supply
cutoffs to the U.S. market.
More recently, worries have centered on events in the Middle East. Published reports that the U.S. was considering attacks on Iran’s nuclear facilities have helped
sparked fears of a potential supply shortage, said Bill O’Grady, an energy analyst at A.G. Edwards.
“There are a number of things pointing to that possibility,” he said. “Thus, it makes sense to buy oil as a protection against such an event.”
O’Grady says that investors have another reason to stock up on oil: as a hedge against inflation. After recently cutting interest rates to ease a widespread credit
crunch — even as inflation remains at the high end of the Federal Reserve's supposed target range — the central bank has shifted its stance to promoting economic
growth. That has some investors conscerned about a possible resurgence of inflation, said O’Grady.
“That tells you tell own real assets,” he said. “And the queen of real assets is oil.”
Though many of those who are buying oil in the futures market never intend to actually use it, the impact is very real for those who do. Still the impact on the
global economy has been fairly mild — at least so far.
That’s another puzzle for anyone old enough to remember the recession of the early 1980s, which followed a sharp increase in oil prices through the 1970s that
peaked with the Iraq invasion of Iran in 1980. Higher energy prices act as a kind of tax on both businesses and consumers. So, all things equal, higher energy
prices should slow the economy by putting a drag on both business and consumer spending.
But oil prices have been rising for five years and it hasn’t happened yet, although the price increases have been gaining momentum. From a low
of just over $50 a barrel in January, oil prices on the futures market have surged nearly 75 percent. Yet the economy remains relatively healthy, corporate profits are
holding up well.
One reason is that economic growth depends less on oil that it did 30 years ago, according to economists, including former Fed Chairman
Alan Greenspan.
“We have very gradually but persistently been phasing out oil in the world's gross domestic product,” he said Monday in an interview on CNBC.
“The ratio of consumption of oil or energy relative to world GDP, in both developing and developed world, has been declining. And that's one of the reasons
why we have been able to maintain fairly strong and buoyant economies in the face of very high crude oil prices.”
By some estimates, it takes about half as much oil today to produce the same dollar of U.S. economic output as it did 30 years ago. So while there are more cars on
the road, and bigger houses that consume more energy, more workers today pay for that consumption by, say, working on a computer instead of a job in a much
more energy-intensive factory where they might have worked 30 years ago.
And, while the price of oil is at a nominal record, it is still well below the inflation-adjusted 1980 peak of $101.43 a barrel.
11
Oil price rise does NOT hurt economy – diversification and recent history show resilience
Baker ‘7
[David R., Chronicle Staff Writer, “BUBBLING CRUDE NOT SUCH A BUST,” San Francisco Chronicle, Section: Business, Final
Edition, October 17, L/N]
High oil prices used to inspire dread among economists and panic on Wall Street. But not anymore.
Prices have been rising steadily for two months, hitting a record of $87.61 per barrel Tuesday on the New York Mercantile Exchange.
Economists aren't thrilled to see such high prices, because paying more for fuel can hurt corporate profit and pinch consumer spending. But
they've watched oil prices climb for years without killing the economy. Listen to them fret about a possible recession, and they're more worried
about the mortgage crisis than about oil.
Same with the stock markets. Stocks have been rising for about two months, just like oil, although they slipped on Monday and Tuesday. Traders
may be starting to worry about fuel prices eating into company earnings, but so far, it hasn't shown.
Anyone old enough to remember the 1970s knows it wasn't always this way.
Back then, spiking oil prices tipped an already stumbling economy into recession. Unemployment lines followed gas lines.
So why hasn't that happened now?
The economy doesn't depend on oil as much as it once did. Some factories that relied on oil in the 1970s have closed,
their jobs shipped overseas. Others switched fuels, burning natural gas to generate power.
In addition, this week's records follow three years of rising petroleum prices. As oil passed milestone after milestone - $45
per barrel, then $55, then $65, then $75 - businesses learned to plan for high prices.
So did drivers. Americans have adjusted to paying more for gasoline, no matter how much they resent it. California's
average gasoline price rose 14 cents in the last month, and now stands at $3.07 for a gallon of regular, according to the AAA auto club.
Many economists now say only sudden, steep changes in oil and gasoline prices pose much danger. As long as the change is predictable,
the economy can probably handle it. Besides, the world has now endured several years of oil prices that were once
considered lethal.
"The price went all the way to $75, and that didn't cause a recession, so should we be scared when it hits $85?" said
James Hamilton, professor of economics at UC San Diego. "I don't see another $5 in the price of oil as the straw that
broke the camel's back."
There's also a question of whether this week's record prices will last.
The petroleum bull market has created its own upward momentum. Speculative investors are filling the market with money. And they keep seeing
reasons to bid the price higher. This week's primary cause: threats that Turkey could attack Kurdish rebels taking refuge in northern Iraq, possibly
threatening the flow of Iraqi oil. Each tidbit of negative news feeds the bulls.
"A lot of it is momentum," said Peter Beutel, president of the Cameron Hanover energy risk management firm. He says the price could hit $90
per barrel. "It's not 'buy low and sell high.' It's 'buy high and sell higher,' " Beutel said.
Five years ago, prices hovered in the $30 range. They'd been there - or lower - for years. But starting in 2004, they began climbing, driven
upward by fighting in the Middle East and China's fast-growing need for fuel.
They are now about as high as they've ever been. Adjusted for inflation, oil peaked at roughly $92 per barrel in 1981, after the start of the Iran-
Iraq War. The current bull market isn't far from hitting that mark.
As prices rose during the last three years, the economy occasionally wobbled but never tanked. That resilience in the
face of high prices shows just how much the American economy has changed since the 1970s. Energy-hungry
industries such as manufacturing have shrunk. Services and retail sales have expanded.
In addition, this decade's petroleum price increase has different root causes than the classic oil shocks of the 1970s and early 1980s.
The earlier price spikes followed sudden disruptions in the supply of oil, such as the 1973 Arab embargo of oil sent to the United States for its
support of Israel. Prices eased when the crude started flowing again. Now, however, prices are being driven up by rising demand throughout the
world. Oil is still available, in other words, but more countries are paying top dollar to get it.
12
Strategic Petroleum Reserves prevents sudden oil price spikes
Yetiv, Professor of political science and international studies, Old Dominion University, '04
[Steve A., "OPINION: Today's oil crunch is unlike 1973," The San Diego Union-Tribune, August, L/N]
Oil prices have risen over 60 percent in the past six weeks, driving people to wonder if we are headed for another oil shock, reminiscent of 1973
Arab oil embargo which quadrupled oil prices and left people standing in long lines at gas stations. While the current oil spike could trip up the
global economic recovery, if it lasts, 2004 is not 1973.
Let's just look at one reason for why this is so: the rise of global oil stocks -- a type of rainy day account for major oil crises.
Each member of the International Energy Agency that is a net oil importer is required to hold oil stocks equal to 90 days or more of its net
imports. This can be achieved chiefly by use of strategic petroleum reserves which are managed and financed by central governments for
emergency or by oil company stocks.
In 1973, during the Arab oil embargo, global oil stocks were minimal. Over the years, they have increased dramatically, especially in the United
States.
The United States and Japan hold the world's largest strategic petroluem reserves. The American reserves, held in an underground network of
caverns in Louisiana and Texas, were created in 1975 as a delayed response to the 1973 Arab oil embargo. The reserves have a capacity of 700
million barrels which could reach the market within 15 days. The United States currently holds 666.5 million barrels in its reserve. At the current
rate of import consumption, they would last 57 days if foreign supplies were totally halted, while the United States has another 84 days of import
protection from company stocks. That provides the United States with about 141 days of protection against a total cut off of global oil.
Notably, these reserves would last far longer if they were needed to cover lost oil only from the Middle East and not the entire world. That is a
crucial point to appreciate, because fears about a massive oil crunch on the order of the 1973 embargo are usually stoked by concerns that Middle
East oil supplies will be interrupted. Such fears add perhaps 20 percent to the price of oil today.
In 1973, the world was unprepared for, and surprised by, the Arab oil embargo which represented the biggest peaceful transfer of
wealth from the industrialized world to developing countries in world history. The rise in U.S. and world reserves has been matched
by a better understanding of how to use them, so that we are much better prepared today than in the past.
For instance, on the eve of the military attack on Iraq on Jan. 16, 1991, oil prices rose significantly, and geopolitical fears ran amok. But the
United States announced a coordinated strategic petroluem reserve sale with Europe and Japan through the International
Energy Agency, and oil prices dropped precipitously, despite the fact that America sold only half of what it had announced. The drop in
oil price was also a function of reports of successful U.S.-led military action, but there is no doubt that the SPR release played both a
real and psychological role in calming oil markets.
The International Energy Agency was also prepared to announce a release of reserves as "Y2K" approached, which some had feared might cause
economic and political disruptions on a global scale. After Sept. 11, 2001, even more attention was placed on using the strategic petroleum
reserves strategically if need be.
Yet, while these reserves and our ability to use them effectively has risen, they have only been used once, during the 1991 war, despite repeated
fears about oil disruptions.
President George H.W. Bush did face pressure to use them, before and during the Iraq War of 2003. Yet, despite heavy oil disruptions due to the
Venezuelan oil strike, and Nigeria's ethnic and political strife, and fears that the Iraq war would cut off even more supply, that was not necessary.
The current Bush administration is willing to use the reserves in the event of an oil disruption caused by "geopolitical" events. But it has refused
repeatedly to use them just to decrease or pre-empt high oil prices. However, if they continue to rise and threaten to cause a double-dip recession,
its hand may be forced.
The development of global oil stocks over the past three decades is nothing less than a structural change in global oil markets that we
have failed to appreciate fully. Today, they could help us face major oil interruptions and, quite possibly, even a worse-case
scenario in which Saudi oil facilities are hit by terrorists. That's no reason not to have a much needed global and national energy
policy, but it surely sets 2004 apart from 1973.
13
Non-Unique: Oil Price Fluctuations

(A/T: Hedge Funds and similar speculator arguments)
Changes in the Dollar’s value
MacDonald '08
[Elizabeth, Fox Business Network stocks editor, "Part Two: Oil Speculators vs Supply and Demand," July 1,
http://emac.blogs.foxbusiness.com/2008/07/01/part-three-oil-speculators-vs-supply-and-demand/ download date: 7-7-08]
And a key driver is the strength of the US dollar. Since oil is traded in dollars, the plunging value of the US dollar likely
has traders scrambling, as the amount earned from future oil sales may get slammed as the dollar loses real value.
Any little single comment by politician or investment banker
Industry Standard ‘8
[June 9, 2008, http://www.thestandard.com/predictions/oil-prices-spike-150-barrel-july download date: 7-6-08]
Oil prices have been on a roller-coaster ride this year, sensitive to all kinds of events, ranging from a weak US dollar to
a single comment made by a politician to a prediction by investment bank Morgan Stanley.
14
Economy Resilient – U.S.
US economy resilient to shocks and other events
Avery ‘5
[Susan, Purchasing, June 16, l/n]
The U.S. economy is amazingly resilient and purchasing and supply chain executives can take credit. Those are
the thoughts of two economists who spoke before purchasing professionals attending this year's Institute of Supply Management
(ISM) conference in San Antonio. Both highlighted the resiliency of the U.S. economy to withstand such shocks as
rising oil prices, the wars in Iraq and Afghanistan and the tragic events of 9/11. Thomas Siems, senior economist and policy
adviser at the Federal Reserve Bank of Dallas, credits the ability of purchasing professionals to manage the supply chains for the
economy's recent performance.
"I am very optimistic about the economy," Siems told the audience, highlighting a chart that shows U.S. business-cycle expansion
and contraction going back to 1948 as an illustration of the resilience of the economy. He also says that economists look to three
areas to define the resilience of the economy: good policies (fiscal and/or monetary), good luck (with the threat of
terrorism, the wars and energy prices, the economy hasn't had much lately), and good practices. Siems sees good practices,
particularly those performed by purchasing professionals, as key to economic performance.
15
Economy Resilient – World
World economy is resilient – many reasons
Financial Times ‘6
[Martin Wolf, September 27, Pg. 17, l/n]
To doubt the resilience of the world economy must now look perverse. Since 2000, it has overcome so many
obstacles: post-bubble traumas in Japan; the bursting of a global stock market bubble in 2000; the terrorist attacks
of September 11 2001; a US recession; years of stagnation in the eurozone; wars in Afghanistan and Iraq; real oil
prices at levels close to those of the late 1970s; and the failure to complete the Doha round of multilateral trade
negotiations. Yet, in spite of all this, world economic growth was 4.1 per cent in 2003, 5.3 per cent in 2004 and 4.9 per
cent in 2005, measured at purchasing power parity exchange rates. In the International Monetary Fund's latest World Economic
Outlook (WEO), it is forecast to reach 5.1 per cent this year.*
Growth is also broadly shared: in 2006, suggests the IMF staff, it will be 3.4 per cent in the US, 2.4 per cent in the eurozone
and 2.7 per cent in Japan.
In emerging markets it is far higher: 8.7 per cent in developing Asia, 6.8 per cent in the Commonwealth of Independent States, 5.8
per cent in the Middle East, 5.4 per cent in Africa, 5.3 per cent in central and eastern Europe and 4.8 per cent in the western
hemisphere.
How has it been possible for the world economy to leap over so many hurdles? We can offer three answers: first, the
power of the underlying drivers of economic expansion - US productivity growth, globalisation and the rise of
Asia; second, the ability of central banks and fiscal authorities to exploit the credibility they won in the 1980s and
1990s responding to the shocks of the 2000s; and, not least, the role of the US as borrower of last resort.
16
Econ ↓ ≠ War
No relation between economic collapse and war – all analysis and examples flawed
Ferguson, History Prof, Harvard, ‘6

[Niall, Laurence A. Tisch Professor of History at Harvard University and a Senior Fellow at the Hoover Institution at
Stanford University, Foreign Affairs, September/October, Vol. 85, Issue 5]
Nor can economic crises explain the bloodshed. What may be the most familiar causal chain in modern
historiography links the Great Depression to the rise of m and the outbreak of World War II. But that simple story
leaves too much out. Nazi Germany started the war in Europe only after its economy had recovered. Not all the
countries affected by the Great Depression were taken over by t regimes, nor did all such regimes start wars of
aggression. In fact, no general relationship between economics and conflict is discernible for the century as a
whole. Some wars came after periods of growth, others were the causes rather than the consequences of
economic catastrophe, and some severe economic crises were not followed by wars.
17
US Econ ≠ Global Econ
US economic slowdown will not cause a global collapse
Business Wire ‘6
["Merrill Lynch: U.S. Downturn Won't Derail World Economy," September 18, l/n]
A sharp slowdown in the U.S. economy in 2007 is unlikely to drag the rest of the global economy down with it,
according to a research report by Merrill Lynch's global economic team. The good news is that there are strong sources of
growth outside the U.S. that should prove resilient to a consumer-led U.S. slowdown.
Merrill Lynch economists expect U.S. GDP growth to slow to 1.9% in 2007 from 3.4% in 2006, but non-U.S. growth to decline by
only half a percent (5.2% versus 5.7%). Behind this decoupling is higher non-U.S. domestic demand, a rise in intra-
regional trade and supportive macroeconomic policies in many of the world's economies. Although some
countries appear very vulnerable to a U.S. slowdown, one in five is actually on course for faster GDP growth in 2007.
Asia, Japan and India appear well-placed to decouple from the U.S., though Taiwan, Hong Kong and Singapore are
more likely to be impacted. European countries could feel the pinch, but rising domestic demand in the core countries
should help the region weather the storm much better than in previous U.S. downturns. In the Americas, Canada
will probably be hit, but Brazil is set to decouple.
18
LOST not solve Arctic Conflict
LOST does not resolve Arctic
Borgerson '8
[Scott G., International Affairs Fellow at the Council on Foreign Relations and a former Lieutenant Commander in the U.S.
Coast Guard. "Arctic Meltdown: The Economic and Security Implications of Global Warming," March/April, Foreign Affairs,
http://www.foreignaffairs.org/20080301faessay87206-p40/scott-g-borgerson/arctic-meltdown.html ]
However, UNCLOS cannot be seamlessly applied to the Arctic. The region's unique geographic circumstances do not
allow for a neat application of this legal framework. The Arctic is home to a number of vexing problems that, taken in
their entirety, make it a special case. These unresolved challenges include carving up the world's longest uncharted and
most geologically complex continental shelf among five states with competing claims, resolving differences between Canada
and the rest of the world over how to legally define the Northwest Passage, demarcating maritime borders between the United States and Canada
in the Beaufort Sea and between Norway and Russia in the Barents Sea, and regulating vessels shielded behind flags of convenience (which
obscure the true origin and ownership of the vessels) as they travel across numerous national jurisdictions. Finally, increased oil and gas
exploration and the trans-Arctic shipping that comes with it will pose serious environmental risks. Oil tankers present a particularly grave
environmental threat, as illustrated by three recent oil spills in the much safer waters of the San Francisco Bay, the Black Sea, and the Yellow
Sea.
There are also a handful of unresolved issues at play in the Arctic that are not covered under UNCLOS. Between 1958 and
1992, Russia dumped 18 nuclear reactors into the Arctic Ocean, several of them still fully loaded with nuclear fuel. This hazard still
needs to be cleaned up. Furthermore, the Arctic region is home to one million indigenous people, who deserve to have a say in the
region's future, especially as regards their professed right to continue hunting bowhead whales, their safety alongside what will become bustling
shipping lanes, and their rightful share of the economic benefits that Arctic development will bring. With the prospect of newfound energy
wealth, there is also growing talk of Greenland petitioning Denmark for political independence. Finally, there has been an explosion in polar
tourism, often involving ships unsuited for navigation in the region. Last year, 140 cruise ships carried 4,000 intrepid travelers for holidays off
Greenland's icy coast, a dangerous journey in largely uncharted waters.
19
Low Oil Prices  Gulf Upheaval
Low Oil Prices brings economic and political crisis for Gulf States, causing revolution and terrorism.
Jeffe and Manning 2k

[Amy Myers Jaffe, former Senior Economist for Petroleum Intelligence Weekly, directs the Energy Research Program at the James A.
Baker III Institute for Public Policy at Rice University; and Robert A. Manning is Senior Fellow and Director of Asian Studies at the
Council on Foreign Relation. "The Shocks of a World of Cheap Oil." Foreign Affairs, January/February 2000,
http://fullaccess.foreignaffairs.org/20000101faessay3/amy-myers-jaffe-robert-a-manning/the-shocks-of-a-world-of-cheap-oil.html
download date: 7-10-08]
Unfortunately, U.S. foreign policy toward the oil-rich ellipse between the Gulf and Russia also seems caught in the same delusion as the region's
bosses: that generous oil revenues will save the day. Some U.S. bureaucrats even argue that this coming oil wealth will magically create
democratic institutions and liberal economies, even though history so far has proven just the reverse.
Sustained low oil prices also mean tremors in the Persian Gulf -- the site of a fundamental U.S. military commitment.
The longer oil prices droop, the more daunting the political, social, and economic challenges that the Gulf countries
will face. Social unrest already bubbles under the surface in most Gulf countries, and succession crises may erupt as a
generation of aging leaders passes. Populations in the region are swelling at a rate of 4 percent or more per year -- a pattern that
foreshadows the worsening demographic bulges caused by large populations under the age of 25 throughout the Gulf. Already, half of the Gulf's
inhabitants are under 15 years old, portending daunting problems in education and employment as well as increased strains on local infrastructure
and resources such as food, water, health, and electric power. Per capita incomes have plummeted; in Saudi Arabia, for example, real per capita
GDP fell from $11,450 in 1984 to $6,725 a decade later. And oil is no panacea. Since 1982, Saudi Arabia has gone from $140 billion in surplus
revenues to run up a national debt of almost $130 billion.
As the Gulf's economies shrink, jobs are becoming an increasingly critical problem. In the ten largest Saudi cities, for example,
unemployment is socking the middle classes, and about 20-30 percent of Saudis lack jobs. Broad cultural and demographic shifts do not help,
either. Many countries, especially Saudi Arabia, now have a large, idle class of students, some favoring religious study.
If employment opportunities in the kingdom remain bleak, Riyadh could lose its ability to co-opt this expanding
younger generation, which could become a major constituency for Islamist opposition movements.
Distributing economic spoils has been a major vehicle for the Gulf regimes to sustain their power base and legitimacy.
In some Gulf countries, as many as 90 percent of the labor force work in government jobs. Political critics and
potential opposition leaders are frequently bought off through subsidies, high offices, or other tokens of wealth and status. The
regimes also build religious centers, medical facilities, and other services to placate the disgruntled. But economic stagnation has already
strengthened local resentment over official corruption and greed and has widened disparities between rich and poor. Without healthy oil
revenues to buy off restive populations, the Gulf leaders will be left with only repression to silence foes and quell
public discontent, which could fuel even more violent opposition. Radicalized local populations could also threaten the
Middle East peace process; disgruntled Gulf states might be tempted to placate Islamist movements by funding the
terrorists of Hamas, for instance.
The U.S. military has demonstrated its impressive capacity to handle external threats to the flow of Gulf oil. But how will these more elusive --
and more likely -- internal threats be managed? Internally organized sabotage of a country's own oil installations is a different type of challenge
than those solved in the past through foreign military assistance. Nor can the U.S. military easily prevent the oil-supply disruptions that might
stem from a violent regime change in the Persian Gulf; witness Iran during its 1979 revolution. One of the lessons of the ill-fated
rule of the shah was that pouring arms into the region does little to address the emerging problems of demography,
social discontent, and strapped regimes.
20

SDI 2008 Closing Randomness: Burk/Stone/Walters Lab

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SDI 2008 Closing Randomness: Burk/Stone/Walters Lab

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SDI 2008 closing randomness

BSW - CLOSING RANDOMNESS

BSW - CLOSING RANDOMNESS......................................................................................................................................................1

A/T: Capitalism K – Perm Best

Monthly Review ‘02

A/T: Capitalism K – Cap = Freedom

A/T: No Value to Life

BOSTROM, Philosophy Professor, Yale, ‘02

WARMING IMPACT – Terrorism

Warming effects increase Terrorism worldwide

High Oil Prices → Recession

Continued high oil prices will cause a deep recession

Oil Prices - Perception Key

High Oil Prices → Recession

AT: Oil Price Forecast

A/T: High Oil prices will hurt Economy

A/T: High Oil prices will hurt Economy

High Oil prices NOT hurt economy

A/T: High Oil prices will hurt Economy

A/T: High Oil prices will hurt Economy

Strategic Petroleum Reserves prevents sudden oil price spikes

Non-Unique: Oil Price Fluctuations

Changes in the Dollar’s value

Any little single comment by politician or investment banker

Economy Resilient – U.S.

US economy resilient to shocks and other events

Economy Resilient – World

World economy is resilient – many reasons

Ferguson, History Prof, Harvard, ‘6

US Econ ≠ Global Econ

US economic slowdown will not cause a global collapse

LOST not solve Arctic Conflict

LOST does not resolve Arctic

Low Oil Prices  Gulf Upheaval

Jeffe and Manning 2k

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