Professional Documents
Culture Documents
Regents
Index
Index....................................................................................................................................................................................................1
1NC Link.............................................................................................................................................................................................3
1NC Russia !.......................................................................................................................................................................................4
1NC Gradualism Turn (1 of 2)............................................................................................................................................................5
1NC Gradualism Turn (2 of 2)............................................................................................................................................................6
U- Prices..............................................................................................................................................................................................7
U- Transition (1 of 3)..........................................................................................................................................................................8
U- Transition (2 of 3)..........................................................................................................................................................................9
U- Transition (3 of 3)........................................................................................................................................................................10
U- Transition- SUVs Module............................................................................................................................................................11
L- Glut...............................................................................................................................................................................................12
L- Glut- Saudi Arabia........................................................................................................................................................................13
L- Boosters........................................................................................................................................................................................14
!- T/ Case (1 of 2)..............................................................................................................................................................................15
!- T/ Case (2 of 2)..............................................................................................................................................................................16
!- Econ...............................................................................................................................................................................................17
!- Hege...............................................................................................................................................................................................18
!- Iraqi Econ......................................................................................................................................................................................19
!- Mexico 2NC..................................................................................................................................................................................20
!- Mexico- Oil Key............................................................................................................................................................................21
!- Middle East Stability.....................................................................................................................................................................22
!- Poverty...........................................................................................................................................................................................23
!- Russia- Lashout 2NC.....................................................................................................................................................................24
!- Russia- Econ- Oil Key...................................................................................................................................................................25
!- Russia- Econ- Inflation IL.............................................................................................................................................................26
!- Russia- Trade Leverage.................................................................................................................................................................27
!- Saudi Arabia 2NC..........................................................................................................................................................................28
!- Saudi Arabia- IL- US Imports Key................................................................................................................................................29
!- Saudi Arabia- !- Econ....................................................................................................................................................................30
!- Saudi Arabia- !- Terror..................................................................................................................................................................31
!- Venezuela.......................................................................................................................................................................................32
Chinese Growth DA 1NC.................................................................................................................................................................33
Chinese Growth DA- L.....................................................................................................................................................................34
2NC AT Peak.....................................................................................................................................................................................35
Aff- U- Prices Won’t Stay High (1 of 2)...........................................................................................................................................36
Aff- U- Prices Won’t Stay High (2 of 2)...........................................................................................................................................37
Aff- U- High Prices Inev...................................................................................................................................................................38
Aff- U- AT High Prices S Case (1 of 2)............................................................................................................................................39
Aff- U- AT High Prices S Case (2 of 2)............................................................................................................................................40
Aff- U- AT Markets S........................................................................................................................................................................41
Aff- No L...........................................................................................................................................................................................42
Aff- !- Dollar.....................................................................................................................................................................................43
Aff- !- Econ (1 of 2)..........................................................................................................................................................................44
Aff- !- Econ (2 of 2)..........................................................................................................................................................................45
Aff- !- Food Prices............................................................................................................................................................................46
Aff- !- Free Trade (1 of 2).................................................................................................................................................................47
Aff- !- Free Trade (2 of 2).................................................................................................................................................................48
Aff- !- Manufacturing- U..................................................................................................................................................................49
Aff- !- Regional War.........................................................................................................................................................................50
Aff- !- Resource Wars (1 of 3)..........................................................................................................................................................51
Aff- !- Resource Wars (2 of 3)..........................................................................................................................................................52
Aff- !- Resource Wars (3 of 3)..........................................................................................................................................................53
Aff- !- Russia- Dem ! T/ (1 of 2).......................................................................................................................................................54
Aff- !- Russia- Dem ! T/ (2 of 2).......................................................................................................................................................55
Aff- !- Russia- U...............................................................................................................................................................................56
Aff- !- Russia- Prices Key.................................................................................................................................................................57
1
CNDI Oil DA
Regents
Aff- !- Russia- Econ- Resilient.........................................................................................................................................................58
Aff- !- Russia- Hege (1 of 2).............................................................................................................................................................59
Aff- !- Russia- Hege (2 of 2).............................................................................................................................................................60
Aff- !- Venezuela...............................................................................................................................................................................61
2
CNDI Oil DA
Regents
1NC Link
Oil prices are and will stay high
Krauss 7-2
Clifford Krauss July 2, 2008 “Clifford Krauss has been a New York Times correspondent since 1990. He currently is a national business correspondent based in
Houston. He covered the State Department, Congress and the New York City police department before serving as Buenos Aires bureau chief and Toronto bureau
chief. He is author of "Inside Central America: Its People, Politics and History," (1991). He has published articles in Foreign Affairs, GQ and Wilson Quarterly,
along with other publications. ““Oil Demand Will Grow, Despite Prices, Report Says” http://www.nytimes.com/2008/07/02/business/02oil.html?ref=business
World demand for oil should continue to climb, despite the doubling of oil prices and weakening economic growth, according to
a report released Tuesday by the International Energy Agency. That should mean tightening supplies, decreasing the odds that
drivers will get much relief at the gasoline pump. The Paris-based agency, which advises governments of the industrialized
countries, predicted that oil consumption would decline slightly in the United States and other developed countries over the
next couple of years. Americans, the report said, are beginning to drive more fuel-efficient vehicles and taking mass transit when it
is available. But the small decline in oil demand in the industrialized countries will be more than offset by an estimated
increase in demand of 3.7 percent a year from 2008 to 2013 in developing countries, particularly in Asia, the Middle East
and Latin America.” said “The report is only further confirmation of the inability of global supply to catch up with rising
demands,Chris Ruppel, an energy analyst at Execution, an institutional brokerage firm. “After five years of record increases in oil prices, producers are still
unable to sufficiently expand output. It means we are in for rough times.” The report said energy consumption was increasing in developing countries because of
increased trade, growing internal markets and strong commodity prices. But subsidies that typically shield gasoline consumers in developing countries, the report
said, are also important in sustaining strong demand, particularly in oil-producing countries. By 2013, oil demand in developing countries will account for nearly 49
percent of total global demand, the report said, compared with 36 percent as recently as 1996. Demand will rise the most in China, as it has since 2004. “China will
account for almost a third of the world’s annual demand increase in the 2008-2013 period,” the report said. That projection is based on International Monetary Fund
predictions of double-digit annual economic growth rates in China for the foreseeable future. The global picture for oil production is little better. The agency’s
forecast for oil production capacity actually declined by about 3 percent for 2012 from what it forecast a year ago. High prices have stimulated exploration and field
development, but the agency projects an increase in annual global production capacity of 1.5 million to 2.5 million barrels a day by 2010 from current levels, or
roughly twice the current production in the Gulf of Mexico. After that, the agency expects annual growth below one million barrels a day from 2011 to 2013. Those
modest increases result from project delays and exploding costs for many oil field projects around the world, declining production in major fields in Mexico and the
North Sea, and political turbulence in Nigeria and other producing countries. There are some bright spots for supplies; at least 250 major new field or field
expansion projects are expected to begin production in the next few years in non-OPEC countries alone. Spare capacity in OPEC countries is projected to rise from
2.5 million barrels a day in 2008 to more than 4 million barrels a day in 2010, although that will still be less than 5 percent of global demand. Production growth is
robust in Brazil, Kazakhstan, Azerbaijan and Iraq. But the agency predicted that the tight markets would keep prices high. And it discounted the impact of
speculation, which has been blamed by many politicians in the United States recently for the spike in prices. “Blaming speculation is an easy solution which avoids
taking the necessary steps to improve supply-side access and investment or to implement measures to improve energy efficiency,” the report said
OPEC will increase supply in response to the plan and decrease the price
But just when it appears something will in fact be done toward increasing domestic energy supplies, getting serious about
alternative sources, and making a long-term commitment toward reducing our dependence on foreign oil — well, miraculously,
prices go down. OPEC magnanimously increases supply, refineries begin humming, and once again thoughts of a national energy
policy fade like the Cheshire cat.
Only the cat's grin is left. And the cat is OPEC and the energy industry. They've seen it all before. They know they have only to
wait; that we in the United States have a short memory, and that as long as they toss us a sop of energy “bargains” from time to
time, we'll moan and groan and pay their price the rest of the time.
3
CNDI Oil DA
Regents
1NC Russia !
Low prices devastate the Russian economy
Hudson Institute Study Group on U.S.-Russian Relations, U.S.-RUSSIAN RELATIONS: IS CONFLICT INEVITABLE?,
Summer 2007, http://www.hudson.org/files/pdf_upload/Russia-Web%20(2).pdf
The economy Putin is leaving to Russia looks impressive. Gross domestic product has risen during his presidency from $200
billion in 1999 to $920 billion in 2006 (in current dollars); the gold and currency reserves have risen from $12.7 billion in 1999
to $ 303.86 billion in February 2007. The reserves of the Stabilization Fund, into which oil revenues are deposited, have reached
$70 billion. In 2006 the trade profit was over $120 billion, and the budget profit is 7.5 percent of gross domestic product. The
Russian economy is now the twelfth largest in the world. Although since 2005 economic growth has been slowing down (from
10 percent in 2000 to 6.8 percent in 2006) it still looks fairly impressive. A boom is continuing not only in the extractive sectors of
the economy but also in construction, trade, and the service and banking sectors. Russian business has shown it is able to organize
large scale production, successfully competing against international corporations. Russia, which in the 1990s had humiliatingly to
beg for loans, repaid her debt to the Paris Club ahead of time. The number of major businessmen in Russia is increasing more than
twice as
fast as in the U.S.: in 2005 the number of dollar millionaires in Russia grew by 17.4 percent as against 6 percent
in the U.S. However, like everything else in Russia, the economy has a false bottom. The causes of the economy’s success give
no grounds for optimism, mainly because it is associated with high oil prices and has partly been achieved
by sectors protected from foreign competition. A collapse of the oil price could plunge the Russian economy into recession, and
people remember what a fall in the oil price means. Yegor Gaidar has repeatedly reminded us that the sixfold decrease in the
oil price in 1986 led to the collapse of the USSR, and the twofold fall in 1998 caused a financial crisis that almost finished off
the barely breathing Russian economy.
4
CNDI Oil DA
Regents
Therefore, she reckons that it will be another 20-25 years before alternative energy sources play a dominant role
the world's energy mix. But orderly and rapid are not necessarily mutually exclusive in this outlook, says Namovicz.
6
CNDI Oil DA
Regents
U- Prices
OIL PRICES WILL RISE INEVITABLY
The International Herald Tribune 2008 [Oil price forecast: Up, then down, then up again, lexis]
Flynn said he thought that oil prices were more likely to fall than rise, ''because I think the factors that drove us to today are
unlikely to repeat in 2008.'' He added that he thinks the dollar will find a bottom in 2008 and that the problems in housing are
already priced into the markets.
But most experts say that if oil prices do go down, they will probably not go down very far or for very long.
Richels said that consumers in Europe and Japan were not feeling the same pressure as Americans because their currencies have
been strengthening and not weakening.
''There is still a lot of demand that is outside of the United States,'' Richels said. ''There is increasing oil consumption, particularly
in the developing nations, and oil is getting more difficult to find.''
Oil prices have doubled in a year to around $130 a barrel as rapid increases in consumption in China and other developing
countries strain supplies, and some analysts have said crude could top $200 a barrel by 2010 as the market remains tight.
While the boom has helped big oil-producer countries, particularly Russia and parts of the Middle East, there are signs the major
consumers - the United States and parts of Europe and Asia - are starting to crack under the strain.
7
CNDI Oil DA
Regents
U- Transition (1 of 3)
High prices are spurring a slow transition that will solve the case now
Wherry ‘7
[Rob, writer for the Smart Money magazine, Alternative-Energy Funds Could Offer High-Powered Returns,
http://www.smartmoney.com/fundinsight/index.cfm?story=20070621&hpadref=1)]
Wind power and other forms of alternative energy — solar, hydro, geothermal, biomass — are quickly coming into vogue across
the globe thanks to record high oil prices, shrinking reserves and world-wide demand that is expected to increase 50% by 2030,
according to the International Energy Agency. What has also given them some attention is that these sources are now at the heart of
profitable businesses. That hasn't always been the case. Clean Edge, an industry research firm, anticipates biofuels, wind, solar and
fuel cells will generate $217 billion in industrywide revenues by 2016, up from $56 billion in 2006. Even the typical American has
changed his perception: A survey by Calvert, a socially-responsible investment firm, found that 85% of the 1,094 people that they
polled thought putting money into alternative energy was a good way to protect the environment and make money, too.
Add all that up and you have a decent investing opportunity. You could spend your time reading over analyst reports on alternative-
energy companies — what little there are on these thinly-traded firms — looking for a diamond in the rough. But a smarter option
is to scoop up the shares of one of the growing number of mutual and exchange-traded funds that specialize in this field. As always,
though, be prepared for sector funds like these to experience dramatic ups and downs. And we would suggest only building a 5% or
smaller position in this niche.
The concerns here are numerous. Many alternative-energy companies are small firms that are barely profitable. Lose a few
customers or fail to make a piece of technology work and it could be lights out. Alternative-energy investors not only need to be
aware of the price of a commodity like oil — the higher it goes the more attractive managing solar and wind farms becomes — but
also others like corn, a chief ingredient in ethanol. There are political concerns, too. "Both Republicans and Democrats agree we
need to be energy independent," says Todd Rustman, president of GR Capital Asset Management in Newport Beach, Calif. But that
doesn't mean there aren't gripes. Locals, especially, complain that wind farms are eyesores and hurt property values. Those protests
can lead to costly delays or even derail some potential money-making projects.
A surge in the price of crude is threatening global growth for the first time in decades and spurring a desperate surge in interest in
energy alternatives and new technology to keep conventional oil flowing.
How companies and governments navigate the treacherous energy landscape - which some analysts liken to that of the 1970s and
1980s - will shape the future of the global economy and potentially tilt the geopolitical balance, experts said.
"What happens 10 years down the road will be determined by the decisions made on energy today," said David Kirsch, analyst at
PFC Energy in Washington. "Countries need to get serious about the underlying problem of demand for oil."
8
CNDI Oil DA
Regents
U- Transition (2 of 3)
Greener technologies wont make a difference in the short term
Newsweek June 9, 2008 The Coming Energy Wars; Rana Foroohar; With Barrett Sheridan in New York WORLD AFFAIRS; Pg. 0
Vol. 151 No. 23 ISSN: 0163-7053
And while higher prices are already driving down energy consumption in rich nations, that drop does not offset the booming
demand in emerging markets.
Meanwhile, though numerous green technologies hold plenty of promise, none of them are going to save the day any time
soon. "It's a false god," says Robin West, chairman of PFC Energy. "There will be step changes in technology, but people
forget the scale of the oil business. Ethanol production was 5 billion gallons last year, with huge subsidies to farmers and
rising food prices. But that's the size of one production platform off the coast of West Africa."
High oil prices cause gradual market innovations that will solve current problems
Financial Times June 29, 2008, “The positive side of high oil price”
http://www.gulfnews.com/business/Comment_and_Analysis/10224724.html
Peak oil or freak oil? The current oil shock, with Nymex crude touching $142 on Friday, has as much to do with bad luck as geology. And, as usual with luck, man
has largely made his own. The central theme of this decade's bull market in crude is little different from previous oil shocks: a change in expectations about future
supplies. In other words, many think we have enough oil today but might not tomorrow. A series of largely man-made disruptions has fed that fear. In countries such
as Russia and Mexico, resource nationalism has stifled investment in supply. Violence in Nigeria and Iraq has shut down fields. The Energy Policy Research
Foundation estimates the world's lost output of up to 4.5 million barrels a day is the equivalent of twice the world's effective spare capacity. Whether the
problems are below or above the ground, the result is the same: fewer barrels available. The distinction, however, is
important - if only because humans, even politicians, can alter their behaviour. When oil prices are rising, producers have an
incentive to keep markets tight. But, eventually, expensive oil encourages conservation, new investment and the search for
alternatives. Meanwhile, protectionism breeds inefficiency. Russia and Mexico, for example, are taking steps to reduce oil taxes or
attract foreign companies, respectively, to address stagnant or falling output. The same point extends to the demand side. In the
US, high oil prices prompt drivers to buy more fuel-efficient cars. Meanwhile, even if Asia's drivers are becoming richer, they
will never reach America's currently bloated per capita usage of oil. Governments across Asia are already cutting expensive fuel
price subsidies. Shocks are occasionally necessary to change human behaviour. High prices are painful, but will ensure the
world does not run out of oil.
Both want to boost alternative energy technology, press for more fuel efficiency and promote more conservation. Both McCain and
Obama favor expanding the electricity grid, implementing caps on carbon emissions to curb global warming, spend billions on
clean-coal research and give nuclear energy a larger role. They differ on offshore drilling, but agree on keeping the ban on oil
exploration in the Arctic National Wildlife Refuge.
Despite the flurry of activity and rhetoric, major factors in the rise of gas prices — the weak dollar, soaring demand in China and
India, market speculation, supply problems — are beyond U.S. policy-makers' direct control.
9
CNDI Oil DA
Regents
U- Transition (3 of 3)
HIGH OIL PRICES CAUSING A SHIFT TO RENEWABLES IN THE STATUS QUO
The Deal 2008 [Fueling the alternatives, lexis]
HIGHLIGHT: The increased demand for energy galvanizes interest in alternative sources at the government and private-sector
level.
Oil prices are reaching record levels, evidence is mounting on the degradation caused by carbon-based fuels, fossil fuel reserves are
declining, green tax breaks are becoming more popular, and the U.S. Senate is working on legislation aimed at cutting U.S.
emissions by 70% before 2050.
This, combined with an increased demand for energy, is fueling interest in alternative energy sources at the government and
private-sector level.
In 2008 the reallocation of venture capital and private placements from coal and biofuel producers (including corn ethanol) to cane
ethanol, wind and solar-energy-producing companies will continue to increase in order to meet increased demand.
In February J.P. Morgan Chase & Co., Morgan Stanley and Citigroup Inc. partnered for the purpose of creating The Carbon
Principles -- climate change guidelines for advisers and lenders to the U.S. power industry. The banks worked in conjunction with
power companies and the Natural Resources Defense Council and Environmental Defense to create the guidelines and a framework
for lenders to understand better and evaluate the potential carbon risks associated with coal-fired power plants. The Principles,
which are expected to be implemented by the U.S. government in the next two years, will require federal caps on carbon dioxide
and should lead to reductions in both the financing and building of coal-fired power plants.
Some companies, noting the rising costs of energy production and anticipating the Carbon Principles and other federal regulations,
are beginning to invest in more environmentally conscious alternative energy sources.
Nevertheless, as oil prices hover above $110 a barrel, it's a safe bet that people will be thinking much harder about how to replace
the gas-powered engine, or at least how to make it use less fuel. Are there investment plays for that? Sure. But only with money
you're willing to see go up in smoke.
Although oil prices are down from their peak of nearly $120 just a few weeks ago, a barrel of light, sweet crude closed at $112.52
Thursday, up from $63.19 a year ago. The average price of a gallon of regular gasoline hit an all-time record high of $3.603 this
week, according to the government.
Back when gasoline was less than $1 a gallon, there was no real urgency to explore alternatives. But the prospect of $4-a-gallon gas
has focused Wall Street's collective mind wonderfully on alternative energy. "When gas gets dear, it doesn't take long for people to
say, 'What else is available?'" says Robert Wilder, CEO of WilderShares, which created the WilderHill Clean Energy index.
10
CNDI Oil DA
Regents
Oil price: Slump in motor sales raises fears for viability of Detroit's car industry
High petrol prices have caused a collapse in demand for pick-up trucks and big cars. Ford revealed yesterday that monthly sales in
its core domestic market had dived by 28% to 167,090 vehicles as cash-strapped consumers shunned its showrooms.
Jim Farley, Ford's vice-president for marketing, said: "Consumer fundamentals and consumer confidence deteriorated as the first
half unfolded."
There was a sliver of relief for Detroit's dented pride as General Motors fought off Japan's Toyota to remain the largest seller of
cars in the US.
GM, which owns brands such as Chevrolet, Saab and Vauxhall, only suffered an 8.3% drop in sales as zero-interest financing offers
proved popular. Toyota's figures were worse, with a fall of 10.3% in the number of vehicles sold.
Mark LaNeve, GM's vice-president for North American sales, conceded that the pick-up truck market was suffering from high
prices at the petrol pump but said: "Asian manufacturers do not have a monopoly on fuel-efficient vehicles."
The news caused a sharp rise in GM's share price, which has fallen by 55% this year and was trading before the sales figures at a
level last seen in the early 1950s.
Analysts are becoming increasingly alarmed that Detroit's big three - Ford, GM and Chrysler - are losing money at an unsustainable
level. The trio have already cut more than 100,000 jobs since a downturn began three years ago but none were prepared for the
scale of the impact caused by the rising price of oil.
For all these reasons, it makes sense to dream of a world that is far, far less dependent on oil than it is now. Winning the Oil
Endgame: American Innovation for Profits, Jobs and Security, written by a team led by Amory Lovins of the Rocky Mountain
Institute in Snowmass, Colo., is one of the best analyses of energy policy yet produced. Lovins, who has been preaching the need
for fuel efficiency for some 30 years, thinks big. His aim is to promote a set of policies that over the next two decades would save
half the oil the U.S. uses, before moving to a hydrogen-based economy that dispenses with oil altogether (save for possible use as a
fuel to produce hydrogen.) If that seems hopelessly Utopian, Lovins reminds us that we have done something very like it before.
Spurred by the oil price shocks of the 1970s, the U.S. between 1977 and 1985 increased efficiency and cut oil consumption 17%
(and net oil imports 50%) while the economy grew 27%. The key to that revolution was a huge increase in average miles-per-gallon
of the U.S. automobile fleet. If we had continued to increase energy efficiency at the same rate, the stability of Iraq and Saudi
Arabia would by now be of minor concern to U.S. policymakers. Instead, we bought SUVs and wasted two decades.
Those SUVs are no joke. In the U.S., where 70% of oil is used for transportation, any energy policy is necessarily also an
automobile policy. The single key insight of Lovins' report is to focus on the need to reduce the weight of cars (without sacrificing
safety) by using advanced materials like carbon fiber and composites instead of heavy steel. When powered by hybrid technologies
that combine electricity with the internal-combustion engine, such light vehicles will produce enormous oil savings. Lovins
proposes a nifty scheme of "feebates," which would reduce the consumer price of such energy-efficient cars while increasing the
price of gas guzzlers.
11
CNDI Oil DA
Regents
L- Glut
Oil glut saps motivation to develop renewables
Time 11/7/94
The oil glut of the 1980s sapped any motivation to develop alternative energy sources. Solar moved to the fringes of public
consciousness in the U.S. as the Reagan Administration eliminated most of the federal funding for research, and big oil companies
dropped their development programs. Result: solar accounts for less than 0.5% of the power generated in the U.S. today, instead of
the 2% to 5% envisioned in the late 1970s.
Norway and Mexico offered to cut production to help support price. The OPEC countries themselves did
everything possible to foster the notion that they could flood the world with cheap oil at the flick of a switch.
It was a strategy aimed to inhibit investments in gas, non-conventional oil, renewable energy or energy
saving that they feared might undermine the market for their oil, on which they utterly depend.
12
CNDI Oil DA
Regents
Surprisingly, Saudi Arabia's decision to increase oil production is not necessarily aimed at increasing profits
in the near term; instead, it is designed to maintain the nation's franchise well into the future. According to the
report, government officials in Saudi Arabia worry that if oil prices remain too high, oil dependent nations
such as the United States will increase oil exploration and development of alternative energy sources. "Saudi
Arabia plans on being in the oil game for many years to come," commented Leuffer. "They do not want to
risk their future prosperity on present day greed." According to Leuffer, Saudi Arabia would like oil to fall to
$25 dollars a barrel and he believes the Saudis will continue to produce oil until that is achieved. However, as
other nations look to cash in before oil prices drop, production will increase beyond the desired levels. "It is
difficult to engineer such a precise correction. Once oil prices start to fall, it will be hard to stop them," said
the Bear Stearns analyst. Leuffer believes oil prices could eventually fall to $20 a barrel.
Saudi Arabia is willing to boost oil production
Caryle Murphy June 23, 2008 “Saudi Arabia to boost oil output. Will gas prices fall?” Correspondent of The Christian Science
Monitor http://www.csmonitor.com/2008/0623/p06s02-wome.html
Jeddah, Saudi Arabia - Saudi Arabia will produce more oil – if customers need it – the kingdom's oil minister promised
Sunday. For the remainder of the year "Saudi Arabia is willing to produce additional barrels of crude oil above and beyond
the 9.7 million barrels per day which we plan to produce during the month of July," Oil Minister Ali al-Naimi said at a rare
meeting of the world's top energy officials in this Red Sea port town. The unusual gathering was called by the Saudis to draw up a
plan of action to address the unprecedented rise of oil prices and to defuse what Saudi officials see as an alarming political backlash
against oil-exporting nations. Mr. Naimi also said Sunday that the kingdom was willing to invest to boost its spare oil production
capacity above the current 12.5 million barrels per day planned for the end of 2009, reversing previous statements that the country
would not go beyond that figure. "In addition, we have identified a series of future crude oil megaincrements totaling another
2.5 million barrels per day of capacity that could be built if and when crude oil demand levels warrant their development,"
he said. The world's biggest oil producer has already announced modest increases (300,000 barrels in June, and 200,000 in
July) but those steps have not done much to stem the skyrocketing price of oil, which closed near $135 a barrel on Friday.
Politicians and financial analysts, however, say there is no quick fix for the coincidence of complex economic factors pushing oil
prices up. "We [have] been 30 years digging ourselves into this hole, and this is not something we're going to be relieved of in any
short term," US Energy Secretary Samuel Bodman told reporters here. Oil's soaring price has contributed to the spikes in food and
transportation costs that have sparked angry street protests in places as diverse as Spain, Nepal, Indonesia, and Egypt. Americans
are furious about $4-a-gallon gas, and airlines are abandoning low fares to cover higher fuel costs. Politicians in oil-consuming and
oil-producing nations fear that rising prices could contribute to a global recession that would hurt all sides.
13
CNDI Oil DA
Regents
L- Boosters
PRICE DECLINES SNOWBALL – LOWER PROFITS GIVE EACH MEMBER AN INCENTIVE TO CHEAT TO GRAB
SCARCE REVENUES
THE ECONOMIST 3/27/1999
The question is not whether there will be cheating, but how much. The recent deal was struck because OPEC producers had seen
their oil income decline by more than $60 billion in 1998, compared with the previous year. They are desperately short of money.
Yet, for the same reason, each now has more incentive than ever to raise revenues by failing to stick to promised production cuts.
Members were ill-disciplined even when the price languished at around $11 last year, argues Fadhil Chalabi, a former OPEC
official who now runs London's Centre for Global Energy Studies. They may well seize on today's prices to make extra money
while they can.
Mr Chalabi also points out that it was not the cartel that created this week's deal, but a smaller cabal of producers: a few Gulf
countries, led by Saudi Arabia, as well as several non-OPEC producers, including Mexico and Norway. Stocks of oil are close to a
record 400m barrels; that means that the recent price rise could quickly be reversed at the first hint of disunity. The new group will
find unity elusive: it is too disparate to function as an effective new OPEC.
OPEC itself has been plagued by divisions. Iran refused last year to acknowledge that it was producing more than its quota,
insisting that it had secretly been given the right to produce an extra 300,000 barrels a day. Saudi Arabia, OPEC's linchpin,
grudgingly gave ground. With such a precedent, the Iranians may be tempted to try again. In Venezuela, the Saudis pin their hopes
on the newly elected president, Hugo Chavez. But Mr Chavez, a populist who was borne to office on a surge of popular
disaffection, will find it just as hard to restrain output as did his predecessor. If the Venezuelan economy worsens, he will face
increasing pressure to cheat.
empirically proven – production increases by one country spill over collapsing opec unity
business wire 7/17/2000
High gas prices have hurt customers all summer, but relief is now on the way and cash strapped drivers can thank Saudi Arabia,
according to a new report by Bear Stearns senior managing director and oil analyst Fred Leuffer. According to the report, Saudi
Arabia's unilateral pledge to increase production by 500,000 barrels a day will start a chain reaction among oil producing nations,
which will cause oil prices to fall below the intended price. "The flood gates are now open," commented Leuffer. "Saudi Arabia's
decision to produce more oil means OPEC unity is out the window. The race is on to see which countries can capitalize on these
high oil prices while they last." Leuffer says compliance among OPEC countries has already been suspect; according to reports,
every country except Nigeria has cheated on its production during the past two months.
Saudi's Long Term Greed.
Surprisingly, Saudi Arabia's decision to increase oil production is not necessarily aimed at increasing profits in the near term;
instead, it is designed to maintain the nation's franchise well into the future. According to the report, government officials in Saudi
Arabia worry that if oil prices remain too high, oil dependent nations such as the United States will increase oil exploration and
development of alternative energy sources. "Saudi Arabia plans on being in the oil game for many years to come," commented
Leuffer. "They do not want to risk their future prosperity on present day greed." According to Leuffer, Saudi Arabia would like oil
to fall to $25 dollars a barrel and he believes the Saudis will continue to produce oil until that is achieved. However, as other
nations look to cash in before oil prices drop, production will increase beyond the desired levels. "It is difficult to engineer such a
precise correction. Once oil prices start to fall, it will be hard to stop them," said the Bear Stearns analyst. Leuffer believes oil
prices could eventually fall to $20 a barrel.
!- T/ Case (1 of 2)
Low prices encourage consumption worsening pollution
Peter coy, 11-3-97 (clean air in an era of cheap oil)
The expensive oil of the 1970s and early 1980s had one virtue: By discouraging consumption, it lessened the pollution caused by
the burning of gasoline, diesel, and other petroleum products. Environmentalists hoped rising oil prices would promote a switch to
cleaner energy sources, such as solar power.
If oil instead remains cheap for decades to come, the harm to the environment from sulfur dioxide, carbon monoxide, particulates,
and other poisons could be enormous. Combustion of oil, coal, and other carbon-based fuels may also overheat the planet by
creating an insulating layer of carbon dioxide. Indeed, cheap oil is bound to complicate efforts to achieve a treaty on global
warming in Kyoto, Japan, this December (page 158).
PRICE TAGS. Luckily, there's growing support for a new pollution-fighting approach that harnesses market forces instead of
fighting them. The concept--embraced by economists and market-savvy environmentalists--is to charge polluters for each unit of
pollution they emit. A few polluters that can't easily cut emissions will pay a hefty cost, but many others that have the technology to
cheaply cut emissions will be motivated to reduce them far more than they would have under traditional regulation. The result:
Profit-seeking behavior leads to bigger reductions at lower costs than might have seemed possible.
"Yes, it causes hardship for some people as the price goes up, but I think we've been cursed with cheap oil," he told the Herald in
Auckland, en route to the third national Ecoshow held in Taupo at the weekend.
"It has lulled us into complacency about using this non-renewable resource at ever-increasing rates and we simply can't continue to
do that - if it takes high prices to change our behaviour then so be it.
"For the last couple of centuries we've been doing something incredibly stupid - developing economies on the ever-increasing consumption of non-renewable
resources."
Mr Heinberg is revered as a leading educator on the concept of Peak Oil, the point at which world production begins a slippery slide from an all-time high, sparking
what its proponents warn will be shortages and widespread conflict between or even within nations unless the international community can agree on quotas for
curbing demand.
For him, that landmark is already in his rear-view mirror. He says production from oil wells peaked in 2005 at 74.2 million barrels a day and supplies extracted from
all sources have declined since July last year.
Oil has meanwhile hit a record price above US$83 ($107) a barrel - more than three times higher than in 2004 - and he predicts an escalation to between US$100
and US$120 by this time next year and "on and up from there".
The black stuff will continue to be discovered but in ever-smaller amounts in increasingly inaccessible parts of the world, such as
the Arctic Circle, where extraction will be more likely to damage fragile ecosystems.
Although Mr Heinberg and his books, such as The Party's Over, have been attacked by oil giant Exxon-Mobil as unfounded scare-mongering, even the International
Energy Agency predicts a supply "crunch" by 2012, followed by an inability to satisfy unabated demand fuelled by tiger economies such as China and India.
Mr Heinberg acknowledges climate change as a problem of "much greater consequence" for the world.
"But I would say oil depletion is a problem of much greater urgency, because the consequences to human societies will come faster and thicker."
He believes an "oil depletion protocol" by which communities and countries could take greater control over their futures by reducing consumption by about 2.6 per
cent a year - equal to his estimate of the depletion rate of world oil reserves - would be easier for the public to grasp than the Kyoto Protocol against climate change.
"It is simpler because everyone is in the same boat. The only way you can reduce vulnerability to supply shocks is to reduce your
dependence on oil."
Cheap crude will short-circuit the push for renewable energy. We've seen this before. The surge in oil prices that occurred after the
1973 oil embargo didn't last. As prices softened, so, too, did the interest in solar power, wind power and other technologies. The
best hope for the renewable energy sector is a sustained period of high prices for fossil fuels of all types, from coal to natural gas.
15
CNDI Oil DA
Regents
!- T/ Case (2 of 2)
Renewables cannot remain cost-competitive with low priced oil
Michael renneris, 2-6-3 (UPI)
Sustained low prices would critically undermine the fledgling efforts to build wind, solar, and hydrogen industries, kick away the
economic incentive to use energy more prudently, and effectively destroy the Kyoto protocol.
Wind power in particular has come a long way, growing by more than 30 percent annually in recent years and now cost-competitive
with most conventional sources of energy.
Such advances could fall victim to artificially cheap oil -- a fuel whose considerable ecological and security costs are not properly
accounted for.
This is by no means an inevitable scenario. Just as it is possible that weapons inspections and determined global opposition to
warmongering, can yet avert an invasion of Iraq, there is no reason why the United States cannot face up to its oil addiction.
Neither is likely to happen in the absence of an informed, vocal public that demands an alternative approach to matters of war and
peace and the environment.
Cheap crude would short-circuit the push for greater automotive fuel efficiency. American motorists who've become accustomed to
$3 per-gallon gasoline have, of late, been buying more fuel-efficient vehicles. If crude (and therefore, gasoline) prices continue to
fall, they will happily return to their Hummers, big pickups, and SUVs. And that will, once again, set up a scenario that will allow
foreign automakers like Toyota, Nissan and Honda to capture even larger shares of the auto industry when gasoline prices rise
again, and they will.
Cheap crude will short-circuit the push for renewable energy. We've seen this before. The surge in oil prices that occurred after the
1973 oil embargo didn't last. As prices softened, so, too, did the interest in solar power, wind power and other technologies. The
best hope for the renewable energy sector is a sustained period of high prices for fossil fuels of all types, from coal to natural gas.
Low-cost oil would increase emissions of greenhouse gases. One can argue all day about what's causing global warming. But if
policymakers want to embrace Kyoto or other anti-warming initiatives, cheap oil is the last thing they should want.
A collapse in oil prices would mean a collapse in America's domestic oil production. We've seen this movie before, too. In the early
1980s, Dallas and Houston were in a frenzy fueled by high-priced oil and a river of cheap money provided by crooked savings and
loan operators. Everyone was convinced that high prices were here to stay. That illusion ended with the oil price crash of 1986 ,
which, by the way, was largely precipitated by unrestricted production from Saudi Arabia. The crash resulted in bankruptcies from
Midland to Tulsa. Idle drilling rigs were cut up and sold for scrap. Skilled oilfield workers left the industry for good.
Cheap oil increases America's reliance on foreign oil. Back in 1985, when America's domestic oil production was on the upswing,
OPEC countries supplied 41 percent of America's imported oil. By 1990, with domestic production decimated, OPEC's share had
climbed to 60 percent. If a stint of low crude prices persists, the U.S. domestic oil industry will, once again, fall on hard times. That
will mean foreign producers, who generally have lower production costs, will be able to gain market share at the expense of
domestic producers.
16
CNDI Oil DA
Regents
!- Econ
High oil prices are key to manufacturing
Newsweek June 23, 2008 Learning From the Oil Shock; SECTION: ROBERT J. SAMUELSON; JUDGMENT CALLS; Pg. 39
Vol. 151 No. 25 ISSN
We all know that gasoline is at $4 a gallon and oil is at $135 a barrel. But if you think that's the end of the story, don't talk to
economist Jeffrey Rubin of CIBC World Markets. By Rubin's reckoning, we've barely passed the halfway point on a steady
march upward that will take gasoline to $7 a gallon and oil to $225 by 2012. Though there will be fluctuations, the underlying
rise in prices, he says, will have pervasive and often surprising side effects. Among them:
• U.S. manufacturers benefit, because rising ocean-freight costs--reflecting fuel prices--make imports more expensive. Some
production returns to the United States, and some shifts from Asia to closer exporters (Mexico over China). Since 2000,
estimates Rubin, the cost of shipping a 40-foot container from East Asia has gone from $3,000 to $8,000. With oil at $200 a barrel,
the shipping cost would be $15,000. Already, he says, China's steel exports to the United States are falling while U.S.
production is rising.
McKillop ‘4
Andrew McKillop, April 19, 2004, Oil and Gas Journal “http://www.gasandoil.com/goc/features/fex42297.htm”
These gigantic investment needs are very obviously dependent on strong and sustained economic growth. Without much
higher and firmer oil prices, it is unlikely that global economic growth can be significantly increased from current low
average annual rates for many key economies.
17
CNDI Oil DA
Regents
!- Hege
Energy independence kills hege
BRYCE 2008 [ROBERT, an Austin writer and managing editor of Energy Tribune, ‘Gusher of Lies’, republished in the New York
Times, http://www.nytimes.com/2008/03/07/books/chapters/first-chapter-gusher-of-lies.html?_r=1&ref=books&pagewanted=all]
America’s future when it comes to energy — as well its future in politics, trade, and the environment — lies in accepting the reality
of an increasingly interdependent world. Obtaining the energy that the U.S. will need in future decades requires American
politicians, diplomats, and businesspeople to be actively engaged with the energy-producing countries of the world, particularly the
Arab and Islamic producers. Obtaining the country’s future energy supplies means that the U.S. must embrace the global market
while also acknowledging the practical limits on the ability of wind power and solar power to displace large amounts of the
electricity that’s now generated by fossil fuels and nuclear reactors. The rhetoric about the need for energy independence continues
largely because the American public is woefully ignorant about the fundamentals of energy and the energy business. It appears that
voters respond to the phrase, in part, because it has become a type of code that stands for foreign policy isolationism — the idea
being that if only the U.S. didn’t buy oil from the Arab and Islamic countries, then all would be better. The rhetoric of energy
independence provides political cover for protectionist trade policies, which have inevitably led to ever larger subsidies for
politically connected domestic energy producers, the corn ethanol industry being the most obvious example.
But going it alone with regard to energy will not provide energy security or any other type of security. Energy independence, at its
root, means protectionism and isolationism, both of which are in direct opposition to America’s long-term interests in the Persian
Gulf and globally.
18
CNDI Oil DA
Regents
!- Iraqi Econ
LOW PRICES KILL IRAQ’S ECONOMY
BRYCE 2006 [ROBERT, an Austin writer and managing editor of Energy Tribune, Opinion Forum: viewpoints on issues in energy,
geopolitics and civilization, http://www.petroleumworld.com/SF07012801.htm]
Lower prices would further damage Iraq's economy. Amid the torrent of bad news in Iraq, higher oil prices have been among the
few positive news developments, allowing the country to amass sizable funds for the rebuilding effort. Iraq's oil output has
plummeted since Bush and the neocons rushed to invade the country in March 2003. But that falling output has been offset, at least
partially, by higher prices. And given that Iraq will for good or ill be America's colonial possession in the Persian Gulf for the
foreseeable future, higher oil prices are far better than lower prices.
19
CNDI Oil DA
Regents
!- Mexico 2NC
High prices boost the Mexican economy
Mike Moffat, About, June 5, 2007 (from article Will High Oil Prices Slow Down Globalization and International Trade)
"Instead of finding cheap labour halfway around the world, the key will be to find the cheapest labour force
within reasonable shipping distance to your market," according to Rubin.
In that type of world, Mexico's proximity to the rest of North America, combined with its labor costs, will
give it a second chance to compete with Pacific Rim production, according to Rubin, who predicts that when oil
prices reach US$200 a barrel, it will cost three times as much to ship the same container from China than
from Mexico.
The related increase in oil prices and decline in the U.S. dollar is changing trade patterns, and this change is
showing up in international shipping data. Justin Fox explains:
In 2007 Long Beach imported 3,704,593 loaded twenty-foot equivalent units (TEUs), shipped out 1,574,241 loaded TEUs, and
handled 2,033,631 empties--almost all of which were outbound. So "loaded mainly with empty containers" is correct with respect
to last year. Starting early this year, though, things changed. Loaded outbound containers outnumbered empties in February, March,
and April, the first such three-month run, Wong says, since the spring of 2000. The totals so far in 2008 are 1,033,655 loaded
inbound, 595,232 loaded outbound, and 476,853 empties. And while in 2000 the balance swung back to mostly empties for the full
year, I get the feeling that won't be the case this year.
Rangel ‘95
(Enrique-, Monterrey Bureau, Nov. 28, Dallas Morning News, “Pressure on the Peso; Mexico’s Economic Crisis carries global
implications”, Lexis)
With the exception of 1982 - when Mexico defaulted on its foreign debt and a handful of giant New York banks worried
they would lose billions of dollars in loans - few people abroad ever cared about a weak peso.
But now it's different, experts say.
This time, the world is keeping a close eye on Mexico's unfolding financial crisis for one simple reason:
Mexico is a major international player.
If its economy were to collapse, it would drag down a few other countries and thousands of foreign
investors. If recovery is prolonged, the world economy will feel the slowdown.
"It took a peso devaluation so that other countries could notice the key role that Mexico plays in today's
global economy," said economist Victor Lpez Villafane of the Monterrey Institute of Technology.
"I hate to say it, but if Mexico were to default on its debts, that would trigger an international financial
collapse" not seen since the Great Depression, said Dr. Lpez, who has conducted comparative studies of the Mexican
economy and the economies of some Asian and Latin American countries.
20
CNDI Oil DA
Regents
Article published by: Heather Scoffield Globe and Updated May 27, 2008
http://www.supplychainnetwork.com/?p=330 (Writer for Globe Magazine, from article Will High Oil Prices Reverse
Globalization?)
Oil prices now account for about half of total freight costs, and for the past three years, for every $1 increase in world oil, there has
been a corresponding one per cent increase in transport costs.“Unless that container is chock full of diamonds, its shipping costs
have suddenly inflated the cost of whatever is inside,” Mr. Rubin said. “And those inflated costs get passed onto the Consumer
Price Index when you buy that good at your local retailer. As oil prices keep rising, pretty soon those transport costs start cancelling
out the East Asian wage advantage.”Persistently high oil prices will also cause many commuters to consider moving to the city,
reversing the allure of the suburbs, he said. And it could also force a change in eating habits, as foreign food becomes too expensive
to ship.“It means forget about that 50-mile commute from Cooksville to Toronto, and also forget about that avocado salad in
January.”More fundamentally, the soaring oil price will prompt a major rethinking of how production is organized, Mr. Rubin
argues, and could even lead to a revival of North American manufacturing.Already, U.S. imports of Chinese steel are declining
dramatically, while domestic production is rising at rates not seen for years, they say.China’s steel exports to the United States are
falling at a 20-per-cent annual pace, while U.S. domestic production has risen by 10 per cent in the past year. That makes sense, the
economists say, because Chinese steel producers need to import iron ore from the likes of Australia and Brazil, then turn it into
steel and then pay huge and rising freight costs to send the hot-rolled steel to the United States.Regional trade looks much cheaper
in comparison, they say.As oil prices continue to climb, shipments of furniture, footwear and machinery and equipment are likely to
meet the same fate, the economists say.“In a world of triple-digit oil prices, distance costs money,” they say in a paper released
Tuesday. “And while trade liberalization and technology may have flattened the world, rising transport prices will once again make
it rounder.”At first glance, such developments may seem to favour a renaissance of the moribund steel mills and boarded up
furniture plants of Canada. But high oil prices won’t eliminate importers’ search for cheap labour. Instead, they’re eyeing
Mexico.(Continued)“Instead of finding cheap labour half-way around the world, the key will be to find the cheapest labour force
within reasonable shipping distance to your market,” CIBC says.“In that type of world, look for Mexico’s maquiladora plants to get
another chance at bat when it comes to supplying the North American market. In a world where oil will soon cost over $200 per
barrel, Mexico’s proximity to the rest of North America gives its costs a huge advantage.”While high oil prices will require major
reorganization of global supply chains, the bigger danger comes in the form of inflationary pressure, Mr. Rubin warns.“If you’re a
steel buyer, your costs are going up regardless of whether you are sourcing it from China or Pittsburgh,” he says, saying the same
dynamic applies to Hamilton.Soon, the United Steelworkers of America will want a piece of that higher price, and wages that have
been kept flat for years because of labor competition from Asia will begin to rise.He doesn’t necessarily see a return to the double-
digit inflation of the early 1980s, but figures the central banks in the United States and eventually Canada will have to begin raising
rates dramatically in order to confront inflation running at around 3.5 or 4 per cent annual pace. Canada’s target is two per cent a
year.
21
CNDI Oil DA
Regents
22
CNDI Oil DA
Regents
!- Poverty
High Oil prices key to solving poverty.
McKillop 04
Andrew McKillop, April 19, 2004, Oil and Gas Journal “http://www.gasandoil.com/goc/features/fex42297.htm”
Conversely, low oil and energy prices entraining low real resource prices, combined with rising population numbers, surely
aggravate the cycle of poverty in low-income commodity exporter countries. Deprived of sufficient revenues, such countries
can become "basket case" indebted countries, subjected to draconian conditions by the Club of Paris, World Bank, and
International Monetary Fund for debt refinancing and restructuring. The ability and capacity for investing huge amounts
of capital into oil, gas, and other energy production infrastructures by low-income, indebted countries is realistically very
low or zero. Yet estimates for world investment needs of the oil and gas industry through the next 10- 15 years extend into
the range of several thousand billion dollars. Without strong economic growth, it is unrealistic to expect that any "energy
transition" can occur, for example, as predicated by the Kyoto Treaty on climate change. More critically, it also is unrealistic to
expect that world oil supply can be increased at the rates required or as deemed feasible in such publications as the IEA's World
Energy Outlook -- that is a net average increase of about 2.25 million b/d/year during 2003-20 (raising capacity to about 115
million b/d), over and above replacement of capacity lost through depletion.
23
CNDI Oil DA
Regents
If China and to a lesser extent India suffer severe downturns, then oil demand must drop off correspondingly and it becomes
unlikely that the 1970s pattern of continuing high oil prices even in a recession will be repeated. If oil prices drop sharply, the
political effect on oil producing countries will be considerable, and not necessarily pleasant. The Shah of Iran basically fell
because of the 1973 oil price rise. He was already overspending in 1972-3, supported largely by bank loans, then he spent with
total abandon in 1974 as higher revenues had appeared to make Iran's oil wealth inexhaustible. Needless to say, he then ran out of
money, as the international banking system would not provide him with sufficient funds to complete the projects he'd initiated in
the bubble year. 1976 and 1977 were thus years of relative austerity in Iran, much to the fury of the Iranian people who had come to
expect a bonanza. It should thus have been no surprise that revolution occurred in 1979, although robust US support for the shah
might have enabled him to overcome it. This time around, the overspending oil producers are obvious: Venezuela and Russia.
Venezuela will undoubtedly get into severe difficulty once the oil price collapses. This is on balance likely to favor US interests
(and those of the Venezuelan people) provided that the crisis can be leveraged to remove Hugo Chavez from the country's
leadership. If he remains, Venezuela will become another Cuba, with deep repression and a suffering and impoverished populace
but forming no real threat to the United States. Russia is a much more dangerous story, being both economically and militarily
more powerful. The parallels with Germany of the 1930s are disquieting, although the move to aggression in an economic
downturn would presumably take the form of an assumption of further authoritarian powers by Vladimir Putin, rather
than his replacement by an even more sinister figure. However a downturn in the oil price might well cause an aggressive
Russia to intervene militarily in its neighbors, use the weapon of Gazprom's gas pipelines disruptively against Western
Europe and devote 25% of output to the military, as did the Soviet Union in its most aggressive periods. Should that
happen, Russia would become a considerably more dangerous threat to the world than al-Qaeda could ever dream of; it is to
be hoped that western leaders, particularly in Europe, recognize the danger early and effectively. The balance of probability must
thus be for a global downturn which combines the inflation of the 1970s with the severe recession and geopolitical danger of
the 1930s. Not an appealing prospect.
Nuclear war
Ariel Cohen, Ph.D.January 25, 1996 The New "Great Game": Oil Politics in the Caucasus and Central Asia
http://www.heritage.org/Research/RussiaandEurasia/BG1065.cfm
Much is at stake in Eurasia for the U.S. and its allies. Attempts to restore its empire will doom Russia's transition to a
democracy and free-market economy. The ongoing war in Chechnya alone has cost Russia $6 billion to date (equal to Russia's
IMF and World Bank loans for 1995). Moreover, it has extracted a tremendous price from Russian society. The wars which
would be required to restore the Russian empire would prove much more costly not just for Russia and the region, but for
peace, world stability, and security.
As the former Soviet arsenals are spread throughout the NIS, these conflicts may escalate to include the use of weapons of
mass destruction. Scenarios including unauthorized missile launches are especially threatening. Moreover, if successful, a
reconstituted Russian empire would become a major destabilizing influence both in Eurasia and throughout the world. It
would endanger not only Russia's neighbors, but also the U.S. and its allies in Europe and the Middle East. And, of course,
a neo-imperialist Russia could imperil the oil reserves of the Persian Gulf.15
Domination of the Caucasus would bring Russia closer to the Balkans, the Mediterranean Sea, and the Middle East.
Russian imperialists, such as radical nationalist Vladimir Zhirinovsky, have resurrected the old dream of obtaining a warm
port on the Indian Ocean. If Russia succeeds in establishing its domination in the south, the threat to Ukraine, Turkey, Iran,
and Afganistan will increase. The independence of pro-Western Georgia and Azerbaijan already has been undermined by
pressures from the Russian armed forces and covert actions by the intelligence and security services, in addition to which
Russian hegemony would make Western political and economic efforts to stave off Islamic militancy more difficult.
Eurasian oil resources are pivotal to economic development in the early 21st century. The supply of Middle Eastern oil
would become precarious if Saudi Arabia became unstable, or if Iran or Iraq provoked another military conflict in the area.
Eurasian oil is also key to the economic development of the southern NIS. Only with oil revenues can these countries sever
their dependence on Moscow and develop modern market economies and free societies. Moreover, if these vast oil reserves
were tapped and developed, tens of thousands of U.S. and Western jobs would be created. The U.S. should ensure free
access to these reserves for the benefit of both Western and local economies.
24
CNDI Oil DA
Regents
For nearly 40 years, the political economy of Russia has been shaped by its heavy reliance on oil and gas wealth. Through
alternating periods of boom and bust, Russia’s fortunes and the legacies of its leaders have been dependent on the
fluctuating value of its oil and natural gas.
Resource dependence played a crucial role in both the development and the demise of the Soviet economy. Resource abundance
did not merely mask the flaws in the Soviet system; it led to a transformation of the economy’s physical and institutional structure. The result was addiction to oil
and gas wealth. When oil prices collapsed in the early 1980s, Soviet leaders struggled to cope in much the same way as an addict faced with a cutoff in the supply of
a narcotic. Their panicky reactions weakened the system fatally.
Although record high oil prices have once again led to a boom, Russia’s current prosperity may be a bubble. As Clifford G.
Gaddy and Barry W. Ickes explain, Russia’s addiction persists, and its political-economic system is still driven by the imperatives
of distributing the wealth from oil and gas.
High oil prices is what keeps Russia’s economy going, keeping it out of a recession.
FreshPlaza 07
FreshPlaza News, Netherlands, Associated Content, July 20, 2007 https://www.usrbc.org/aboutus/usrbcinnews/article/1323/
Lawson emphasized that Russia's money from oil revenues has at last "trickled down", and Russian consumers are ready to
buy plenty of foreign goods and services, while Russian investors have plenty of cash that they would love to sink into
Western businesses. Russia's economy was so bad less than a decade ago that it was no longer considered to be a "superpower"
and its future looked utterly grim. Many Russian citizens who had rallied behind the bloodless revolution of 1991, when the Soviet
government finally collapsed in line with the fall of the Soviet-backed communist government of East Germany in 1989, were
clamoring for at least a partial return to the old ways. Record-low prices for oil-Russia's greatest exportable commodity-and a
financial crisis in 1998 when the Ruble lost 70% of its value against the U.S. dollar in only six months of currency trading
and behind-the-scenes corruption flourished almost without limits in the broken pieces of the former government and
economy made Russia an economic wasteland, arguably worse off than before the revolution. But since then, most things
about the economy have gone in the opposite direction for Russia. Now, according to the World Bank, the steeply rising price
of oil is set to continue bringing new money into the exploding Russian economy. In fact, the influx of foreign investment
and oil profits is so strong now that it could hinder government attempts to keep a cap on inflation.
25
CNDI Oil DA
Regents
ago. There is no question that Putin and his team see themselves presiding over a stable authoritarian modernization of Russia for
the next two to three decades. But history is replete with nations pursuing authoritarian modernization plans that have gone awry.
Russia - in just eight years - has firmly established itself as a thriving and rapidly developing economy. Total output has
grown by 67 percent, and Prime Minister Vladimir Putin has said that he expects this figure to overtake that of the UK by the end
of this year. Moreover, since 1999, stock market capitalization has increased 22-fold and foreign trade turnover five-fold. These
positive trends appear set to continue, with the IMF forecasting another 33 percent increase in GDP by 2013. Yes, the Russian
economy is red-hot. But there remain some lingering doubts about the economy's long term success and stability. Russia's
biggest task is to balance economic growth while keeping inflation low. During the 1990s, inflation sometimes soared to over
10 percent a month, wiping out people's savings and triggering mild panic in the economy. Although the inflation dragon has
been tamed, it continues to be stuck at over 10 percent annually. This year the inflation target has been revised up to 10 percent
after price increases at the beginning of the year. Meanwhile, the IMF predicts that inflation will finish at 11.4 percent for the year.
The major factor causing inflation is the massive increase in oil prices since 2002. In the last six years there has been an
increase from approximately $20 a barrel to $125. Furthermore, there has been speculation that oil prices will continue to
rise and according to Goldman Sachs and the Iranian oil minister, they could hit $200 a barrel in two years. Russia's
economy is highly dependent on natural resources, with 28 percent of exports to the U.S. last year being oil and gas
products. The high oil prices have helped the Russian economy to grow, while even permitting for the creation of a massive
stabilization fund. The downside is that the influx of petrodollars contributes to inflationary pressure. Another serious
concern are rising world food prices. Although very little can be done to prevent this shock to the Russian economy, it will
predominantly affect those who are already struggling with poverty. The government is aware that there is a trade off between
growth and inflation and therefore most of the stabilization fund won't be spent immediately, despite some sectors needing
heavy investment. Putin will play a prominent role in the economy in his new post of Prime Minister, and perhaps there is no other
person better qualified for the task of bringing inflation down to single digits, since this was one of Putin's stated goals as president.
Investors are often discouraged by high inflation as the instability it causes makes future profits insecure, so taming
inflation is job one. In St. Petersburg, two conferences will be held on inflation ("New challenges on the world food market" and
"Energy - Global players and arbiters"). This shows the government's priorities in these sectors, which are the primary causes of
inflation in Russia.
26
CNDI Oil DA
Regents
The Kremlin has a competitive advantage. Higher oil gives the Kremlin a competitive advantage in its trade talks with the
EU and other potential partners, such as China. The prospect of high and continuing oil prices and considerable
uncertainty over the future of energy encourages energydependent economies towards prudent actions and conservation of
resources. But those measures take time, and in the meantime, the priority is to ensure energy security. As the owner of the world’s
biggest gas reserves, this plays into Russia’s hands. The likelihood is that current reserves will be increased in the Arctic region and
in the water off Sakhalin. Offering access to those reserves and to the products extracted gives the Kremlin considerable
leverage in its trade, investment and political negotiations with neighbouring energy-hungry countries. More deals expected.
In recent months, progress has been made in restructuring the Shtokman JV, in reaching a price agreement with China for gas
exports, and with Italy on the South Stream pipeline. Further deals covering Kovykta and the Yamal Peninsula developments are
expected over the next few months. Russia expects reciprocal favourable trade and investment deals as part of the barter. But
only so long as oil is high. Those favourable deals will be possible only so long as the price of oil and the general uncertainty
about energy security remain high. If oil prices fall, then Russia’s leverage in these barter deals will also be lower.
27
CNDI Oil DA
Regents
28
CNDI Oil DA
Regents
29
CNDI Oil DA
Regents
A civil war in Saudi Arabia would collapse the world economy and spread WMD
Steven David, professor of political science at Johns Hopkins, Foreign Affairs, Jan/Feb, 1999
THE END OF THE WORLD (AS WE KNOW IT) CONFLICTS FOUGHT within the borders of a single state send shock waves
far beyond their frontiers. To begin with, internal wars risk destroying assets the United States needs. Were the Persian Gulf oil
fields destroyed in a Saudi civil war, the American economy (and those of the rest of the developed world) would suffer severely.
Internal wars can also unleash threats that stable governments formerly held in check. As central governments weaken and fall,
weapons of mass destruction may fall into the hands of rogue leaders or anti-American factions.
30
CNDI Oil DA
Regents
31
CNDI Oil DA
Regents
!- Venezuela
US Oil market is key to Venezuelan Econ
Cesar J. Alvarez, Stephanie Hanson, June 27, 2008
Though Venezuela has repeatedly threatened to cut off its oil exports to the United States, analysts say the two
countries are mutually dependent. Venezuela supplies about 1.5 million barrels of crude oil and refined
petroleum products to the U.S. market every day, according to the EIA. Venezuelan oil comprises about 11
percent of U.S. crude oil imports, which amounts to 60 percent of Venezuela’s total exports. PDVSA also wholly
owns five refineries in the United States and partly owns four refineries, either through partnerships with U.S.
companies or through PDVSA’s U.S. subsidiary, CITGO. A U.S. Government Accountability Office (GAO)
report (PDF) says Venezuela’s exports of crude oil and refined petroleum products to the United States have
been relatively stable with the exception of the strike period.
The World Bank's Frepes-Cibils says “Venezuela will continue to be a key player in the U.S. market.” He argues
that in the short term it will be very difficult for Venezuela to make a significant shift in supply from the United
States. Nevertheless, Chavez has increasingly made efforts to diversify his oil clients in order to lessen the country’s dependence on the United
States. The GAO report says the sudden loss of Venezuelan oil in the world market would raise world oil prices
and slow the economic growth of the United States.
32
CNDI Oil DA
Regents
33
CNDI Oil DA
Regents
Cheaper oil will mean higher consumption in developing countries like China and India. The Chinese government has repeatedly
increased the price of gasoline in an effort to slow that country's insatiable thirst for oil. Cheaper crude would reduce China's oil
import bills and thereby allow greater consumption with little cost. If they Chinese decide to allow the yuan to float against the
dollar, then their oil becomes even cheaper. And that would allow the Chinese economy to grow even faster growth that will
further fuel China's rise as a global power.
34
CNDI Oil DA
Regents
2NC AT Peak
Peak oil is a myth
Asia Times 2007 By F William Engdahl author of A Century of War: Anglo-American Oil Politics and the New World Order
“Russia is far from oil's peak” http://www.atimes.com/atimes/Central_Asia/II27Ag02.html
Peak Oil theory is based on a 1956 paper by the late Marion King Hubbert, a Texas geologist working for Shell Oil. He argued
that oil wells produced in a bell-curve manner, and once their "peak" was hit, inevitable decline followed. He predicted that US oil
production would peak in 1970. A modest man, he named the production curve he invented Hubbert's Curve, and the peak as
Hubbert's Peak. When US oil output began to decline in about 1970, Hubbert gained a certain fame.
The only problem was, it peaked not because of resource depletion in the US fields. It "peaked" because Shell, Mobil,
Texaco and the other partners of Saudi Aramco were flooding the US market with dirt-cheap imports from the Middle East,
tariff-free, at prices so low California and many Texas domestic producers could not compete and were forced to shut their
wells.
While the US oil multinationals were busy controlling the easily accessible large fields of Saudi Arabia, Kuwait, Iran and other
areas of cheap, abundant oil during the 1960s, the Russians were busy testing their alternative theory. They began drilling in a
supposedly barren region of Siberia. There they developed 11 major oilfields and one giant field based on their deep abiotic
geological estimates. They drilled into crystalline basement rock and hit black gold of a scale comparable to the Alaska North
Slope.
They then went to Vietnam in the 1980s and offered to finance drilling costs to show that their new geological theory worked.
Russian company Petrosov drilled in Vietnam's White Tiger oilfield offshore into basalt rock some 5,000 meters down and
extracted 6,000 barrels a day of oil to feed the energy-starved Vietnam economy. In the USSR, abiotic-trained Russian geologists
perfected their knowledge and the Soviet Union emerged as the world's largest oil producer by the mid-1980s. Few in the West
understood why, or bothered to ask.
Dr J F Kenney is one of the only Western geophysicists who has taught and worked in Russia, studying under Vladilen Krayushkin,
who developed the huge Dnieper-Donets Basin. Kenney told me in a recent interview that "alone to have produced the amount of
oil to date that [Saudi Arabia's] Ghawar field has produced would have required a cube of fossilized dinosaur detritus,
assuming 100% conversion efficiency, measuring 19 miles [30.5 kilometers] deep, wide and high." In short, an absurdity.
Western geologists do not bother to offer hard scientific proof of fossil origins. They merely assert their belief as a holy
truth. The Russians have produced volumes of scientific papers, most in Russian. The dominant Western journals have no
interest in publishing such a revolutionary view. Careers, entire academic professions are at stake, after all.
The 2003 arrest of Russian Mikhail Khodorkovsky, of Yukos Oil, took place just before he could sell a dominant stake in Yukos to ExxonMobil after a private
meeting with Cheney. Had Exxon gotten the stake, it would have had control of the world's largest resource of geologists and engineers trained in the abiotic
techniques of deep drilling.
Since 2003, Russian scientific sharing of knowledge has markedly lessened. Offers in the early 1990s to share knowledge with US and other oil geophysicists were
met with cold rejection, according to American geophysicists involved.
Why then the high-risk war to control Iraq? For a century, US and allied Western oil giants have controlled world oil via control of Saudi Arabia or Kuwait or
Nigeria. Today, as many giant fields are declining, the companies see the state-controlled oilfields of Iraq and Iran as the largest remaining base of cheap, easy oil.
With the huge demand for oil from China and now India, it becomes a geopolitical imperative for the United States to take direct military control of those Middle
East reserves as fast as possible. Cheney came to the job of vice president from Halliburton Corp, the world's largest oil-geophysical-services company. The only
potential threat to that US control of oil just happens to lie inside Russia and with the now-state-controlled Russian energy giants.
According to Kenney, Russian geophysicists used the theories of brilliant German scientist Alfred Wegener fully 30 years before Western geologists "discovered"
Wegener in the 1960s. In 1915, Wegener published the seminal text The Origin of Continents and Oceans, which suggested an original unified landmass or Pangaea
more than 200 million years ago that separated into present continents by what he called continental drift.
Up to the 1960s, supposed US scientists such as Dr Frank Press, the White House science adviser, referred to Wegener as "lunatic". Geologists at the end of the
1960s were forced to eat their words as Wegener offered the only interpretation that allowed them to discover the vast oil resources of the North Sea.
Perhaps in some decades Western geologists will rethink their mythology of fossil origins and realize what the Russians
have known since the 1950s. In the meantime, Moscow holds a massive energy trump card.
35
CNDI Oil DA
Regents
WASHINGTON (AP) — Like two rival filling-station owners across the highway in long-bygone price wars, Democratic Sen.
Barack Obama and Republican Sen. John McCain keep putting up flashy signs and offering new incentives in hopes of attracting
customers battered by $4 gas prices.
McCain is offering a summer break from the 18.4-cent federal gasoline tax, and holding out the promise of more offshore drilling
to help you drive more cheaply to the beach. He wants to build 45 new nuclear reactors to generate electricity. On Monday, he
proposed a $300 million government prize to anyone who can develop a superior battery to power cars of the future.
He may even wash your windows.
If you pull into the Obama station, he'll promise you cash back from the windfall-profits tax he plans to slap on Big Oil. Check the
tires? How about promises to go after oil-market speculators who help drive up prices as well as big subsidies for solar, wind,
ethanol and other alternative-energy projects? The Illinois senator likens his energy package to the Kennedy-era space program.
Oil and gas prices that have doubled in the past year have squeezed aside the war in Iraq as the No. 1 issue this election year and
both parties are blaming each other for the price spike — and for apparent congressional paralysis.
Obama and McCain have made high gas prices a top issue in their campaigns and have offered dueling remedies aimed at easing
them. Their positions are being echoed daily by their surrogates on Capitol Hill. And both make it sound as if only their proposals
would chart the path to lower fuel prices and a final cure for what President Bush once labeled the nation's addiction to foreign oil.
After years of inexpensive oil, America suffered a case of deja vu harking back to the 1970s when, in late 2004, crude oil prices
surged above $50 a barrel. At the start of 2005, prices relaxed briefly before returning to their new high. Will we again see the long
gas lines and economic stagnation that followed the original oil crisis?
In the short term the answer is almost certainly no. Both the causes and impact of the price shocks differ from 1973. Prior to 1999,
oil prices had spent a quarter century either stable or shrinking, and, adjusted for inflation, prices remain lower than their 1981
high, according to Congressional Research Service (CRS) Issue Brief for Congress RL31849 - Energy: Useful Facts and Numbers.
The triggers of this price rise also seem more short-term than those of the 1970s; then, a small group of countries that controlled
much of global oil production colluded to increase prices. Today's rise is caused by an amorphous collection of events, including
declining U.S. refinery capacity, instability in the Middle East and other oil-producing countries such as Venezuela and Russia;
speculation in the oil markets; and increased global demand.
Some volatility is a fact of life in the oil industry, although long-term trends have been more predictable. According to RL31720 -
Energy Policy: Historical Overview, following "the time of the Arab oil embargo and first oil price shock in 1973" we have had a
30-year period "of general price and supply stability that is periodically broken by shorter episodes of supply disruption and price
volatility."
We cannot know, then, the short-term course of oil prices, which may swing tremendously, may return to their previous lows, or
may settle in to relative stability at their current price. In the very long term, certainly, current patterns are not tenable, as ever-
increasing global demand will eventually run into the reality of a finite oil supply. "The very long term," however, can mean many
different things, over which there is little agreement.
36
CNDI Oil DA
Regents
37
CNDI Oil DA
Regents
38
CNDI Oil DA
Regents
WASHINGTON -- President Bush, seeking to put political pressure on the Democratic-run Congress in an election year plagued by
soaring gasoline prices, called Wednesday for lifting federal bans on offshore oil drilling and other measures to boost oil
production.
"For many Americans, there is no more pressing concern than the price of gasoline," Bush said.
HIGH PRICES ARE NOT CREATING ALTERNATIVE ENERGY INCENTIVES, THEY ARE SIMPLY MOTIVATING
DRILLING FOR OIL
Silva 2008 [Mark, White House Correspondent for the Chicago, June 19, Bush calls for offshore drilling, citing gasoline prices
Relief won't come until Congress lifts the ban, the president says, acknowledging it would take years for his proposals to bear fruit,
http://www.latimes.com/news/politics/la-na-bush19-2008jun19,0,2224764.story]
And last year, the White House said, Congress added to a spending bill a ban on the leasing of federal lands for oil-shale
exploration -- a ban, Bush said, that Congress can just as easily lift.
For some time, Bush has also been pressing for alternative energy sources as a solution to America's "addiction to oil," which he
highlighted in a State of the Union address.
"The president says we are addicted to oil, and yet all he and McCain offer is a bigger needle," said Warner Chabot, vice president
of the Ocean Conservancy in San Francisco. "They are focused on supply when they should be focused on reducing demand."
The Energy Information Administration said that opening access to undersea oil fields "in the Pacific, Atlantic and eastern Gulf
regions would not have a significant impact on crude oil and natural gas production or prices before 2030." Drilling in domestic
waters off all the coasts except Alaska's would increase annual production from 2.2 million barrels a day to 2.4 million barrels a
day, the agency estimates.
The four-point plan proposed by Bush would:
* Increase access to the outer continental shelf, which has been off-limits since 1981. With the advent of technology that can make
drilling less risky to the environment, Bush says, the moratorium is "outdated and counterproductive." If Congress lifts the
moratorium, he says, he will lift an executive prohibition.
* Encourage the extraction of oil from shale in the West -- which holds as much potential for oil, 18 billion barrels, as the offshore
drilling proposal. This amounts to nearly three decades of oil imports from Saudi Arabia, the White House says.
* Permit drilling in the Arctic National Wildlife Refuge, which President Clinton vetoed and Democratic leaders oppose. This could
offer 10 billion barrels of oil, equal to two decades of Saudi imports, according to the White House.
* Expand oil refineries in the U.S., where a refinery has not been built for three decades. Bush proposes regulatory reforms that
could remove barriers to refinery construction -- namely public opposition. He proposes that any appeal of a federal permit for
refinery expansion must be filed in federal court within 60 days.
NO TRANSITION NOW – CONGRESS FAILED TO FORCE OIL COMPANIES INTO INVESTING IN ALTERNATIVE
ENERGIES
USA TODAY 2008 [Big oil resists investing 10% of earnings in research;
Criticism flies on alternative energy, lexis]
The head of a congressional committee failed Tuesday to get executives from the five biggest U.S. oil companies to promise they
will invest 10% of their earnings in alternative energy development.
39
CNDI Oil DA
Regents
Rising prices and the scarcity of conventional supplies have triggered an inflow of cash into development of nonconventional
petroleum sources - like the Alberta oilsands, gas shale in Colorado and technology to turn coal into motor fuel - that could be
harmful to the environment.
Companies have already poured $100 billion into the Alberta oilsands and hope to triple production by 2015.
HIGH PRICES ARE FORCING MAJOR OIL COMPANIES TO MOVE TO OTHER OIL-BASED PRODUCTS
The Independent 2008 [London, ExxonMobil fights off call to invest in oil alternatives;
Rockefeller-led shareholders urge world's biggest oil company to develop fossil fuel alternatives,
https://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T4067427500&format=GNBFI
&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T4067427503&cisb=22_T4067427502&treeMax=true&treeWidth=0&c
si=8200&docNo=19]
Exxon's case is that throwing money at alternative energy is a foolish way to deal with the immediate threat of climate change.
Instead, it is focusing on reducing greenhouse gas emissions from its own operations, and from developing new oil-based products
that reduce the environmental impact of consumers' energy use. The company highlighted its Mobil 1 synthetic motor oil that
improves vehicle fuel economy, lighter weight plastics, and next-generation tyre-liners. If all the vehicles in the US incorporated
these products, Mr Tillerson said, it would be "like taking 8 million cars off US roads".
40
CNDI Oil DA
Regents
Aff- U- AT Markets S
Energy should not be left to the markets to solve something must be done
W Joseph Stroupe Nov 22, 2006 Russia tips the balance THE NEW WORLD OIL ORDER, Part 2 author of the new book Russian
Rubicon: Impending Checkmate of the West and editor of Global Events
http://www.atimes.com/atimes/central_asia/hk22ag01.html
Goldwyn stated: "The United States is more energy-insecure today than it has been in nearly 30 years. We are insecure
because the global oil market is more fragile, more competitive and more volatile than it has been in decades."
Goldwyn referred to the fact that "the growing [energy] dependence of rising powers such as China and India is rapidly
eroding US global power and influence around the world" as those rising powers increasingly enter bilateral long-term
contracts with suppliers, ever greater numbers of which do not allow free market access by the West's oil majors to
production and exploration acreage and which are creating a strategically tight market for the rest of the world.
Goldwyn observed: "This 'tight' market is undermining the fluidity and fairness of the market for available oil supplies and
exploration acreage. New competitors like China and India are trying to negotiate long-term supply contracts (at market prices) to
ensure that they have supplies in the event of a crisis or supply disruption ... the trend is counter to the market system that operates
so efficiently ... the trend of long-term contracts runs counter to the modern liquid global market which operates efficiently in
rapidly moving supplies to meet market demand ... China has not yet developed faith in these market mechanisms."
While Goldwyn presented such concerns in the context of a rising but not yet imminent threat to the current order, in testimony
before the US Senate Committee on Foreign Relations nearly a year earlier, on July 26, 2005, Mikkal Herberg of the National
Bureau of Asian Research in Seattle, Senator Richard Lugar, the committee chairman, heard the following facts:
For China and India both, as well as the other Asian powers, energy is becoming a matter of "high politics" of national security
and no longer just the "low politics" of domestic energy policy. Governments in both countries have decided that energy
security is too important to be left entirely to the [US-led liberal] markets as their economic prosperity increasingly is
exposed to the risks of global supply disruptions, chronic instability in energy exporting regions, and the vagaries of global
energy geopolitics.
In global warming terms, the implications are nothing short of catastrophic: Rising reliance on coal (especially in China, India and
the United States) means that global emissions of carbon dioxide are projected to rise by 59% over the next quarter-century, from
26.9 billion metric tons to 42.9 billion tons. The meaning of this is simple. If these figures hold, there is no hope of averting the
worst effects of climate change.
When it comes to global energy supplies, the implications are nearly as dire. To meet soaring energy demand, we would
need a massive influx of alternative fuels, which would mean equally massive investment - in the trillions of dollars - to
ensure that the newest possibilities move rapidly from laboratory to full-scale commercial production; but that, sad to say,
is not in the cards.
41
CNDI Oil DA
Regents
Aff- No L
Demand will increase even with wealthy nations reducing consumption
Newsweek June 23, 2008 Learning From the Oil Shock; SECTION: ROBERT J. SAMUELSON; JUDGMENT CALLS; Pg. 39
Vol. 151 No. 25 ISSN
But higher demand from developing countries and oil producers is offsetting the lower demand of wealthy countries.
Consumption in these countries will rise 3 percent in 2008, or 1.2 million barrels a day, projects the International Energy
Agency. Many of these countries subsidize fuel so that final customers are insulated from price increases. Gasoline is about
25 cents a gallon in Venezuela and about 60 cents in Saudi Arabia, Kuwait and Iran, notes Rubin. China also subsidizes fuel.
ALTERNATE FUELS WON’T LOWER PRICES – FINDING AN ALTERNATIVE IS ESSENTIAL TO SOLVE THE OIL
CRUNCH
Business World 2008 [No end in sight to high fuel prices, lexis]
While the government has stressed that indigenous and alternative fuels would ease market pressure from imported fuel, Energy
department director Mario C. Marasigan yesterday admitted "They will not necessarily lower oil prices."
"It's primarily to find alternatives to our [shrinking] supply. But cheaper alternatives can balance high prices of imported oil," he
said.
For today's launch, Mr. Marasigan said "The important thing here is that CNG is indigenous, it's our gas. There's no foreign
exchange cost."
42
CNDI Oil DA
Regents
Aff- !- Dollar
High oil prices kill the value of the US dollar, killing US’s geopolitical dominance
W Joseph Stroupe Nov 22, 2006 Russia tips the balance THE NEW WORLD OIL ORDER, Part 2 author of the new book Russian
Rubicon: Impending Checkmate of the West and editor of Global Events
http://www.atimes.com/atimes/central_asia/hk22ag01.html
The dollar will begin to weaken as its international support and devotion wanes, or even sinks. As the dollar weakens, the
price in dollars for everything the US imports will skyrocket, adding a powerful inflationary hit to the US economy. Along
with the impending US recession, that will further weaken the dollar and likely its decline, or outright collapse, will feed on
itself.
As the dollar weakens and energy price volatility increases on the New York-London exchanges, producers will have further
powerful incentive to switch their product offering to the non-dollar-denominated exchanges, where there will be greater stability
and where they will not be forced to take payment for their products in the increasingly undesirable weakened dollar.
The profound risks to the West as respects its ability then to secure access to sufficient energy resources should be self-evident. Left
with a severely shrunken dollar-denominated pool of oil and gas, a pool that virtually only the West draws from, the viability of a
potential targeted embargo will have increased exponentially.
The globe's producers will be fully able to "throttle" the economies of the West by virtue of controlling how much of their oil
and gas they sell into the dollar-denominated pool. This represents the nightmare scenario for the US.
Perhaps the most disturbing aspect of this analysis is the fact that it is not based on any hypothetical conspiracy theory, but rather
on solid economic and market principles and the increasingly ominous warnings of experts and informed leaders.
Additionally, the key developments that are already pushing the world order to the eventuality described here, that of a full
exploitation of the West's Achilles' heel by Russia and its global partners leading to a loss of the US global position of economic
and geopolitical dominance, are already well established.
Russia, in conceiving the new model of "international" energy security and a new global energy order, and in winning increasing
numbers of key converts and adherents to its model, thereby defines and draws the circle of international energy security. Those
inside the circle will achieve Russia's definition of "energy security", but those left outside will be left with little if any energy
security by any definition.
43
CNDI Oil DA
Regents
Aff- !- Econ (1 of 2)
High oil prices collapse the economy
Jennifer Yousfi Wednesday, June 25th, 2008 “Declining Russian Oil Production Could Lead to $200 Oil and “Global Recession,”
Says Deutsche Bank” Managing Editor http://www.moneymorning.com/2008/06/25/declining-russian-oil-production-could-lead-
to-200-oil-and-global-recession-says-deutsche-bank/
Higher oil could lead to a worldwide economic collapse, according to a top analyst at Germany’s largest bank. "Two-hundred
dollar oil would break the back of the global economy," Adam Sieminski, chief energy economist at Deutsche Bank AG (DB),
told Bloomberg News in an interview yesterday (Wednesday) in Tokyo. "Next step after $200 would be global recession and bad
news for everybody."Just a little over a year ago, $200 oil seemed out of the question. But the Deutsche Bank prediction of oil-
fueled global recession follows a Goldman Sachs Group Inc. (GS) forecast that oil might climb as high as $200 per barrel in
two years. Keith Fitz-Gerald, Money Morning’s Investment Director - and one of the first global financial gurus to predict triple-
digit oil prices - recently boosted his target price for crude oil from $187 to $225. "The math is really simple here," Fitz-Gerald said
back in May, when oil futures were trading around $123 a barrel. "We are burning through supplies at a rate that’s four times
to five times faster than we’re discovering new reserves," he said. "Throw in a few [surprises]… perhaps a terrorist event… and
add in the accelerating use of oil and gasoline in Third World countries, and we have the recipe for far higher prices."Since
the time of Fitz-Gerald’s prediction, oil has gone on to several new highs, nearly breaking through the $140 barrier on June 16,
earlier this month. Russia’s Bubbling Oil Troubles Exacerbating the high oil prices are production problems in Russia, the
world’s second largest oil exporter. Aging oil fields and a lack of infrastructure investment has led to the country’s first
annual production decline in 10 years. Output fell 0.9% to 9.76 million barrels a day in the first five months 2008, Bloomberg
reported. "Growth last quarter fell on a year-on-year basis, and this has to do with the policies implemented over the prior year to raise taxes on oil industries,"
Deutsche Bank’s Sieminski said, speaking of Russia’s oil difficulties. "This made it difficult for foreign capital to come in." But "if Russia could reverse some of
these policies and get their own oil industry back on, this will help very much" with supply concerns, he added. Fear of government corruption and takeover of
assets has dissuaded some firms from seeking investment in Russia.
HIGH OIL PRICES WOULD TIP THE UNITED STATES INTO A RECESSION AND SLOW GLOBAL TRADE
The International Herald Tribune 2008 [Oil price forecast: Up, then down, then up again, lexis]
But with oil prices rising at an increasingly rapid rate over the past few months in conjunction with the U.S. housing market slump
and credit squeeze, many economists wonder whether oil prices could tip the economy into a recession.
A recession, of course, would curb oil demand. That would push oil prices right back down again, or so the theory goes, as fewer
consumers drive to the mall, companies produce and ship less and world trade slows.
''If we are slowing down, we will not be buying as much goods from China and services from India,'' said Addison Armstrong,
director for market research at Tradition Energy, an energy broker that deals with banks and hedge funds. ''My forecast for 2008 is
that crude prices will average $75 a barrel, and that is based on a scenario of a slowing economy in the United States.''
Aff- !- Econ (2 of 2)
Economic collapse unlikely but continued inflation due to oil is bad for the global economy
Times Anatole Kaletsky July 02, 2008 Oil prices key to economic recovery
http://www.theaustralian.news.com.au/story/0,25197,23954826-30538,00.html
The possibility of a serious US recession, which has dominated most media and market comment since the credit crunch began in
America, is in my view the least plausible of these threats. Statistics suggest that the US economic slowdown is already at or near
its low point and the risks of a serious recession are rapidly diminishing. GDP, consumption, industrial activity and employment
have all been consistent with a fairly typical mid-cycle slowdown and none have fallen sufficiently to signal even a mild recession.
Of course it is possible that the US economy will deteriorate in the months ahead, but this seems unlikely, given the huge tax
cuts and interest rate reductions to which US consumers are likely to start responding in the second half of this year.
But if a global recession is likely to be avoided, why are investors in such a funk? The answer is that most now see inflation as a
much greater threat than recession. This makes sense, but only up to a point. The bad news is that inflation is much harder to
cure than weak growth or unemployment because the remedies required -- higher interest rates and cuts in government spending --
are painful to implement.
The good news is that inflationary pressures in the US, Britain and the eurozone are still fairly weak -- and will get weaker in the
year ahead, as house prices keep falling, consumption growth slows and unemployment drifts up.
I suspect what really worries investors in the US and Europe is not really the likelihood of high inflation, but the risk that central
banks will overreact to inflation fears. If central banks are paralysed by fears of igniting inflationary expectations they may stop
supporting financial institutions through the credit crunch. This seems to be behind the panic selling of financial stocks.
In addition, there is a growing worry that developing countries, including China, will be overwhelmed by inflation, like Italy and
Britain in the 1970s, instead of learning to tame it as did Germany and Japan. A long period of disappointing performance from
the developing countries would be a big shock to the world economy, since global growth depends increasingly on emerging
markets. US consumption growth, while it is not collapsing, is bound to be much weaker in the next decade than it was in
the last.
What is ailing the world economy is now quite simple: it is $US140 oil. If investors come back to their senses, the oil price
will fall back below $US100 after the northern summer and the second half of this year will prove less traumatic than the first. But
in the unlikely event that oil is still trading above $US140 by the year-end, all bets are off on world economic prosperity.
45
CNDI Oil DA
Regents
46
CNDI Oil DA
Regents
The threat has yet to be officially tallied; major financial institutions like Morgan Stanley have only just begun to seriously discuss
the potential downgrades to the global economy should $200 oil become a reality. But already, it's clear that oil is catalyzing the
threat of inflation in rich countries as well as poor. Inflation looks likely to be about 5 percent in the United States this
summer, and about 3 percent in Europe. But in emerging economies, double-digit inflation could become the norm. "In America,
it will feel like the opposite of the 1990s," says Morgan Stanley chief U.S. economist Richard Berner. "But if you think things
won't be pleasant for industrial nations, think about developing economies, where people spend 50 percent of their income on food
and fuel."
Indeed, there's concern that as higher oil prices force many Asian economies to reduce or even cut their generous fuel
subsidies, growth will slow sharply, and there could be social unrest as the world's poorest become more desperate. The
political ramifications of this (which already include moves away from free trade), combined with the ever-rising costs of
doing business as usual, could force a retrenchment from globalization. "It's a harbinger of the reversal of globalization,"
says Jeff Rubin, chief economist for CIBC World Markets. "At $200 a barrel, you'll see transport costs rise so much that they will
effectively reverse the trade liberalization of the last 30 years." He predicts that world trade will realign itself regionally, so that
while Japan may continue to ship in goods from China, the United States will increasingly import from Latin America. "If you look
at the period from 1973 to 1979 [when oil spiked] you'll find the same thing happened," he notes. "The share of imports to the U.S.
from Latin America and the Caribbean rose by 6 percentage points. That was all about freight costs."
Regionalism won't stop at trade. There will be new financial and service hubs in energy-rich areas like Russia, Latin America and
the Gulf. Sovereign Wealth Funds will continue to buy up big chunks of Western banks and blue-chip companies, as well as
investing more broadly in a new range of countries and currencies (which is likely to make forex movements stronger and more
unpredictable).
Oil drives so much of the global economy, it's almost impossible to fully imagine the world of $200 oil. No question, the
shock will force nations to go greener much faster than now, particularly by conserving energy and developing and
adopting new non-fossil fuels. But none of this can happen full stop in six to 24 months. So the predictions tend to be
gloomy: some analysts see a shift toward regional trade, and even a major reversal of globalization itself, as rising transport
costs make it too expensive to ship many kinds of goods long distances. A major acceleration in the transfer of wealth that
has, in the past five years, shifted trillions of petrodollars from oil consumers to producers would alter the world balance of
power--including a boost for the troublesome oil autocrats of Iran, Venezuela and Russia. At $200 a barrel the proven oil
reserves of the six Gulf nations alone would rise in value to $95 trillion, about twice the size of public equity markets, according to
Morgan Stanley managing director Stephen Jen. That would make the Sovereign Wealth Funds of oil states market kingmakers.
Western efforts to press more openness on these funds, many controlled by royal courts, would surely grow.
While some optimists believe the windfall could bring the Middle East into the modern world if it's smartly invested, that's a big if.
Already many small states are struggling to wisely invest their oil windfall to date, and the corrupting curse of oil wealth is well
known. Michael L. Ross, associate professor of political science at UCLA, notes that the percentage of the world's wars that
take place in oil states is growing. The number of oil states is also rising--with Cambodia, East Timor and others joining the
ranks--with more likely to follow as prices climb. Many of these newcomers are small, and ill equipped to cope with the
corruption that often wastes the windfall.
47
CNDI Oil DA
Regents
The rising price of oil is making international trade of heavy cargo prohibitively expensive, and acting as an
incentive for importers to find products such as steel closer to home, new research by CIBC World Markets shows.
For heavy products, rising shipping costs are eroding the low-wage advantage of China over North America,
say chief economist Jeff Rubin and senior economist Benjamin Tal. If oil prices continue to rise, the soaring cost of global transport
will act like a major tariff barrier and lead to a substantial slow down in international trade, they argue.
Oil passed $133 (U.S.) a barrel on Monday, and Mr. Rubin forecasts the price will average $106 this year, $130
next year, $150 in 2010 and $225 by 2012.
These days,the cost of oil is the equivalent of imposing a tariff rate of about nine per cent on goods coming
into the United States. At $150 a barrel, transport costs act like a tariff of 11 per cent. And at $200, all the
trade liberalization efforts of the past 30 years are reversed, Mr. Rubin said.
48
CNDI Oil DA
Regents
Aff- !- Manufacturing- U
MANUFACTURING SECTION IS DOING POORLY
American Machinist 2008 [05/08/, No growth in manufacturing sector while overall economy grows,
http://www.americanmachinist.com/304/News/Article/False/80210/]
Manufacturing failed to grow for the third consecutive month in April as the PMI registered 48.6 percent, the same as in March. A
reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is
generally contracting.
A PMI in excess of 41.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the
PMI indicates the overall economy is growing and the manufacturing sector is contracting at this time. Ore stated, "The past
relationship between the PMI and the overall economy indicates that the average PMI for January through April (49.1 percent)
corresponds to a 2.5 percent increase in real gross domestic product (GDP). In addition, if the PMI for April (48.6 percent) is
annualized, it corresponds to a 2.4 percent increase in real GDP annually."
49
CNDI Oil DA
Regents
The rise of the Sovereign Wealth Funds has already triggered a protectionist backlash, including U.S. moves to step up the
vetting of foreign investors in American firms.
Worse conflicts are possible. "As areas like the Mideast and Africa, Russia and Venezuela continue to rise, you're going to
see increasing energy greed, aggressive behaviors and neocolonial actions on the part of various countries," predicts Scott
Nyquist, the head of McKinsey's energy practice. As Iran gets richer, Hizbullah might get stronger. China will clearly wield
more might in Africa. Western ideas about civil society, the environment and women's rights could be displaced with new
sets of values.
More blood will almost certainly be spilled. Oil wealth tends to wreak havoc on a nation's economy and politics,
discouraging diversity, aggravating ethnic grievances and making it easier to fund insurgencies. Oil countries now host
about a third of the world's civil wars, up from one fifth in 1992. "There's a vicious cycle, which you can see played out in
places like Iraq and Nigeria, where conflict fuels higher prices, and higher prices in turn fuel conflict," says UCLA's Ross.
The lack of any spare capacity in the global pipeline makes it difficult to solve such situations with sanctions; taking any oil off the
market would, at this point, merely ignite an already explosive situation. The megatrends fueling the global supply shortage tend to
feed on one another. Higher prices fuel the growing tendency of oil states like Russia and Venezuela to re-nationalize fields.
That often leads to lower output, due to the inefficiency of most state oil companies, notes Sanford Bernstein analyst Ben Dell. The
publicly traded companies have to go where they can. As fields in peaceful places (Alaska, the North Sea) are tapped out, the hunt
for new oil has moved into conflict zones (Nigeria and Angola) or geologically extreme territory (Siberia, the deep sea).
50
CNDI Oil DA
Regents
Gordon Brown meeting Britain's oil chiefs to discuss higher North Sea output to bring down prices is prompted by oil prices hitting a record high of $135 a barrel,
twice as high as a year ago and a staggering 12 times higher than a decade ago. The well-sourced website petrolprices.com is now predicting that petrol will reach
£1.50 a litre by September, just 4 months away. Jeff Rubin of CIBC World Markets is forecasting "oil prices almost doubling over the next five
years". That would mean $270 a barrel by 2013. It perhaps explains why the government is now strongly backing BP to get a big new slice of the oil
drilling licences soon to be issued in Iraq, and – astonishingly – has now also made clear it intends to annex a third of a million square miles of the seabed off
Antarctica to pre-empt any rights to the oil it may contain. The fight for oil has begun in earnest. But is there the oil to go round? The
authoritative International Energy Agency foresees an oil supply crunch within 5 years forcing up prices to unprecedented
levels and greatly increasing western dependence on Opec. And the oil industry itself in its own report Facing the Hard
Truths about Energy, produced by 175 authorities including all the heads of the world's big oil companies, for the first time
predicted that oil and gas may run short by 2015. The geopolitical implications of this gathering crisis for world oil supply
2010-15 are immense. The risk of further military interventions and conflicts in the Middle East is clearly high. Total world
oil reserves are estimated at 2.5-2.9 trillion barrels, of which half has now been already consumed, while half of the 51 oil-
producing countries reported output declines in 2006. Non-Opec production is expected to peak and decline within the next
five years, driven mainly by burgeoning demand from China and the US, together with restricted output from Iraq. Then in
the following five years Opec's diminishing spare capacity will probably become increasingly unable to accommodate short-
term fluctuations, depending on how fast world demand grows and how extensively Opec invests in new capacity. The latter
may well not raise production capacity high enough or quickly enough, whether for political reasons or because internal
decision-making is too slow or the security environment too hostile. There are of course exits from this doom-stricken scenario, though none is
at all credible. First, discovery of major new oilfields could alter the picture. However, though billions have been spent on the search for new fields, discovery
peaked in the mid-1960s and the last big ones were found in the 1970s. Only Iraq has undeveloped super-giant oilfields – at West Qurna, Athabascan tar sands (from
Alberta, Canada), extra-heavy oil (from the Orinoco belt in Venezuela), oil shale, and mature source rocks. But the almost insurmountable problem is recoverability,
whether poor quality oil (extra-heavy oil), poor quality reservoirs (oil from source rocks), or both (oil shale). Worse, production may be uneconomic because of a
very low net energy gain, ie it requires almost as much energy to extract the oil as is made available for subsequent use. And the enormous hike in greenhouse gases
generated could produce a turbo climate change effect that would wipe out any benefit from a global post-Kyoto agreement. But even if supply constraints are
ineluctable as the explosion of Chinese growth coincides with falling non-Opec oil production and the beginnings of a slow but remorseless slippage in Opec
capacity.
51
CNDI Oil DA
Regents
Supply is not growing as fast as demand which creates fierce competition between buyers
Michael T Klare Apr 17, 2008 The rise of the new energy world order
http://www.atimes.com/atimes/Global_Economy/JD17Dj04.html
An increase of this sort would not be a matter of deep anxiety if the world's primary energy suppliers were capable of
producing the needed additional fuels. Instead, we face a frightening reality: a marked slowdown in the expansion of global
energy supplies just as demand rises precipitously. These supplies are not exactly disappearing - though that will occur
sooner or later - but they are not growing fast enough to satisfy soaring global demand.
The combination of rising demand, the emergence of powerful new energy consumers, and the contraction of the global
energy supply is demolishing the energy-abundant world we are familiar with and creating in its place a new world order.
Think of it as rising powers/shrinking planet.
This new world order will be characterized by fierce international competition for dwindling stocks of oil, natural gas, coal
and uranium, as well as by a tidal shift in power and wealth from energy-deficit states like China, Japan and the United
States to energy-surplus states like Russia, Saudi Arabia and Venezuela. In the process, the lives of everyone will be affected in
one way or another - with poor and middle-class consumers in the energy-deficit states experiencing the harshest effects. That's
most of us and our children, in case you hadn't quite taken it in.
52
CNDI Oil DA
Regents
Take oil. The US DoE claims that world oil demand, expected to reach 117.6 million barrels per day in 2030, will be matched by a
supply that - miracle of miracles - will hit exactly 117.7 million barrels (including petroleum liquids derived from allied substances
like natural gas and Canadian tar sands) at the same time. Most energy professionals, however, consider this estimate highly
unrealistic. "One hundred million barrels is now in my view an optimistic case," the chief executive officer of Total, Christophe de
Margerie, typically told a London oil conference in October 2007. "It is not my view; it is the industry view, or the view of those
who like to speak clearly, honestly, and [are] not just trying to please people."
Similarly, the authors of the Medium-Term Oil Market Report, published in July 2007 by the International Energy Agency, an
affiliate of the Organization for Economic Cooperation and Development, concluded that world oil output might hit 96 million
barrels per day by 2012, but was unlikely to go much beyond that as a dearth of new discoveries made future growth
impossible.
53
CNDI Oil DA
Regents
If the American vice-president reads the democracy ranking in the Nations in Transit 2006 survey he will learn that in Kazakhstan
there is even less freedom than in Russia. But what senior members of the American administration are reading these days is not
reports of human-rights organisations but reports on the US's energy-resource balance. The result is a policy that is at the same time
morally appalling and strategically wrong. So, the "second law of petropolitics" (pace Thomas Friedman) is that the price of oil
and the will of democratic governments to promote democracy in energy-rich states always move in opposite directions.
Now, it is clear that the democratisation of Russia is preconditioned on the fall of the price of gas and oil and the de-
monopolisation of the Russian energy sector. The success of the west in overcoming its oil and gas dependency and moving
towards renewable-energy sources will be the one and only indicator of the success of Europe's democracy-promotion
policies. Talking democracy without fighting high oil prices does not make sense any longer. The European Union's
democracy-promotion effort will have results only if it is combined with a common EU energy policy. A coalition composed of old
cold warriors, western-funded NGOs and freedom-loving youth is no longer capable of bringing democracy to Russia; a new,
effective coalition needs to be more of an eclectic mixture of environmentalists, business leaders and innovative scientists. In
this context, Vladimir Putin is absolutely right to believe that the only real challenge that he faces is not from within Russian
society but from outside. Where Putin is wrong is in fearing the spectre of an "orange revolution" that could be exported to
Russia. What he should be afraid of is a green revolution in the west. Only when the price of oil falls in the west will
freedom rise in Russia. So, if you want to see Russia free and democratic, stop signing anti-Putin petitions and voting for hardline
anti-communists. This will change nothing. What you should do is to turn down the lights when you leave your apartment, sell your
American car and start using public transport. The fight for democracy today is a fight against the tyrannical price of oil.
A Democratic Russia is the only way to stop regional wars and deter proliferation
Michael McFaul 2001“Pull Russia West” the Peter and Helen Bing Senior Fellow at the Hoover Institution. He is also a professor of political
science at Stanford. An expert on international relations, Russian politics, political and economic reform in post-communist countries, and U.S.
foreign policy, he is director of the Center on Democracy, Development, and Rule of Law at the Freeman Spogli Institute, where he also serves as
deputy director. http://www.hoover.org/publications/digest/3475486.html
Since coming to office, President Bush has made real progress in challenging some of the lingering legacies of the Cold War. He
has advanced a vision of defending U.S. national security interests that is not constrained by Cold War logic and agreements. Mr.
Bush’s new approach to international security issues has yielded real results—including most notably President Putin’s agreement
in July to rethink Russia’s categorical rejection of missile defense systems.
But to end the Cold War totally will require Bush to advance new thinking on the other major legacy of that era—the divide between rich and poor, democratic and
autocratic, NATO and non-NATO—that still separates Europe into East and West. This final remnant of the Cold War will disappear only when
Russia becomes a democracy, fully integrated into Western institutions. Unfortunately, the promotion of Russian
democracy has taken a back seat to arms control. In the long run, this is a bad trade for American security interests.
Bush is our first truly post–Cold War president. Before becoming president, even Bill Clinton worried about multiple warheads on Soviet ICBMs, pondered
communist expansion in Asia, and was curious enough about the Soviet Union to travel there. Bush was doing other things during the Cold War. My guess is that he
never met a "Soviet" citizen. Unlike most of his foreign-policy advisers, who made their careers fighting the Cold War, Bush’s thinking is unencumbered by a past
era.
54
CNDI Oil DA
Regents
"The best defense against a hostile Russia in the future? Promoting Russian democracy and integration into the West now."
Bush’s willingness to think beyond the Cold War must be applauded. Already, he has compelled everyone to rethink the strategic equation
between offensive and defensive weapons systems. Although still unwilling to discuss concrete numbers, Bush has reiterated his campaign
promise to reduce—unilaterally, if necessary—the number of nuclear warheads in the U.S. arsenal. In agreeing with Putin this past July to link the
discussion of these reductions with consultations about defense systems, Bush has moved closer to convincing the Russians that his plans for
missile defense need not threaten their security.
But getting Russian acquiescence on this new equation is the easy part of dismantling Cold War legacies. After all, Presidents Yeltsin and Clinton
agreed years ago that nuclear arsenals should be reduced far below levels agreed to in Start II. And despite all the posturing, Putin and his security
officials don’t really believe that the Anti-Ballistic Missile Treaty is the "cornerstone" of strategic stability between the United States and Russia.
They rightly have calculated that even the most robust U.S. missile defense system will not make nuclear deterrence obsolete. Most important,
Russian government officials know that a U.S. missile defense system is a tool of limited utility in most foreign and security policy issues.
And that’s the problem with Bush’s current policy toward Russia. By focusing almost exclusively on securing Russian acquiescence to missile
defense and U.S. withdrawal from the ABM treaty, Bush has devoted almost no attention to the most important issue in U.S.-Russian relations—
Russian democracy and Russian integration into the West.
If Russia becomes a full-blown dictatorship in the next 10 years, a U.S. missile defense system will be a rather useless weapon in
the arsenal for dealing with an enemy Russia. If, in this worst-case scenario, autocratic Russia decides to invade NATO member
Latvia, destabilize the Georgian government, or trade nuclear weapons with Iran, Iraq, or China, our missile defense system will do
little to deter these hostile acts against U.S. national interests.
"If Bush can nudge Putin in a more democratic direction, then he will be remembered as the president who dispelled the last
lingering elements of the Cold War."
The best defense against these potential hostile acts is to promote Russian democracy and integration into the West now. If
Russia becomes a full-blown democracy in the next 10 years, then the prospects for conflict between the United States and
Russia, be it over the Latvian border or the balance of nuclear weapons, will be reduced dramatically. A democratic Russia
moving toward entry into the European Union and even NATO will also make possible the unification of Europe and the
final disappearance of East-West walls (be it through visa regimes or military alliances) that still divide Europe.
55
CNDI Oil DA
Regents
Aff- !- Russia- U
Russia’s new president is moving towards democracy
AP Press July 6 2008 Vogel: We must respect Russia, engage China
The Yomiuri Shimbunhttp://www.yomiuri.co.jp/dy/world/20080706TDY08002.htm
Currently, Russia has an unprecedented dual power structure--Vladimir Putin as prime minister and Dmitry Medvedev as president.
Do you think democratization will begin in the near future, or will the trend toward a police state and oppression of mass media
that started in Putin's period continue?
It is difficult to say that Mr. Putin promotes full-fledged democracy, but we have to acknowledge that it is Mr. Putin who has
brought Russia back to a more stabilized and better governed state than before. How the relationship between Mr. Putin and
Mr. Medvedev will develop is very difficult to foresee. But if it is true that the new Russian president wants to realize more
freedom of the press, more democracy and more independence of the judiciary, the other democracies should support him.
56
CNDI Oil DA
Regents
In an attempt to explain the Russian revolution to Lady Ottoline Morrell, Bertrand Russell once remarked that, appalling though
Bolshevik despotism was, it seemed the right sort of government for Russia: "If you ask yourself how Fyodor Dostoevsky's
characters should be governed, you will understand". In explaining the recent resurgence of authoritarianism in Russia one
does not need to reread Dostoevsky or draw on the Bolshevik legacy. It is enough to take into account the rise of the price of oil.
At least this is what one might think when reading the new Freedom House study Nations in Transit 2006 (released on 13 June
2006 in Berlin) that rates the democratic performance in twenty-seven countries in the European Union and its eastern
neighbourhood. The study shows that the skyrocketing of oil prices in the last year has led to deteriorating governance
standards, restrictions on media and the judiciary, and rising corruption in all four energy-rich countries of the former
Soviet Union – Russia, Turkmenistan, Kazakhstan and Azerbaijan. The study is a powerful illustration of Thomas Friedman's
"first law of petropolitics" formulated in Foreign Policy magazine (March/April 2006 [subscription only]). According to this law
"the price of oil and the pace of freedom always move in the opposite direction in oil-rich petrolist states". It follows that the
worst enemy of Russian democracy is not the Kremlin or oligarchs but the high price of oil. The soaring price of oil has
made the energy-rich post-Soviet states more powerful, less democratic and more corrupt. The oil money that has floated
the state budget dramatically decreases Russian state dependence both on foreign funding and on the taxes collected from
its citizens. Russia's reliance on western credits has turned into Europe's reliance on Russian oil and gas. The result is that
Russia does not want to be lectured any more; she wants to lecture.
Now when the Russian government has more money than it knows how to spend, the Russian government has lost interest in
improving the quality of its governance, and concentrates instead on deciding whom to buy and whom to leave in the cold. More
money means larger and better client networks. But even more important – the high price of oil has given birth to a new state
ideology – oil nationalism. "We, the people" has been transformed into "We, the people who have oil". The country's oil is
at the core of the new Russian state identity. Oil, not history or culture, is at the heart of Russia's claim to great-power
status. It is oil that makes Russians feel powerful, special and privileged. Any criticism of the government is simply
dismissed as an attempt by foreigners to put their hands on Russian oil. The combination of the "orange" fears of the elites and
the new price of oil has produced a real regime change in Russia. In less than two decades Russia has been transformed from a
communist one-party state into an oligarchic one-pipeline state. The monopoly of power is now fixed not in any article of the
constitution but in the legislation regulating the use of the energy infrastructure. When at the most recent European Union-Russia
summit, at Sochi in May 2006, Gazprom rejected EU demands for Russia to open its pipeline network to access by independent
producers and other countries, this was a declaration of the new Russian philosophy of power. The western response to the rise of
Russia as a non-democratic energy superpower is a mixture of indignation, fear and double-standard politics. The visit in
May of the United States vice-president Dick Cheney in Lithuania is a disturbing illustration of this new reality. Cheney went to
Vilnius where he ferociously attacked Russia's democratic record; the next day he flew to Kazakhstan and praised Nursultan
Nazarbayev for stabilising his country
57
CNDI Oil DA
Regents
58
CNDI Oil DA
Regents
Russia has found the Achilles' heel of the US colossus. In concert with its oil-producing partners and the rising powerhouse
economies of the East, Russia is altering the foundations of the current US-led liberal global oil-market order, insidiously
working to undermine its US-centric nature and slanting it toward serving first and foremost the energy-security needs and
the geopolitical aspirations of the rising East.
All this is at the impending incalculable expense of the West. What is increasingly at stake is secure US access to global energy resources - strategic US energy security - because the West's traditional control respecting
those global resources is seriously faltering in the face of the compelling strategies undertaken by Russia and its global partners.
The US giant is increasingly at risk as it faces what is gradually but now more widely being recognized as Russia's clever exploitation of US foreign energy dependency and the hemorrhaging of its all-important
economic-geopolitical capital: its traditional global energy leadership and dominance via its onetime virtually all-pervasive oil majors.
US Senator Richard Lugar, who recently labeled Russia an "adversarial regime" that increasingly uses its growing energy
dominance as a powerful geopolitical weapon, has warned of economic "catastrophe" for the United States, notwithstanding its
status as a superpower. Consequently, informed and reasoned leaders such as Lugar increasingly see the US in energy-based
jeopardy.
Such leaders clearly do not put blind trust in the conventional wisdom that keeps insisting the US giant has no Achilles' heel and is
virtually immune to the efforts on the part of comparatively smaller powers such as Russia and its partners to undermine the
current US global position of supremacy.
Backing up the mounting concerns of such leaders as Lugar, as reported on October 1 by The Guardian Unlimited, widely respected energy economist Professor
Peter Odell, who was an adviser to Tony Benn, the British energy minister in the late 1970s, and who has since worked for a host of different foreign governments,
said he was not being alarmist or controversial when he recently warned that the West was at imminent risk of losing access to global energy
resources as a result of Russia's global oil grab.
High oil prices allow Russia to change the economic system threatening the West’s very survival
W Joseph Stroupe Nov 22, 2006 Russia attacks the West's Achilles' heel THE NEW WORLD OIL ORDER, author of the new
book Russian Rubicon: Impending Checkmate of the West and editor of Global Events Magazine Part 1
http://www.atimes.com/atimes/central_asia/hk22ag01.html
Under the new market arrangement, nearly all oil became highly visible and instantly accessible because the traditional
long-term supply contracts became the minor factor while the spot markets and highly liquid oil-futures contracts became
the major factors.
In effect, this radically raised the visibility, accessibility and fungibility of global oil supplies to unheard-of heights and
made it possible for oil lost for some reason in one part of the market to be easily, naturally and almost instantly replaced
by oil from another part of the market.
In effect, the new exchanges facilitated the creation of one virtual global pool of oil denominated in US dollars into which nearly all exporters sell their oil and out
of which nearly all importers purchase oil, all on a daily basis.
A discrete global pool of oil does not physically exist anywhere on the planet, of course. But it does exist in a virtual sense, powerfully mimicking a literal global
pool of oil, because the structure and presence of the new exchanges and the global adherence and devotion to them ensures that oil is bought, sold and delivered
largely as if such a pool literally exists. And the global dominance of the West's oil majors, whose task it has been to capture global oil
supplies for full incorporation into the new US-led liberal global oil-market order, has been the key factor perpetuating the
global dominance of that order.
As long as the Western oil majors hold global sway and the US-backed liberal order is globally adhered to, therefore, any attempt to target the US with an oil embargo, as by the efforts of an exporter or group of
exporters refusing to sell to the US, would fail miserably because the US would merely draw oil elsewhere from the global pool to suffice its needs.
Importantly, the US and Britain accomplished two goals of profound importance and value with the creation of their new liberalized global oil-market order. First, they prevented the enacting of any targeted oil embargo,
and they greatly enhanced the leverage of the West's oil majors, their de facto state sponsors and the West's financial institutions in the new market arrangement while simultaneously fundamentally undermining the
leverage of producers, thus powerfully bolstering the strategic energy security of the West.
Second, they consolidated and powerfully solidified the role of the US dollar as the unquestioned international currency, since the
one virtual global pool of oil created and maintained by the new liberalized market order is denominated in US dollars alone.
But it is crucial to understand that the West's immunity from a targeted embargo is assured only as long as the current
liberal, highly liquid US-led global oil market is unwaveringly adhered to. Once the movers and shakers (now Russia and its
producing and consuming partners) begin again to revert to the rigid bilateral long-term supply contracts conducted
privately between producers and consumers, thereby incrementally altering the foundations of the global oil-market order
by decreasing its level of liquidity, then the real potential for a revoking of a significant measure of oil's fungibility exists.
This means that the ability to enact an effective targeted embargo is once again incrementally revived. A meaningful loss of
fungibility of oil would spell potential economic-geopolitical doom for the West. This is the Achilles' heel of the West.
As we shall see, it is that very Achilles' heel Russia and its partners have found and are already energetically exploiting in a bid to
shift the US colossus out of its current position of global dominance.
Swiftly mounting anxiety on the part of increasing numbers of the globe's key energy-hungry economies in the East as respects
energy security is already fueling incremental abandonment and circumvention of the US-dominated liberal global oil market.
59
CNDI Oil DA
Regents
60
CNDI Oil DA
Regents
Aff- !- Venezuela
Low oil prices oust Chavez
Martin Hutchinson Jun 25, 2008 “A new model for nastiness” author of Great Conservatives
http://www.atimes.com/atimes/Global_Economy/JF25Dj04.html
If China and to a lesser extent India suffer severe downturns, then oil demand must drop off correspondingly and it becomes
unlikely that the 1970s pattern of continuing high oil prices even in a recession will be repeated. If oil prices drop sharply, the
political effect on oil producing countries will be considerable, and not necessarily pleasant. The Shah of Iran basically fell
because of the 1973 oil price rise. He was already overspending in 1972-3, supported largely by bank loans, then he spent with
total abandon in 1974 as higher revenues had appeared to make Iran's oil wealth inexhaustible. Needless to say, he then ran out of
money, as the international banking system would not provide him with sufficient funds to complete the projects he'd initiated in
the bubble year. 1976 and 1977 were thus years of relative austerity in Iran, much to the fury of the Iranian people who had come to
expect a bonanza. It should thus have been no surprise that revolution occurred in 1979, although robust US support for the shah
might have enabled him to overcome it. This time around, the overspending oil producers are obvious: Venezuela and Russia.
Venezuela will undoubtedly get into severe difficulty once the oil price collapses. This is on balance likely to favor US
interests (and those of the Venezuelan people) provided that the crisis can be leveraged to remove Hugo Chavez from the
country's leadership. If he remains, Venezuela will become another Cuba, with deep repression and a suffering and
impoverished populace but forming no real threat to the United States. Russia is a much more dangerous story, being both
economically and militarily more powerful. The parallels with Germany of the 1930s are disquieting, although the move to
aggression in an economic downturn would presumably take the form of an assumption of further authoritarian powers by Vladimir
Putin, rather than his replacement by an even more sinister figure. However a downturn in the oil price might well cause an
aggressive Russia to intervene militarily in its neighbors, use the weapon of Gazprom's gas pipelines disruptively against Western
Europe and devote 25% of output to the military, as did the Soviet Union in its most aggressive periods. Should that happen, Russia
would become a considerably more dangerous threat to the world than al-Qaeda could ever dream of; it is to be hoped that western
leaders, particularly in Europe, recognize the danger early and effectively. The balance of probability must thus be for a global
downturn which combines the inflation of the 1970s with the severe recession and geopolitical danger of the 1930s. Not an
appealing prospect.
61