Da Oil1

UMKC SDI 2008 Mapes/Petite
Oil
OIL CORE
OIL CORE.......................................................................................................................................................................1
**Russia Disad**............................................................................................................................................................3
Russia 1NC.....................................................................................................................................................................4
Russia 1NC
.........................................................................................................................................................................................5
Uniqueness- Prices high..................................................................................................................................................6
Uniqueness- Prices High.................................................................................................................................................7
Uniqueness- Russian Economy OK................................................................................................................................8
Link- Perception..............................................................................................................................................................9
Link- Alt Energy Kills Russia.......................................................................................................................................10
Links- Decreased Demand Lowers Prices....................................................................................................................11
Links- Shifts Disrupt Prices..........................................................................................................................................12
Internal Links- Oil Key to Russia.................................................................................................................................13
Impact- Instability.........................................................................................................................................................14
Impact- US-Russia........................................................................................................................................................16
**Aff**.........................................................................................................................................................................17
Prices dropping now......................................................................................................................................................18
Uniqueness- Prices dropping now.................................................................................................................................19
Uniqueness- Russian Economy Low............................................................................................................................20
No Link.........................................................................................................................................................................21
A2 Prices Key...............................................................................................................................................................22
Impact- High Prices Kill Russian Econ........................................................................................................................23
**Peak Oil**.................................................................................................................................................................25
Theory False..................................................................................................................................................................26
Theory False..................................................................................................................................................................27
Theory False..................................................................................................................................................................28
Theory False- Recoverable Oil.....................................................................................................................................29
Theory False- Tech........................................................................................................................................................30
Theory False- Africa.....................................................................................................................................................31
Theory True...................................................................................................................................................................32
Theory True...................................................................................................................................................................33
Theory True...................................................................................................................................................................34
Peak True- A2 New Reserves........................................................................................................................................35
Peak True- A2 Technology ...........................................................................................................................................36
Peak True- No Fill in.....................................................................................................................................................37
**High Prices Bad**....................................................................................................................................................38
Economy Mod...............................................................................................................................................................39
Economy Ext.................................................................................................................................................................40
A2 High prices key to economy....................................................................................................................................41
A2 High prices key to investments ..............................................................................................................................42
A2 High prices good for poor countries........................................................................................................................43
Energy Mod...................................................................................................................................................................44
Poverty Mod .................................................................................................................................................................45
Poverty Ext....................................................................................................................................................................46
Shocks Bad- Economy..................................................................................................................................................47
Shocks Bad- Economy..................................................................................................................................................48
A2 Venezuela ...............................................................................................................................................................49
A2 Venezuela ...............................................................................................................................................................50
A2 Mexican Econ..........................................................................................................................................................51
A2 Texas Econ..............................................................................................................................................................52
**High Prices Good**..................................................................................................................................................53
Canada Mod..................................................................................................................................................................54
Canada Mod .................................................................................................................................................................55
Texas Econ Mod............................................................................................................................................................56
1
Oil
Central Asia Mod..........................................................................................................................................................57

Pipeline Mod.................................................................................................................................................................58
Mexico Econ Mod.........................................................................................................................................................59
Mexico Ext..................................................................................................................................................................60
Mexico Ext....................................................................................................................................................................61
Renewables Mod...........................................................................................................................................................62
Economy mod...............................................................................................................................................................63
Economy Ext.................................................................................................................................................................64
A2 Economy.................................................................................................................................................................65
Venezuela Mod..............................................................................................................................................................66
Venezuela Link Ext.......................................................................................................................................................67
Venezuela Impact Ext....................................................................................................................................................68
High prices good- shocks..............................................................................................................................................69
A2 Shocks- No impact..................................................................................................................................................70
**Dependency Good**.................................................................................................................................................71
Terrorism Mod..............................................................................................................................................................72
Terrorism D...................................................................................................................................................................73
US-Israel Relations Mod...............................................................................................................................................74
Economy Mod...............................................................................................................................................................75
A2 Hurts Economy........................................................................................................................................................76
A2 Iran prolif................................................................................................................................................................77
**Dependency Bad**...................................................................................................................................................78
Economy Mod...............................................................................................................................................................79
Economy Ext.................................................................................................................................................................80
Economy Ext.................................................................................................................................................................81
Terrorism Mod..............................................................................................................................................................82
Terrorism Ext................................................................................................................................................................83
Iran Prolif Mod..............................................................................................................................................................84
Iran Prolif Link Ext.......................................................................................................................................................85
......................................................................................................................................................................................85
2
Oil
**Russia Disad**
3
Oil
Russia 1NC
Although prices had a small dip, the trend still remains- high prices to continue
Wall Street Journal 7/25 (Finally, Ford Sees the Light,
http://online.wsj.com/article/SB121694081472082761.html?mod=googlenews_wsj)
Sure, upward pressure on gasoline prices should ease within days or weeks. But they still will be high.
After all, the crude-oil price has dropped back only to where it was two months ago -- when it seemed
almost unbearably expensive -- and still is roughly 70% more costly than a year ago.
Development of alternative energy causes prices to drop

DeCiantis ’08 (Devin, March 25, Masters candidate in Public Policy at Harvard’s JFK School of Government,
specializing in development economics and international trade,
http://www.freedom24.org/rationalpost/2008/03/25/speculations-on-a-25-oil-tariff/)
In the mid-term, as industries and generators begin to shift away from higher-cost imported oil, domestic oil
producers might begin building out untapped Arctic capacity and utilities might begin diversifying their energy
portfolios into lower-cost fossil fuels and alternative energy technologies. Together, these processes should cause a
more substantial decline in import volumes. In the long-run, a more fundamental shift away from a high-carbon,
high-cost, oil-dependent economy is likely to unfold, at which point oil imports would begin to decline more
precipitously as demand for energy is almost completely replaced with lower-cost substitutes. This progression is an
example of a typical “adjustment lag”. b. The world price of oil? Again, in the very short-term we might expect a
modest decline, partially offsetting the cost of the tariff. Given that America is one of the world’s largest energy
importers (importing roughly 2/3rds of its annual consumption), it would still need to source oil externally or risk
seizing up its industrial capacity. Thus, aggregate import demand would remain relatively stable and prices would
likely settle somewhere between $75 and $100. Over the mid-to-long-term, major OPEC suppliers would have room
to lower prices given their lower relative cost of production, while growing demand from China and India would
partially offset declining American demand. Finally, as the U.S. begins to substitute away from oil as a key energy
input in the long-run, global aggregate demand for oil will inevitably decrease, assuming that emerging market
demand doesn’t continue to grow at its current pace in perpetuity. This will put considerable downward pressure on
prices over time as oil exporters adjust to a situation of extended excess supply-at least while total global oil reserves
remain relatively plentiful.
Drop in prices crushes the Russian economy

BBC Worldwide Monitoring, "Russian finance minister warns of effects of possible oil price fall" April
12, 2008 lexis
[Presenter] A fall in the oil price could inflict a serious blow on the Russian economy, Finance Minister Aleksey
Kudrin has said during a visit to Washington. He said that at the moment the country's economy is seriously dependent
on the oil price, and that in the case of a fall in the price a crisis will affect both the state and private
sectors.
4
Oil
Russia 1NC
Impact is nukes
Steven David, Prof. of political science at Johns Hopkins, 1999, Foreign Affairs
If internal war does strike Russia, economic deterioration will be a prime cause. From 1989 to the present, the GDP has fallen by 50 percent. In a
society where, ten years ago, unemployment scarcely existed, it reached 9.5 percent in 1997 with many economists declaring the true figure to be much higher. Twenty-two percent of Russians live below the official poverty line
(earning less than $ 70 a month). Modern Russia can neither collect taxes (it gathers only half the revenue it is due) nor significantly cut spending. Reformers tout privatization as the country's cure-all, but in a land without well-
defined property rights or contract law and where subsidies remain a way of life, the prospects for transition to an American-style capitalist economy look remote at best. As the massive devaluation of the ruble and the current
political crisis show, Russia's condition is even worse than most analysts feared. If conditions get worse, even the stoic Russian people will soon run out of patience. A future conflict would quickly draw in Russia's military. In the
Soviet days civilian rule kept the powerful armed forces in check. But with the Communist Party out of office, what little civilian control remains relies on an exceedingly fragile foundation -- personal friendships between
government leaders and military commanders. Meanwhile, the morale of Russian soldiers has fallen to a dangerous low. Drastic cuts in spending mean inadequate pay, housing, and medical care. A new emphasis on domestic
missions has created an ideological split between the old and new guard in the military leadership, increasing the risk that disgruntled generals may enter the political fray and feeding the resentment of soldiers who dislike being
used as a national police force. Newly enhanced ties between military units and local authorities pose another danger. Soldiers grow ever more dependent on local governments for housing, food, and wages. Draftees serve closer to
home, and new laws have increased local control over the armed forces. Were a conflict to emerge between a regional power and Moscow, it is not at all clear which side the military would support. Divining the military's
allegiance is crucial, however, since the structure of the Russian Federation makes it virtually certain that regional conflicts will continue to erupt. Russia's 89 republics, krais, and oblasts grow ever more independent in a system
that does little to keep them together. As the central government finds itself unable to force its will beyond Moscow (if even that far), power devolves to the periphery. With the economy collapsing, republics feel less and less
incentive to pay taxes to Moscow when they receive so little in return. Three-quarters of them already have their own constitutions, nearly all of which make some claim to sovereignty. Strong ethnic bonds promoted by
shortsighted Soviet policies may motivate non-Russians to secede from the Federation. Chechnya's successful revolt against Russian control inspired similar movements for autonomy and independence throughout the country. If
Should Russia succumb to internal war, the consequences for the United
these rebellions spread and Moscow responds with force, civil war is likely .
States and Europe will be severe. A major power like Russia -- even though in decline -- does not suffer civil war quietly or alone. An embattled Russian Federation
might provoke opportunistic attacks from enemies such as China. Massive flows of refugees would pour into central and western Europe.
Armed struggles in Russia could easily spill into its neighbors. Damage from the fighting, particularly attacks on nuclear plants, would
poison the environment of much of Europe and Asia. Within Russia, the consequences would be even worse. Just as the sheer brutality of the last Russian civil war laid the basis for the privations of Soviet
communism, a second civil war might produce another horrific regime. Most alarming is the real possibility that the violent disintegration of Russia could lead to loss of
control over its nuclear arsenal. No nuclear state has ever fallen victim to civil war, but even without a clear precedent the grim consequences can be foreseen. Russia retains some
20,000 nuclear weapons and the raw material for tens of thousands more, in scores of sites scattered throughout the country. So far, the government has managed to
prevent the loss of any weapons or much material. If war erupts, however, Moscow's already weak grip on nuclear sites will slacken, making
weapons and supplies available to a wide range of anti-American groups and states. Such dispersal of nuclear weapons represents the
greatest physical threat America now faces. And it is hard to think of anything that would increase this threat more than
the chaos that would follow a Russian civil war.
5
Oil
Uniqueness- Prices high
Prices still skyrocketing

Boak 7/25/08 (U.S. claims Optiver influenced oil prices, http://www.chicagotribune.com/business/chi-fri-
oil-speculatr-investigatjul25,0,292524.story)
"Given the pressure, if [the CFTC] cannot come up with a much bigger case, I would say that there is not
fraudulent speculation out there," said Garret, who believes that market fundamentals explain the high
prices.
Many on Capitol Hill blame the surge in gasoline and crude oil prices on speculation, suggesting that the
entrance of hedge funds and other investors into the commodity markets caused prices to double within a
year.
Sen. Byron Dorgan (D-N.D.) frequently describes oil as "shooting up like a Roman candle" because of
unbridled speculation that has broken the markets. The Optiver suit is "not nearly enough to address this
widespread problem," Dorgan said.
The end of the week marked a jump in prices

Thomas Financial Times 7/25 (Oil prices edge higher,
http://www.forbes.com/afxnewslimited/feeds/afx/2008/07/25/afx5253683.html)
Oil prices rose slightly on Friday at the end of a week during which they had fallen sharply as concerns
eased over tight supplies and strong demand for energy, traders said.
New York's main contract, light sweet crude for September delivery, rose 18 cents to $125.67 a barrel.
Brent North Sea crude for September climbed 20 cents to $126.64.
Oil prices had picked up on Thursday after two days of heavy losses, as the market weighed the impact of
slowing global economic growth on energy demand.
Prices high now

Ray 6/25 (Chris, 2008, “Will oil prices crash soon?” http://www.moneyhighstreet.com/feature/446/)
It is estimated that speculation by institutional investors is contributing to around 40% of the oil price. As
huge investment funds have retreated from personal and commercial lending and property investments,
the surging oil futures market is proving an attractive alternative. The oil futures market is currently
trading oil at around $137 per barrel for the rest of this year and pricing it at around $136 per barrel for 12
month contracts. This indicates that investors expect Nymex Light Crude oil prices to remain at these
levels for some time, however these futures prices can fluctuate with events and investor sentiment.
6
Oil
Uniqueness- Prices High

Demand still high- prices peaking
Funk 6/25 (Josh, Associated Press, “Buffett: Supply and demand driving oil prices up,” 2008,
http://www.forbes.com/feeds/ap/2008/06/25/ap5152923.html)
Billionaire Warren Buffett says he believes supply and demand, not market speculation, is what's driving
oil prices to new heights. Oil futures fell Wednesday after the Energy Department said the nation's
supplies of fuel and oil were larger than expected last week, but prices remain above $130 a barrel.
Prices will increase- prefer this evidence because it’s predictive

Brian J. O'Connor 2008 [accessed 6/10/08 from lexis 'Our efforts to conserve won't
stop
oil surge' in The Detroit News]
Our efforts to conserve won't stop oil surge
Now that Americans are trying to cut down on our oil dependency, when will prices for crude
drop? Next
month? Next year? How about never?
According to investment analyst Stephen Leeb, oil's headed up to $200 a barrel and it won't
come down no
matter how little we drive. The surging economies of China, India, Brazil and Russia are
going to lap up any oil that American conservation efforts create. Meanwhile, any surplus
that would be created might well be temporary one
group studying the issue predicts worldwide production of oil will peak by 2010.
7
Oil
Uniqueness- Russian Economy OK
Russia’s Economy is currently high and is constantly growing

The CIA World Factbook 24 July 2008 “Economy Of Russia- Overview” The CIA [https://www.cia.gov/library/publications/the-
world-factbook/geos/rs.html#Econ] Accessed July 26, 2008
Russia ended 2007 with its ninth straight year of growth, averaging 7% annually since the financial crisis of 1998. Although high
oil prices and a relatively cheap ruble initially drove this growth, since 2003 consumer demand and, more recently, investment have
played a significant role. Over the last six years, fixed capital investments have averaged real gains greater than 10%
per year and personal incomes have achieved real gains more than 12% per year. During this time, poverty has declined steadily
and the middle class has continued to expand. Russia has also improved its international financial position since the 1998
financial crisis. The federal budget has run surpluses since 2001 and ended 2007 with a surplus of about 3% of GDP. Over the past several years,
Russia has used its stabilization fund based on oil taxes to prepay all Soviet-era sovereign debt to Paris Club creditors and the IMF. Foreign debt
is approximately one-third of GDP. The state component of foreign debt has declined, but commercial debt to foreigners has risen strongly. Oil
export earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to some $470 billion at yearend 2007, the third
largest reserves in the world. During President PUTIN's first administration, a number of important reforms were implemented in the
areas of tax, banking, labor, and land codes. These achievements have raised business and investor confidence in Russia's
economic prospects, with foreign direct investment rising from $14.6 billion in 2005 to approximately $45 billion in 2007. In
2007, Russia's GDP grew 8.1%, led by non-tradable services and goods for the domestic market, as opposed to oil or mineral extraction
and exports. Rising inflation returned in the second half of 2007, driven largely by unsterilized capital inflows and by rising food costs, and
approached 12% by year-end. In 2006, Russia signed a bilateral market access agreement with the US as a prelude to possible WTO entry, and its
companies are involved in global merger and acquisition activity in the oil and gas, metals, and telecom sectors. Despite Russia's recent success,
serious problems persist. Oil, natural gas, metals, and timber account for more than 80% of exports and 30% of government revenues, leaving the
country vulnerable to swings in world commodity prices. Russia's manufacturing base is dilapidated and must be replaced or modernized if the
country is to achieve broad-based economic growth. The banking system, while increasing consumer lending and growing at a high rate, is still
small relative to the banking sectors of Russia's emerging market peers. Political uncertainties associated with this year's power transition,
corruption, and lack of trust in institutions continue to dampen domestic and foreign investor sentiment. PUTIN has granted more influence to
forces within his government that desire to reassert state control over the economy. Russia has made little progress in building the rule of law, the
bedrock of a modern market economy. The government has promised additional legislative amendments to make its intellectual property
protection WTO-consistent, but enforcement remains problematic.
Economy on track
China View 7/5 (Russia's economic growth remains robust, http://news.xinhuanet.com/english/2008-
07/05/content_8493711.htm)
Russia's economic growth remained robust in the first half of 2008, with major economic indicators
beating expectations. The Russian government has raised its economic growth forecast for 2008 to 7.1
percent from 6.7 percent.
Russia's gross domestic product rose 8.3 percent during January-April from the same period last year,
according to the Federal State Statistics Service (Rosstat).
The increase in GDP is mostly spurred by strong investment and consumer spending. In the first four
months, the domestic fixed investment increased 20.3 percent year-on-year and retail sales saw a rise of
15.6 percent.
One bright spot of the economic growth is the sharp rise in foreign trade, which grew 48.4 percent during
the January-April period from a year earlier to 235.2 billion U.S. dollars, with exports rising 51.8 percent
to 150.3 billion dollars and imports up 42.8 percent to 84.9 billion dollars.
8
Oil
Link- Perception
Any shift in prices triggers the impacts- perception of oil markets is the key internal link
Paul Roberts, energy expert and writer for Harpers,2004, The End of Oil, pg. 95
Within the oil world, no decision of any significance is made without reference to the U.S. market, nor is
anything left to chance. Indeed, the world’s oil players watch the American oil market as attentively as
palace physicians once attended the royal bowels: every hour of every day, every oil state and company in
the world keeps an unblinking watch on the United States and strains to find a sign of anything — from a
shift in energy policy to a trend toward smaller cars to an unusually mild winter —that might affect the
colossal U.S. consumption. For this reason, the most important day of the week for oil traders anywhere
in the world is Wednesday, when the U.S. Department of Energy releases its weekly figures on American
oil use, and when, as one analyst puts it, “the market makes up its mind whether to be bearish or bullish.”
Perception matters
Paul Roberts, energy expert and writer for Harpers,2004, The End of Oil, pg. 93-4
So embedded has oil become in today’s political and economic spheres that the big industrial
governments now watch the oil markets as closely as they once watched the spread of communism — and
with good reason: six of the last seven global recessions have been preceded by spikes in the price of oil,
and fear is growing among economists and policymakers that, in today’s growth-dependent, energy-
intensive global economy, oil price volatility itself may eventually pose more risk to prosperity and stabil-
ity and simple survival than terrorism or even war. In this bleak context, it becomes easier to understand
why nations as powerful and technologically advanced as Japan, Britain, and the United States have such
abysmal records when it comes to long-term energy planning or alternative energy. Indeed, when the
major nations speak of energy policy today, about energy for the future, or about the much-touted energy
security,” they are not talking about depletion curves, or fuel cells, or a hydrogen economy. They are not
talking about fuel efficiency, or solar power, or any of the potentially significant but speculative sources
of energy. Rather, when nations discuss energy security today, what they are really talking about is the
geopolitics of energy — and specifically, the actions, money, and alliances necessary to keep oil flowing
steadily and cheaply through the next fiscal quarter.
9
Oil
Link- Alt Energy Kills Russia

New forms of energy collapses prices leaving Russia in the dust
Newsday 96 (NY, April 7, LN)
IF SCIENTISTS discovered tomorrow that a clean and safe source of infinitely renewable energy could
be cheaply derived from, say, ordinary sea water, we all know it would be an unmitigated boon for
mankind. Well, not exactly. Because any such invention would necessarily cause a collapse of oil prices,
and Texas, Louisiana and Oklahoma would become basket states. In Mexico, where petroleum is the chief
national patrimony, the floor under a fragile economy, would disintegrate. The Middle East would
become a destabilized mess as oil-rich regimes lost the resources through which they now control their
populations. Russia and the many former constituent republics of the Soviet Union would lose export
earnings critically important to the survival of their democracies. Billions invested in the extraction of
North Sea oil would lose its value. Ripple effects running through the financial system as a result of the
downsizing and bankruptcy of much of the existing oil industry are simply too terrifying to contemplate.
10
Oil
Links- Decreased Demand Lowers Prices

High demand cause of high prices
Foster 7/26/08, (PHD, Oil Speculators: A Marginal (at Best) Cause of High Energy Prices,
http://www.hawaiireporter.com/story.aspx?73fd96c1-6c4d-47c2-a580-32260c001789)
There are many possible contributors to high energy prices. Growing world demand and an almost
complete lack of excess supply capacity play the major role. Such tight-spot markets mean that even
small shifts in current or expected future supply or demand can have exceptional effects on prices.
Drop in demand causes prices to plummet- Russia is affected

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

Jagganathan in 6 (Sridhar, “Hawking India's soul?” May 31,
http://www.thehindubusinessline.com/2006/03/31/stories/2006033100891000.htm)
SEEKING ALTERNATIVES This is already happening — increased funding of wind farms, more
exploration of marginal oil fields, the phoenix-like rise of the nuclear industry, and active measures by the
automotive industry to extract greater fuel efficiency. It does not take much increase in demand to push up
oil prices, and a small rise in conservation and alternative energy supply acts to decrease oil prices. India's
and China's energy needs will put pressure on the available supply of oil, and its price will tend to rise.
This demand-side pressure is felt globally which then introduces the virtuous cycle of decreased
consumption and alternative energy acceleration. Thus, India's needs become a global problem and the
rest of the world responds in a manner that forces oil prices to fall.
11
Oil
Links- Shifts Disrupt Prices

Any shift in energy impacts prices
The obsessive focus on oil is hardly surprising, given the stakes. In the fast-moving world of oil politics,
oil is not simply a source of world power, but a medium for that power as well, a substance whose huge
importance enmeshes companies, communities, and entire nations in a taut global web that is sensitive to
the smallest of vibrations. A single oil “event” — a pipeline explosion in Iraq, political unrest in
Venezuela, a bellicose exchange between the Russian and Saudi oil ministers — sends shockwaves
through the world energy order, pushes prices up or down, and sets off tectonic shifts in global wealth and
power. Each day that the Saudi-Russian spat kept oil supplies high and prices low, the big oil exporters
were losing hundreds of millions of dollars and, perhaps, moving closer to financial and political disaster
— while the big consuming nations enjoyed what amounted to a massive tax break. Yet in the volatile
world of oil, the tide could quickly turn. A few months later, as anxieties over a second Iraq war drove
prices up to forty dollars, the oil tide abruptly changed directions, transferring tens of billions of dollars
from the economies of the United States, Japan, and Europe to the national banks in Riyadh, Caracas,
Kuwait City, and Baghdad, and threatening to strangle whatever was left of the global economic recovery.
12
Oil
Internal Links- Oil Key to Russia

Russia dependent on oil revenue
Donald h. Gold Investor's Business Daily June 23, 2008 HEADLINE: Globalization Fuels Brave New
World
After a storybook revolution -- from Lech Walesa to the Berlin Wall to Boris Yeltsin facing down the
tanks of an attempted putsch -- the new Russia is in a precarious position. That may sound odd. The
RTSI, Russia's benchmark stock index, is among the world's hottest. But Russia is a one-sector
economy, warns Josef Karasin, head of emerging markets at IDEAGlobal in London.
Russia is sitting on vast stores of oil and natural gas. It's the No. 1 gas source for Europe. Sounds
great. What's more, Russia's untapped deposits are the equivalent of low-hanging fruit, Karasin says.
That makes its cost of production far lower than untapped sources in, say, Canada, the U.S. or the North
Sea. Or much of the Middle East. After decades of Communist Party rule, investment in Russian oil
exploration, drilling and extraction was sorely neglected. Elsewhere around the world, the easy-to-get-at
oil had already been pumped, refined and burned. So what's the problem? First, Russia has not
translated its energy wealth into a broader base, Karasin says. If oil and gas prices fall, so will Russia's
economy -- and the RTSI, which is like one giant energy ETF. Second, despite the oil -and-gas boon,
Russia is an inefficient, heavily regulated economy. "The authorities have not made any reforms."
Karasin said.
Oil fuels the Russian economy

MSNBC News 3/21/2007 http://msnbc.msn.com/id/6063583/
And Russia is now one of the world's fastest growing economies. Moscow now has more billionaires than
any city in the world, according to Forbes magazine. The real estate market is on fire. “Right now, you're talking you need at least $1
million ... up to $2 million ... to find something decent in that area, is how the price has gone up,” said Irina Zharova-Wright, a real estate
broker for Intermark Group. Food stores are brimming and crowds of premium western shops line streets choked with European luxury cars.
The fuel for this economic fire is oil. Russia has huge reserves, and exports 6 million barrels a day,
second only to Saudi Arabia.
Oil stabilizes the Russian economy

David Satter 2003 [accessed online 6/11/08 from
http://eng.terror99.ru/publications/100.htm]
The problems of lawlessness, lack of respect for human life and moral disorientation shadow
the visible
changes in Moscow that have led many to describe Russia as a political and economic
success. The
improved appearance of Moscow (although not the rest of the country) is indisputable, but it
is mainly a
product of the high price of oil. Every dollar difference in the price of oil translates into
roughly $1 billion
in budget revenue; a high price for oil has therefore become the key to the government's
ability to balance
the budget, pay state employees and repay Russia's foreign debt. If the price should fall
significantly and
stay relatively low, as it did in much of the 1980s and 1990s, Russia will be plunged into a
severe economic
crisis. At that point, the invisible moral factors in Russia's situation will be become critical to
its stability
13
Oil
Impact- Instability
Instability leads to nuclear war
Victor Irsraelyan, Soviet ambassador, diplomat, and arms control
negotiator, Winter, 98'
Russia at the Crossroads: Don't Tease a Wounded Bear. Washington Quarterly/ The first and
by far most dangerous possibility is what I call the power scenario.Supporters of this option
would, in the name of a "united and undivided Russia,"radically change domestic and foreign
policies. Many would seek to revive a dictatorship
and take urgent military steps to mobilize the people against the outside
"enemy." Such
steps would include Russia's denunciation of the commitment to no-first-use
of nuclear
weapons; suspension of the Strategic Arms Reduction Treaty (START) I and refusal to
ratify both START II and the Chemical Weapons Convention; denunciation of the
Biological Weapons Convention; and reinstatement of a full-scale armed force,
including the acquisition of additional intercontinental ballistic missiles with multiple
warheads, as well as medium- and short-range missiles such as the SS-20. Some of
these measures will demand substantial financing, whereas others, such as the
denunciation and refusal to ratify arms control treaties, could, according to
proponents, save money by alleviating
the obligations of those agreements. In this scenario, Russia's military planners
would shift Western countries from the category of strategic partners to the
category of countries representing a threat to national security. This will
revive the strategy of nuclear deterrence -- and indeed, realizing its
unfavorable odds against the expanded NATO, Russia will place new
emphasis on the first-use of nuclear weapons, a trend that is underway
already. The power scenario envisages a hard-line policy toward the CIS countries, and in such circumstances
the problem of the Russian diaspora in those countries would be greatly magnified. Moscow would use all the
means at its disposal, including economic sanctions and political ultimatums, to ensure the rights of ethnic Russians
in CIS countries as well as to have an influence on other issues. Of those means, even the use of direct military
force in places like the Baltics cannot be ruled out. Some will object that this scenario is implausible because no
potential dictator exists in Russia who could carry out this strategy. I am not so
sure. Some Duma members -- such as Victor Antipov, Sergei Baburin, Vladimir Zhirinovsky, and Albert Makashov,
who are leading politicians in ultranationalistic parties and fractions in the parliament -- are ready to follow this path
to save a "united Russia." Baburin's "Anti-NATO" deputy group boasts a membership of more than 240 Duma
members. One cannot help but remember that when Weimar Germany was isolated, exhausted, and humiliated as
a result of World War I and the Versailles Treaty, Adolf Hitler took it upon himself to "save" his country. It took the
former corporal only a few years to plunge the world into a second world war that cost humanity more than 50
million lives. I do not believe that Russia has the economic strength to implement such a scenario successfully, but
then again, Germany's economic situation in the 1920s was hardly that strong either. Thus, I am afraid that
economics will not deter the power scenario's would-be authors from attempting it. Baburin, for example, warned
any political leader who would "dare to encroach upon Russia" would be
that
decisively repulsed by the Russian Federation "by all measures on heaven
and earth up to the use of nuclear weapons." n10 In autumn 1996 Oleg Grynevsky,
Russian ambassador to Sweden andnformer Soviet arms control negotiator, while saying
that NATO expansion increases the risk of nuclear war, reminded his Western listeners that
Russia has enough missiles to destroy both the United States and Europe. n11 Former
Russian minister of defense Igor Rodionov warned several times that Russia's vast nuclear
arsenal could become uncontrollable. In this context, one should keep in mind that, despite
dramatically reduced nuclear arsenals -- and tensions -- Russia and the United States remain
poised to launch their missiles in minutes. I cannot but agree with Anatol Lieven, who wrote,
"It may be, therefore, that with all the new Russian order's many problems and weaknesses,
it will for a long time be able to stumble on, until we all fall down together." n12
14
Oil
15
Oil
Impact- US-Russia
High prices key to U.S.-Russian relations

David Victor (Analyst at CFR ‘03 (David, Foreign Affairs, march/april)
Ever since the Iron Curtain came crashing down, American and Russian diplomats have been searching for a special relationship between their
countries to replace Cold War animosity. Security matters have not yielded much. On issues such as the expansion of NATO, stabilizing
Yugoslavia, and the war in Chechnya, Washington and Moscow have sought each other's tolerance more than cooperation. Nor have the two
nations developed much economic interaction, as a result of Russia's weak institutions and faltering economy. Thus, by default, "energy" has
become the new special topic in Russian-American relations.
At a Kremlin summit in May 2002, Presidents George W. Bush and Vladimir Putin pledged to work together to reduce volatility in global energy
markets and promote investment in Russia's oil industry. Soon after, at the first-ever summit of U.S. and Russian oil executives in Houston,
Russia's energy minister, Igor Yusufov, reiterated this goal. The two governments have created a special working group on energy cooperation,
and Russia will host the next commercial energy summit in 2003. In Moscow, especially, the potential of new oil ties has attracted extensive
media coverage and political speculation. For instance, Grigory Yavlinsky, head of Yabloko, one of Russia's leading opposition parties, has
suggested that the United States and Russia could sideline the Organization of Petroleum Exporting Countries (OPEC) as the arbiter of world oil
prices. This enthusiasm is misplaced, however. A collapse of oil prices in the aftermath of an invasion of Iraq may soon lay bare
Washington's and Moscow's divergent interests. Russia needs high oil prices to keep its economy afloat, whereas
U.S. policy would be largely unaffected by falling energy costs. Moreover, cheerleaders of a new Russian-American oil
partnership fail to understand that there is not much that the two governments can do to influence the global energy market or even investment in
Russia's oil sector.
Cooperation is critical to prevent the spread of infectious disease

Sestanovich ‘06 (Stephen- Senior fellow for Russian and Eurasian Studies, “Russia's Wrong Direction:
What the United States Can and Should Do”, Council on Foreign Relations, March,
http://www.cfr.org/publication/9997/ )
U.S.-Russian cooperation can help the United States to handle some of the most difficult challenges it faces: terrorism, the
proliferation of weapons of mass destruction, tight energy markets, climate change, the drug trade, infectious diseases, and human
trafficking. These problems are more manageable when the United States has Russia on its side rather than
aligned against it.
Infections disease spread risks global extinction

Steinbruner ‘98 (John D- Senior Fellow at Brookings Institution, “Biological weapons: A plague upon
all houses,” Foreign Policy)
It is a considerable comfort and undoubtedly a key to our survival that, so far, the main lines of defense against this threat have not
depended on explicit policies or organized efforts. In the long course of evolution, the human body has developed physical
barriers and a biochemical immune system whose sophistication and effectiveness exceed anything we could
design or as yet even fully understand. But evolution is a sword that cuts both ways: New diseases emerge, while
old diseases mutate and adapt. Throughout history, there have been epidemics during which human
immunity has broken down on an epic scale. An infectious agent believed to have been the plague bacterium killed an
estimated 20 million people over a four-year period in the fourteenth century, including nearly one-quarter of Western Europe's population at
the time. Since its recognized appearance in 1981, some 20 variations of the HIVvirus have infected an estimated 29.4 million worldwide, with
1.5 million people currently dying of aids each year. Malaria, tuberculosis, and cholera-once thought to be under control-are now making a
comeback. As we enter the twenty-first century, changing conditions have enhanced the potential for widespread
contagion. The rapid growth rate of the total world population, the unprecedented freedom of movement across
international borders, and scientific advances that expand the capability for the deliberate manipulation of pathogens are all cause
for worry that the problem might be greater in the future than it has ever been in the past. The threat of infectious
pathogens is not just an issue of public health, but a fundamental security problem for the species as a
whole.
16
Oil
**Aff**
17
Oil
Prices dropping now
Prices down due to drop in demand

Lin 7/26/08 (Oil – how low can it go?
http://biz.thestar.com.my/bizweek/story.asp?file=/2008/7/26/bizweek/1642045&sec=bizweek)
MARKETS have long kept their fingers crossed that the uproarious oil prices would reach its crescendo
and start its downward descend.
The relief when it finally did a week ago is unmistakable; financial markets are the first to exhibit its
blatant glee. The joy is palpable and the cry of ecstasy from stock owners clearly audible. Across all stock
exchanges around the world, its a sea of green, as stocks enlivened and re-energised back up north.
Barely two weeks ago, markets were a mess, as commodity prices continuously teased new highs on a
back drop of slower economic growth.
The break arrived on July 14, when unyielding high oil prices finally buckled after reaching its high of
US$147.27 on July 11. Since then, oil futures have declined more than 15% to US$124, which is also its
new 7-week low as of Wednesday.
The oil plunge came after reports showed demand in the US and Japan, two of the three largest oil
consuming countries, are falling as high prices crimp fuel consumption.
Prices falling now- the trend will continue

Reuters 7/15/2008 (Worst over for drivers as pump prices slide: AAA,
http://uk.reuters.com/article/usTopNews/idUKN2542436220080725)
U.S. retail gasoline prices have fallen more than 10 cents per gallon in a week and could fall another 25
cents by the end of summer, a sign the worst is over for U.S. motorists this vacation season.
The decline tracks a record pullback in the price of crude that has come amid mounting evidence high
energy costs and an economic slowdown are shrinking American demand for fuel, auto and travel group
AAA said Friday.
Lowest prices since 2007

Lin 7/26/08 (Oil – how low can it go?
http://biz.thestar.com.my/bizweek/story.asp?file=/2008/7/26/bizweek/1642045&sec=bizweek)
The US Energy Department says that US fuel demand averaged 19.9 million barrels a day last week, the
lowest since January 2007.
Oil prices also fell as the Energy Department report showed that gasoline supplies rose 2.85 million
barrels last week. Stockpiles of distillate fuel, a category that includes heating oil and diesel, climbed 2.42
million barrels.
18
Oil
Uniqueness- Prices dropping now
Average gallon price decreasing

AP 7/25 (Texas, U.S. gas prices fall with cost of crude oil,
http://www.chron.com/disp/story.mpl/front/5907112.html)
Gasoline prices in Texas this week reflected the recent drop in the price of crude oil.
AAA Texas reported a 9-cent decline in the average retail cost of regular self-serve gas, which settled at
$3.90 per gallon, according to figures updated early today.
Nationally, the average price for self-serve regular slipped 11 cents, to $4 per gallon, the weekly survey
found.
19
Oil
Uniqueness- Russian Economy Low
Russian economy in a downward spiral

Barentsobserver.com 7/25 (Russian economy slowing down,
Despite high oil prices, the Russian economic growth now shows signs of stagnation. Industrial output
growth is shrinking together with investments, housing construction, and peoples‘ incomes. Meanwhile,
both production costs and prices increase.
20
Oil
No Link
Alt energy doesn’t impact prices

Schenker ’07 (Jason, March, Economist, @Wachovia Corporation,
http://www.kiplinger.com/businessresource/summary/archive/2007/oil_addiction_wachovia.html)
Although a number of differing alternatives are likely to be part of the mix, oil is clearly here to
stay. Our cars will not all be hybrids. Our cars will not all "go yellow" with ethanol-based fuel.
Hydrogen vehicles will not rule the roads. Solar will not be a massive part of the energy mix.
LNG will not be a pricing panacea. Nuclear may expand, but the establishment of de novo U.S.
facilities en masse seems unlikely. We are hooked on oil, and there is no near-term quick fix.
There are Band-Aid-esque measures that can assuage the future rise in demand, or potentially ameliorate
consumption—over time. But, for decades to come, oil will still be king. Energy Type Breakdown
U.S. energy generation is spread across several different categories. Fossil fuels are clearly the lion's
share of energy generation in the United States: petroleum accounts for 38.1 percent, coal
accounts for 23.2 percent, natural gas for 22.9 percent and propane, 1.7 percent. Nuclear energy
accounts for 8.1 percent. The lauded "renewables" like biomass (2.9 percent), hydro (2.7 percent),
wind (0.1 percent), geothermal (0.1 percent) and solar (0.1 percent) account for a much smaller
percentage of energy generation. For example, although we may hear that the amount of solar
energy generation is likely to double in the coming year, solar would then still account for only
0.2 percent of energy generation nationally.
21
Oil
A2 Prices Key
High prices mean collapse is inevitable
National Post 7 (John O'Sullivan . June 20, 2007 Wednesday, “RUSSIA CRUMBLES” LN)
Yet as Roger Bootle of Capital Economics in London had warned as early as 2007, high oil prices were
more a threat than a benefit to Russia in the long run. They stimulated government over-
spending, corruption and buying voter popularity. They discouraged moves towards the
transparent markets and genuine democracy needed for long-term economic growth. And they
camouflaged Russia's worsening social problems.
22
Oil
Impact- High Prices Kill Russian Econ
High prices collapses the US economy

Moises Naim (Editor) Jan/Feb 2004 Foreign Policy
Russia's future will be defined as much by the geology of its subsoil as by the ideology of its leaders.
Unfortunately, whereas policymakers can choose their ideology, they don't have much leeway when it comes to geology. Russia has a lot
of oil, and this inescapable geological fact will determine many of the policy choices available to its
leaders. Oil and gas now account for roughly 20 percent of Russia's economy, 55 percent of its export
earnings, and 40 percent of its total tax revenues. Russia is the world's second largest oil exporter after Saudi Arabia, and its
subsoil contains 33 percent of the world's gas reserves. It already supplies 30 percent of Europe's gas needs. In the future, Russia's oil
and gas industry will become even more important, as no other sector can be as internationally competitive, grow as
rapidly, or be as profitable. Thus, Russia risks becoming, and in many respects may already be, a "petro-state." The arrest of
oil magnate Mikhail Khodorkovsky sparked a debate over what kind of country Russia will be. In this discussion, Russia's characteristics as a
Petro-states are oil-rich countries plagued by weak
petro-state deserve as much attention as its factional struggles.
institutions, a poorly functioning public sector, and a high concentration of power and wealth.
Their population is chronically frustrated by the lack of proportion between their nation's oil wealth and their widespread poverty. Nigeria and
Venezucla are good examples. That Russia has lots of oil is old news. What's new is the dramatically enhanced role that
changes in Russian politics, oil technology, and energy markets have given to its petrolcum
sector. Throughout the 1990s, privatization in Russia and innovations in exploration and drilling technologies brought into production oil
fields that had hitherto been underperforming or completely off-limits. To energy companies worried about growing domestic instability among
the major oil exporters of the Middle East, Russia became an even more attractive hedge. Regardless
of its political turmoil,
Russia will continue to appeal to oil companies, which know how to operate profitably in countries with weak property
rights and unstable politics. Thus, while the Khodorkovsky affair may temporarily scare away some investors, Russia's beguiling geology will
eventually attract energy companies that cannot afford to be left out of some of the world's richest oil reservoirs. But when oil revenues
flood a nation with a fragile system of democratic checks and balances, dysfunctional politics and
economics ensue, and a petro-state emerges. A strong democracy and an effective public sector explain why oil has not distorted
the United States or Norway as it has Nigeria and Venezuela. A lot of oil combined with weak public institutions produces
poverty, inequality, and corruption. It also undermines democracy. No petro-state has succeeded in
converting oil into prosperity for the majority of the population. An economy that relies mostly on oil
exports inevitably ends up with an exchange rate that makes imported goods less expensive and exports
more costly. This overvalued exchange rate makes other sectors--agriculture, manufacturing, tourism--
less internationally competitive and hinders their growth. Petro-states also have jobless, volatile economic growth. Oil
generates export revenues and taxes for the state, but it creates few jobs. Despite its economic heft, Russia's oil and gas industry employs only
around 2 million workers out of a total workforce of 67 million. Also, because the international price of oil is volatile, petro-states suffer
constant and debilitating economic boombust cycles. The busts lead to banking crises and public budget
cuts that hurt the poor who critically depend on government programs. Russia already experienced this effect in 1998 when the drop in
oil prices sparked a financial crash. If oil prices fall below $20 a barrel, Russia will surely face another bout of painful economic instability.
Petro-states also suffer from a narrow tax base, with the bulk of government revenues coming from just a few large taxpayers. In Russia, the 10
largest companies account for more than half of total tax revenues. Weak governmental accountability is a typical side effect of this dependency,
as the link between the electorate and government spending is indirect and tenuous. The political consequences are also
corrosive. Thanks to the inevitable concentration of the oil industry into a few large firms, owners and managers acquire enormous political
clout. In turn, corruption often thrives, as a handful of politicians and government regulators make decisions that are worth millions to
these companies. Nationalizing the oil industry fails to solve these problems: State-owned oil companies quickly become relatively independent
political actors that are rife with corruption, inefficiency, and politicization, and can dominate other weak public institutions. Privatizing the
industry without strong and independent regulatory and tax agencies is also not a solution, as unbridled private
monopolists can be as predatory as public ones. In petro-states, bitter fights over the control and distribution of the nation's oil rents become the
gravitational center of political life. It is no accident that the current crisis in Russia hinges on control of the country's largest oil company and the
political uses of its profits. But Russia is not Nigeria and has yet to become a full-fledged petro-state. It is a large, complex country with a highly
educated population, a relatively strong technological base, and a still somewhat diversified economy. A strong democracy could help
Russia compensate for the economic and political weaknesses that plague all countries dominated by oil.
Russia is still struggling to overcome the crippling effects of its ideological past. Let's hope it will also be able to avoid the
crippling effects of its geological present.
23
Oil
24
Oil
**Peak Oil**
25
Oil
Theory False
Peak theory flawed
Economist; 1/5/2008
Economist [Non-Fiction foreign affairs magazine] 1/5/2008 Vol. 386 Issue 8561,
http://search.ebscohost.com/login.aspx?direct=true&db=ulh&AN=28113270&site=src-live
Yetthe fact that not enough oil is coming out of the ground does not mean not enough of it is there. There
are many other explanations for the lacklustre response to the glaring price signal. For one thing, oil
producers have tied their own hands. During the 1980s and 1990s, when the price was low and so were
profits, they pared back hiring and investment to a minimum. Many ancillary firms that built rigs or
collected seismic data shut up shop. Now oil firms want to increase their output again, they do not have
the staff or equipment they need. Worse, nowadays, new oil tends to be found in relatively inaccessible
spots or in more unwieldy forms. That adds to the cost of extracting oil, because more engineers and more
complex machinery are needed to exploit it--but the end of easy oil is a far remove from the jeremiads of
peak-oilers. The gooey tar-sands of Canada contain almost as much oil as Saudi Arabia. Eventually,
universities will churn out more geologists and shipyards more offshore platforms, though it will take a
long time to make up for two decades of underinvestment.
Majority of experts concede peak oil is false

Steve Connor June 11, 2008 Canberra Times (Australia) HEADLINE: Oil shortage myth: insider tells of dodgy calculations
There is more than twice as much oil in the ground as major producers say, according to a former industry adviser who
It is widely assumed that oil production has
claims there is widespread misunderstanding of the way proven reserves are calculated.
peaked and proven reserves have sunk to roughly half of original amounts. But former oil industry man Richard
Pike, who is now chief executive of the Royal Society of Chemistry, said this idea was based on flawed thinking. Current
estimates suggest there are 1200 billion barrels of proven global reserves, but the industry's internal figures suggest
this is less than half of what actually exists. The misconception has helped boost oil prices to an all-time high,
sending jitters through the market and prompting calls for oil- producing nations to increase supply to push down
costs. Dr Pike said there was anecdotal evidence that big oil producers were glad to go along with under- reporting
of proven reserves to help maintain oil's high price. Part of the oil industry is perfectly familiar with the way oil reserves are
underestimated, but the decision-makers in both the companies and the countries are not exposed to the reasons why proven oil reserves are
bigger than they are said to be," he said. Dr Pike's assessment does not include unexplored oilfields, those yet to be
discovered or those deemed too uneconomic to exploit. The implications of his analysis, based on more than 30
years in the industry,will alarm environmentalists who have exploited the concept of peak oil to press the urgency
of the need to find greener alternatives. "We should not be surprised if oil dominates well into the 22nd century.
26
Oil
Theory False
No risk of reaching the peak
Stelzer 4/08’
Irwin Stelzer [business adviser and director of economic policy studies at the Hudson Institute] The
Sunday Times (London) April 27, 2008
Production of oil is being constrained by several forces, none of them due to God's failure to put enough of the black
gold under our feet. Several countries that are important sources of supply are in political turmoil, and unable to
bring to market the oil they are capable of producing. Think Nigeria, where security problems have shut down about
20% of the nation's capacity of 2.5m barrels a day and discouraged new investment, and Iraq, where political
paralysis and terrorists have kept production at less than half its potential.
Other countries will not develop the reserves of oil known to lie under their territories.
Russia has made it clear that foreigners who invest in its oil industry might be playing a game with Vladimir Putin
known as heads I win, tails you lose. Find nothing and you lose your money; find substantial reserves and the state
squeezes you until your shareholders' pips squeak. Only companies at least 51% owned by - Russians - read FOPs,
Friends of Putin are allowed to look for oil in the new, difficult areas in which it is to be found. Little surprise that
oil output dropped in the first quarter of this year.
Mexico's president, Felipe Calderon, wants to revive Petroleos de Mexico (Pemex), the world's third-largest oil
producer, by contracting with foreign companies to introduce modern methods of extracting more from existing
fields and finding new ones. But legislation is stalled by left-wingers who have seized and are sleeping at podiums
in both houses of congress.
Saudi Arabia's royal family has announced that it will not expand capacity. Abdallah Jum'ah, chief executive of the
kingdom's oil company, said high prices didn't mean the world needs more oil because such market signals were
"imperfect", and energy minister Ali al-Naimi has announced that there are no plans to embark on a new round of
expansion. The oil is there, but with current production yielding about $120 a barrel, there is no incentive to find
more, especially since new production might drive down prices as demand from the slowing American economy
falls.
Venezuela's oil industry can only be described as a mess. President Hugo Chavez's cronies are inadequate substitutes
for the technicians they have replaced, so production is falling, while foreign investors are reluctant to trust hundreds
of millions in exploration dollars to a regime that treats contracts as the first step in a negotiation.
In America, Congress alternates between calls for "energy independence" and refusals to allow drilling in what it
considers environmentally sensitive areas in Alaska and offshore California and Florida.
There's more, but you get the idea. There is a lot of oil out there to be found and produced, not even including the
vast reserves in Canada's tar sands. We might have reached the age of peak panic about oil supplies, but not of peak
oil.
Tons of oil exist- disproves the theory

Dr.Leonardo Magueri (Senior Vice President Eni Spa) 2003 July/Aug, Foreign Affairs
Dire predictions of scarcity go hand in hand with fears about oil security. The truth is that oil supplies
are neither running out nor becoming insecure. Today, the average world recovery rate from existing oil
reserves is 35 percent, as compared to about 22 percent in 1980. Given current oil consumption levels,
every additional percentage of recovery means two more years of existing reserves. This evolution also
partly explains why the life index of existing reserves is still growing even though the world is replacing
only 25 percent of what it consumes every year with new discoveries and major new oil discoveries
have decreased since the 1960s. Today's ratio of proven oil reserves to current production indicates a
remaining life of 43 years for existing reserves, compared to 35 years in 1972 and 20 years in 1948.
Advances in technology explain the apparent contradiction between fewer discoveries and more oil.
Whereas an oil field does not change, knowledge about it does, sometimes dramatically.
27
Oil
Theory False
Peak won’t happen- 50 years
John Wood (Energy Analyst for Department of Energy) 8/18/2004
http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/worldoilsupply/oilsupply04.html
In any event, the world production peak for conventionally reservoired crude is unlikely to be "right around the
corner" as so many other estimators have been predicting. Our analysis shows that it will be closer to the
middle of the 21st century than to its beginning. Given the long lead times required for significant mass-market penetration
of new energy technologies, this result in no way justifies complacency about both supply-side and demand-side research and development
Hubbert’s model is wrong

Bailey ‘04 (Ronald, Science Correspondent for Reason Magazine, Feb. 18, “Are We Out of Gas
Yet?” Reason Online, http://www.reason.com/rb/rb021804.shtml)
Once again, the gauge on our national economy is dropping dangerously to the red. So swears a spate of books and articles in the
past few years, reviving '70s-era fears of impending oil catastrophe. The once-invaluable, now highly political, Scientific
American ran an article in March 1998 declaring "The End of Cheap Oil." Fred Pearce similarly declared in a July 1999 New Scientist article,
"Dry Future," that "the world is probably only two years off peak oil production, after which decline is inevitable." In his 2001 book Hubbert's
Peak: The Impending World Oil Shortage, Princeton University Professor Kenneth Deffeyes found "that world oil production will peak in this
decade—and there isn't anything we can do to stop it. While long-term solutions exist in the form of conservation and alternative energy sources,
they probably cannot—and almost certainly will not—be enacted in time to evade a short-term catastrophe."
More recently, in January Caltech physics Professor David Goodstein upped the ante in his book, Out of Gas: The End of the Age of Oil, warning
that the peak of world production is imminent and that "we can, all too easily, envision a dying civilization, the landscape littered with the rusting
hulks of SUVs."
There is a choirmaster to this chorus of oily doom: the late geophysicist M. King Hubbert. In 1956 Hubbert
Like Hubbert, current doomsayers reach their
(correctly) predicted that U.S. oil production would peak in the early 1970s.
grim conclusions of impending octane depletion by using estimates of the world's recoverable reserves of
oil and comparing them with estimates of rates of future use. From this they derive predictions of when the
demand for oil will outstrip the supply, and most suggest that dry pumps will greet us before the end of this decade.
Once the peak is reached, oil doomsters foresee skyrocketing prices leading to economic ruin and social and environmental collapse. One
reviewer of Goodstein's book despaired, "If he's right, I'm sorry for my kids. And I'm especially sorry for theirs."
But we've heard it all before. "These kinds of doom and gloom energy predictions become popular every
10 years or so," says Michael Lynch, president of Strategic Energy and Economic Research, a Massachusetts consulting firm.
"In this case there's very little original research and everybody is citing the same handful of articles. It's
an example of how the herd instinct drives the psychology of scientific consensus ." Lynch's new study "The New
Pessimism about Petroleum Resources," pokes holes in forecasts of imminent oil doom. Lynch points out that the supply of oil is determined not
only by geologic factors, but also by political, economic, and technological ones.
It's true that oil discoveries peaked in 1982, but Lynch argues that's because of politics, not geology. "The big factor in the decline in oil
discoveries is that Saudi Arabia, Kuwait, Iraq, and Iran all nationalized their oil industries in the 1970s. Plus Iraq and Iran went to war and
essentially stopped exploring for more oil," explains Lynch. "They have so much oil, why would they bother looking for more?" He adds dryly
that Scientific American doomster Colin Campbell has been predicting that the peak of oil production is three to
four years away for the past 15 years.
28
Oil
Theory False- Recoverable Oil
Recoverable oil solves the peak- oil’s not finite

Sarah Barmak, staff-Toronto Star June 21, 2008 S The Toronto Star HEADLINE: Oil, oil everywhere?
Well, just maybe; An English industry insider says we've grossly underestimated our reserves. Could he
be right?
Ask him about oil, and Dr. Richard Pike has a rather sunny outlook. Oil and gas, he says confidently,
will be around well into the next century. Pike can maintain his optimism because he knows something
no one else knows. He believes that a simple mathematical error - the sort made by first-year university
statistics students - is causing much of our panic over a worldwide oil shortage. It's an error that oil
companies, riding high on skyrocketing crude prices, may want you to believe. "This might be hard for
some of your readers to take," he warns. With oil at $132 a barrel yesterday, tensions over gas prices are
at a boiling point. But listen, he says: at 1.2 trillion barrels, we have grossly underestimated the world's
proven oil reserves. If he's right, we likely have double the amount of recoverable oil that we think we
have in the ground, or perhaps even more.
The argument is attracting attention at a time when many governments are looking for new sources of
oil; U.S. President George W. Bush reversed his long-held position against offshore drilling this week.
Skeptics say Pike is just recycling an old argument: that companies underreport reserves on purpose to
keep prices up. He claims the problem is more systemic than a few corporations playing with the stats,
however.
Pike is an oil industry insider, an engineer by training. An employee of British Petroleum for 25 years,
he is now the chief executive of England's Royal Society of Chemistry. He explains the world's most
epic math mistake patiently, like a vaguely bemused schoolteacher going over a problem with a dull
student.
He first realized there was a problem two years ago, when he saw alarming discrepancies between
figures the oil industry uses to estimate the world's crude and those used by everyone else. Calculating the
amount of oil in a field is notoriously difficult, so companies issue a probability figure, called their proven reserves, to
shareholders and outside bodies. It represents the amount of oil that has a 90 per cent chance of being met or exceeded by the
field's actualproduction (giving it its name, P90). Apparently, no one bothered to let us know that oil companies have long been
generating an entirely different number for their own internal use. Not content with the hard certainty of P90, which in practice is
almost always exceeded by a field's output, oil companies use more sophisticated measurements to yield numbers often two or
even three times as high, helping them decide things like how many wells they drill. Very often, those higher estimates are more
accurate. Too bad they don't make it into the public domain. Instead, in order to get a picture of how much oil we have left,
international organizations often simply add up the conservative, proven reserve estimates for every field in the world. That's
when the real headaches begin. "Because it's a probability-based set of numbers, you can't add them like that," says Pike. "That's
completely wrong." Think of estimating oil fields like rolling a pair of dice, Pike says. If youthrow just one die, the probability
that you will roll higher than a one is five out of six. But if you throw two dice, the probability that you will roll higher than two
- snake eyes - is not five out of six, it's 35 out of 36, since there are 36
different possible outcomes of a single throw of two dice. With two dice, you have a five-of-six chance of rolling not a two, but
a four. "It's an interesting case where ... one plus one equals four," says Pike.Sooil is at $132 a barrel all because of ... a math
screw-up? That, says Pike, and the fact that oil companies are likely turning a blind eye. "There are some very
interesting mind games going on," he muses. Oil companies, particularly those in the Middle East, are
happy to let our shoddymath stand if it helps push crude prices ever higher.
29
Oil
Theory False- Tech

New tech exists
Environmental Literacy Council 2004 (http://www.enviroliteracy.org/subcategory.php/252.html)
Despite the continued growth in global consumption of petroleum, proven oil reserves have increased steadily over the
past twenty years, in large part because oil companies have revised their estimates of reserves in known
fields. According to the Oil & Gas Journal’s production estimates, during the period of 1970 to 2000, 680 Gb of oil was produced, but 980
Gb of reserves were added. Under old technologies, oil companies could only retrieve about 35 percent of the
oil in place; with enhanced technologies, including directional drilling, companies have increased that
amount and with new technologies, it is believed that it is possible to extract up to 65 percent of the oil
in the field. Moreover, three and four dimensional seismic exploration technology has led to revised
estimates of oil that can be economically extracted. Reserves are defined by economic as well as
geological considerations; one reason that reserves increase is that companies do not invest funding in
exploration and enhanced recovery until there is a demand and the prices of oil warrants the
expenditure. In constant dollars, the cost of gasoline is less than it was a century ago; currently oil
companies lack the incentive to invest significant amounts in risky oil exploration activities.
new technology has increased reserves

Dr. Leonardo Magueri (Senior Vice President Eni Spa) 5/21/2004 Science Magazine
http://www.sciencemag.org/cgi/content/full/304/5674/1114#affiliation
Thanks to new exploration, drilling, and recovery technology, the worldwide finding and development
cost per barrel of oil equivalent (boe) has dramatically declined over the last 20 years, from an average
of about $21 in 1979-81 to under $6 in 1997-99 (in 2001 dollars) (9). At the same time, the recovery rate
from world oil fields has increased from about 22% in 1980 to 35% today. All these factors partly
explain why the life-index of world reserves (gauged as the ratio between proven oil reserves and
current production) has constantly improved, passing from 20 years in 1948 to 35 years in 1972 and
reaching about 40 years in 2003. Today, all major sources estimate that proven world oil reserves exceed
1 trillion (1012) barrels, while yearly consumption is about 28 billion barrels (10-13). Overall, the world
retains more than 3 trillion barrels of recoverable oil resources (14).
30
Oil
Theory False- Africa

Oil will pop up in Africa
Paul Roberts (Energy Author) 2004 The End of Oil p.56
Third, companies are much smarter at knowing where to look for oil. New geological understandings —
for example, that oil can form anywhere within dozens of miles of a river delta, even in superdeep
waters — have led to a welter of new discoveries in unexpected places, like the deep waters off the
coast of West Africa. Deep-water oil is touted as the real frontier of the future and is the place where
most oil companies and many analysts expect to find the bulk of the undiscovered oil. Excitement is
particularly keen over “deltaic” prospects in the deep-water Gulf of Mexico, off the coast of Africa and
Brazil, as well as in the Arctic provinces of Canada and Greenland, Nonvay, and Siberia, where seismic
surveys reveal subterranean structures identical to those beneath the oil-rich North Sea, but far larger.
“The Arctic is going to be the next big play:’ promises torn Ahlbrandt, the director of the USGS world
assessment project and a prominent oil optimist. “We feel that more than half of all undiscovered
resources are in the deep offshore, of which half are in the Arctic. And we’ve looked at only seven
Arctic provinces; there are twenty-eight more we peed to look at. We haven’t even begun to discover all
the oil that is out there?”
31
Oil
Theory True
Peak will happen in less than 4 years

Michael Klare June 26, 2008 http://www.fpif.org/fpiftxt/5326 End of the Petroleum Age?
We could live with the decline of these great reservoirs if we had some confidence that new reserves were
being discovered all the time to replace all those now reaching the end of their productive life. But this is not
the case. Despite a sharp increase in spending on exploration and development, the rate of new reserve discovery has been
falling steadily for the past 30 years. According to the U.S. Army Corps of Engineers, the last decade in which
new discoveries exceeded the rate of extraction from existing fields was the 1980s. Since then we have been
consuming more oil than we have been finding – a pattern that can only result, eventually, in the complete exhaustion of the world’s
known petroleum reserves. Few New Finds Only one giant field has been discovered in the past 25 years Kashagan in –
Kazakhstan’s sector of the Caspian Sea – and it has turned out to be an unmitigated disaster. With estimated reserves of 7-13 billion
barrels of oil and natural gas liquids, Kashagan was originally expected to come on line in 2005 at a cost of $50 billion. As a result of
environmental hazards, government intervention, and disputes among members of the consortium established to operate the field, it is
now scheduled to begin pumping oil in 2011 at the earliest at a minimum cost of $135 billion. Recently the Brazilian state firm Petrobras
has announced an equally large discovery in the deep waters of the Atlantic, some 150 miles off the coast of Rio de Janeiro. Although very
promising, the Tupi field will take many years to develop and will require the use of more costly and advanced technology than any now
in widespread use. These new discoveries may add one or two million barrels of oil per day to existing output in
2015 and beyond, but by that point output from existing fields is likely to be considerably lower than it is
today. Nobody can predict exactly where combined worldwide production will stand at that time. But more
and more analysts are coming to the conclusion that the output of conventional (i.e., liquid) petroleum will
peak at about 95 million barrels per day in the 2010-2012 time-frame and then begin an irreversible decline.
The addition of a few million added barrels from Kashagan or Tupi will not alter this trend.
Studies prove peak is coming

John Bellamy Foster 2k8 Peak Oil and Energy Imperialism
Publicly of course the peak oil problem has often been characterized by establishment sources and the media as a
“fringe issue.” Yet over the past decade the question has been pursued systematically with increasing
concern within the highest echelons of capitalist society: within both states and corporations.24 In February 2005 the U.S. Department of Energy released
a major report that it had commissioned entitled Peaking of World Oil Production: Impacts, Mitigation, and Risk Management. The project leader was Robert L. Hirsch of Science Applications International
Corporation. Hirsch had formerly occupied executive positions in the U.S. Atomic Energy Commission, Exxon, and ARCO. The Hirsch
report concluded that peak oil was a little over two decades away or nearer. “Even the most optimistic forecasts,” it
stated, “suggest that world oil peaking will occur in less than 25 years.” The main emphasis of the Hirsch report commissioned by the Department of Energy,
,
however was on the issue of the massive transformations that would be needed in the economy, and particularly transportation, in order to mitigate the harmful effects of the end of cheap oil. The enormous problem of converting
virtually the entire stock of U.S. cars, trucks, and aircraft in just a quartercentury (at most) was viewed as presenting intractable difficulties.25 In October 2005, Hirsch wrote an analysis for Bulletin of the Atlantic Council of the
oil peaking will be

United States on “The Inevitable Peaking of World Oil Production.” He declared there that, “previous energy transitions (wood to coal, coal to oil, etc.) were gradual and evolutionary;
abrupt and revolutionary. The world has never faced a problem like this. Without massive mitigation at least a
decade before the fact, the problem will be pervasive and long lasting.”26 Similarly, the U.S. Army released a major
report of its own in September 2005 stating: The doubling of oil prices from 2003–2005 is not an anomaly, but a
picture of the future. Oil production is approaching its peak; low growth in availability can be expected for the next 5 to 10
years. As worldwide petroleum production peaks, geopolitics and market economics will cause even more significant price increases and security risks. One can only speculate at the outcome from this scenario as world
petroleum production declines.27 Indeed, by 2005 there was little doubt in ruling circles about the likelihood of serious oil shortages and that peak oil was on its way soon or sooner. In its 2005 World Energy Outlook the IEA raised
the issue of Simmons’s claims in Twilight in the Desert that Saudi Arabia’s super-giant Ghawar oil field, the largest in the world, “could,” in the IEA’s words, “be close to reaching its peak if it has not already done so .” Likewise the
In February 2007
U.S. Department of Energy, which had initially rejected Simmons’s assessment, backtracked between 2004 and 2006, degrading its projection of Saudi oil production in 2025 by 33 percent.28
the U.S. Government Accountability Office (GAO) released a seventy-five-page report on Crude Oil pointedly subtitled:
Uncertainty about Future Oil Supply Makes It Important to Develop a Strategy for Addressing a Peak and Decline in
Oil Production. It argued that almost all studies had shown that a world oil peak would occur sometime before 2040
and that U.S. federal agencies had not yet begun to address the issue of the national preparedness necessary to face this impending emergency. For the GAO the threat of a major oil shortfall was worsened by the political
risks primarily associated with four countries, accounting for almost one-third of world (conventional) reserves: Iran, Iraq, Nigeria, and Venezuela. The fact that Venezuela contained “almost 90 percent of the world’s proven extra-
“
heavy oil reserves” made it all the more noteworthy that it constituted a significant political risk” from Washington’s standpoint.29 In April 2008, Jeroen van der Ver, CEO of Royal Dutch Shell, pronounced
that “we wouldn’t be surprised if this [easy] oil would peak somewhere in the next ten years.” Due to a combination of factors including production shortfalls and a declining dollar, oil in May 2008 reached over $135 a barrel (it
The same month Goldman Sachs shocked world capital markets by coming
averaged $66 in 2006 and $72 in 2007).
out with an assessment that oil prices could rise to as much as $200 a barrel in the next two years. Western oil interests were particularly
distressed that the first production from Kazakhstan’s Kashagan oil field (considered the largest oil deposit in the world outside the Middle East) was eight years behind schedule due in part to waters frozen half the year. By May 2008
the IEA, according to analysts for the New York Times, was preparing to reduce its forecast of world oil production for 2030 from its earlier forecasts of 116 mb/d to no more than 100 mb/d.30
It was alarm about gasoline prices and national energy security (and no doubt the specter of a world oil peak) that induced the Bush administration in 2006 to take a more aggressive stance in promoting cornbased ethanol production
as a fuel substitute. In 2007, 20 percent of U.S. corn production was devoted to ethanol to fuel automobiles. The price of grain spiked worldwide partly as a result. As environmentalist Lester
R. Brown wrote in his Plan B 3.0: “Suddenly the world is facing a moral and political issue that has no precedent: Should we use grain to fuel cars or to feed people?...The market says, Let’s fuel the cars.”31
32
Oil
Theory True
No arguments against the theory- multiple scenerios prove it’s happening

Q.Y. Meng (State Key Laboratory of Petroleum Resource and Prospecting, China University of
Petroleum, Beijing) and R.W. Bentley (Department of Cybernetics, The University of Reading) August
2008 Energy 33 (2008) 1179– 1184 Global oil peaking: Responding to the case for ‘abundant supplies of
oil’
2.1. Failure of past oil forecasts
Maugeri’s first argument is that since as early as 1919 there have been many predictions of imminent oil shortage that turned out to be
incorrect. In Maugeri’s words: ‘‘these cycles of hysteria followed by new bonanzas have continued to the present.’’ His implication is that
today’s forecasts of near-term oil supply constraint based on oil peaking calculations will prove equally wrong. Examination of past oil
forecasts shows a more complex
picture, however, than a simple view that ‘all past oil forecasts were wrong’. Oil has long been important, so it is not
surprising that as particular regions went into decline there were concerns about the future supply. In the 1970s, in particular, there were
widespread fears, based on the contemporary estimate of proved reserves, that the world oil resource would be depleted within about 30 years.
But it was also well known in the 1970s that such fears were unrealistic, see the oil forecasts given in Table 1 (and see [6] for details). Proved
reserves were known to report only very conservative ‘market-ready’ quantities of oil, and that the quantity to use instead was the amount of oil
actually discovered, given typically by the ‘proved plus probable’ reserves. To this must be added the expected ‘reserves growth’ (known oil in
existing fields that better technology was expected to access) plus the anticipated amount of oil in new fields then yet-to-find. Calculations of
this type in the 1970s and 1980s showed that the expected size of this total global ‘recoverable-resource’ base of conventional oil was in the
region of 2000 billion barrels (Gb), of which only about 400Gb had been consumed by that date. Thus the 2000 Gb total was known to be able
to support the anticipated growth in global production up to around the year 2000 before it would reach its anticipated resource-limited ‘mid-
point’ peak. The figure of interest is the date of peak production, rather than the date when the current proved reserves will have been
produced.
In the event, oil production growth was constrained by the high prices of the late 1970s and early 1980s, so that
the same estimate today for the size of the recoverable conventional oil resource base puts the global production
peak at around 2010. Moreover, oil industry data show that global discovery of oil in new fields has been in
decline since the mid-1960s [7]. For this reason, most estimates of the size of the recoverable resource base of conventional oil have
changed remarkably little since the 1970s. This is because once discovery started to slow by the early 1970s it was possible to estimate with
reasonable accuracy the amount of oil likely to be found in future, and hence the total size of the recoverable resource base. Today, we now
know where much of the oil anticipated back in the 1970s actually lies, but the recent history of discovery has only underlined the falling trend
in the volume of oil from new discoveries that started in the 1960s. In summary, those oil forecasts from the 1970s to the
present day that were based on the anticipated size of the total recoverable resource base of conventional oil have
been remarkably consistent (see Table 1). Taking the 1980s demand reduction into account, these forecasts have all
indicated that the resource-limited peak of global conventional oil production would occur at around 2010, give-
or-take about 5 years.
33
Oil
Theory True
Peak coming
Papantonio 2008 (Solution to dependence is energy intervention,
http://www.pnj.com/apps/pbcs.dll/article?AID=/20080625/OPINION/806250338)
First, Arab sheiks are running out of oil. The term "peak oil" is a reality that this administration has
known about for seven years. They've known that out of 60 of the world's top oil producing countries, 50
have completely run past their peak production capabilities; production is in an irreversible free fall. It is
a development that oil royalty won't acknowledge because they want the U.S. oil addiction to last as long
as possible.
Peak by 2010
Jeremy Wakeford 7/2/06 [Writer for the Africa News]
http://www.lexisnexis.com/us/lnacademic/returnTo.do?returnToKey=20_T4048009763
In recent years, a handful of petroleum geologists using Hubbert's methodology have been predicting a
global oil peak somewhere between last year and 2016. The Association for the Study of Peak Oil and
Gas, an international network of leading scientists studying fossil-fuel depletion, estimates that "regular"
oil peaked last year and forecasts that all liquids plus gas will peak in 2010.
Headed towards a crisis

Doyle 4
Doyle, Rodger [Writer for Scientific magazine] Scientific American Sep2004
http://search.ebscohost.com/login.aspx?direct=true&db=ulh&AN=14073179&site=src-live
To some geologists, the world is heading toward an oil crisis of historic proportions. The crisis will come,
they say, not when the wells go dry, but when world oil production reaches a peak and begins to decline.
The difference between oil optimists and oil pessimists is crucial, for if the pessimists are correct, there
will be insufficient time for an orderly transition to alternative energy sources. The variable estimates
over the timing of the peak may exist in part because official agencies such as the Energy Information
Administration of the U.S. Department of Energy are under intense pressure not to throw the markets into
a panic by coming out with pessimistic forecasts. Oil optimists say that new techniques of discovery and
retrieval will keep production high for many years to come, thus forestalling an early peak in production.
The coming decline of oil could lead to a worldwide depression and exacerbate existing tensions among
oil importers.
34
Oil
Peak True- A2 New Reserves
No new reserves will be found

Paul Roberts (Energy Author) 2004 The End of Oil p.40-50
Yet for all their dark theories and occasional paranoia, oil pessimists are right to challenge the oil
numbers being tossed around today, because in many cases those numbers simply don’t make sense.
Take the estimates for “undiscovered” oil. Many optimists, including the USGS, believe that a huge
amount of oil remains to be found — anywhere from 1 trillion to 1.5 trillion barrels. The problem is,
few places on earth remain where all that oil could be hiding but where oil companies have not already
looked. Oil is not a random geological event, something that can occur just anywhere. It is the product of
complex geological processes that take place only in certain quite specific conditions. As we saw in the story of Spindletop, you must first
have source rock— the deeply buried sediments rich in organic matter. It is also necessary to have a migration
pathway — cracks or porous rock through which the newly formed petroleum can escape toward the surface. Finally, a layer of impermeable
stone or clay or salt is required, to trap the petroleum and create a reservoir, or field.
35
Oil
Peak True- A2 Technology
Technology can only go so far- can’t make up for the peak

Q.Y. Meng (State Key Laboratory of Petroleum Resource and Prospecting, China University of
Petroleum, Beijing) and R.W. Bentley (Department of Cybernetics, The University of Reading) August
2008 Energy 33 (2008) 1179– 1184 Global oil peaking: Responding to the case for ‘abundant supplies of
oil’
Maugeri’s final argument is that ‘‘in countries closed to foreign investments, the technologies and
techniques used are, in most cases, obsolete’’. Though some of the major countries have been closed to
upstream oil investment, few have been closed to technological improvement. Saudi Arabia, for example,
has applied some of the world’s best oil-extraction technologies. It is true that some of these countries
could increase production if better technology was used, but mainly at the expense of faster depletion
after peak. To expect improved technology to access much extra oil in the short or medium term is
mistaken. looked in detail at the reasoning and data behind the oil peaking calculations. It must be
admitted, however, that oil peaking is counterintuitive. As countries past peak such as the US, UK and
Norway all show, the resource-limited production peak in a region occurs when there are still large
reserves in the ground, when technology and enterprise are expected to raise the recovery rate of these
reserves, when new finds are still occurring, and when there is known to be quite a lot of oil yet to
discover. So to determine if the peak is close it helps little to analyse what is currently happening in an oil
region. The only sure indicator of peak is the quantity of oil that has already been found (using industry
2P data), the history of when these discoveries occurred (the discovery trend), geological knowledge on
what the rest of the region is likely to yield in new discovery, and sensible estimates on when such
discoveries are likely to occur. Such knowledge of how to predict oil peaking was general some 30 years
ago, but largely forgotten in more recent times.
No new reliable technology

Dale Pfeiffer (Renowned Geologist) 7/30/2003 http://globalresearch.ca/articles/PFE307A.html
However, the major oil companies have started making coded announcements indicating that they know
the future of the oil business will not match its past. Instead of investing in production and discovery, all
of the majors have been shedding exploration staff and consolidating their holdings. None of this
bespeaks a growing industry. And insiders know that there is very little excess capacity to be found
anywhere. Saudi Arabia is just about the only country with the capability to increase production by any
noticeable amount, and even they would be hard pressed to do so.
36
Oil
Peak True- No Fill in
Unconventional oil won’t fill in

Robert L. Hirsch, SAIC, Project Leader Roger Bezdek, MISI Robert Wendling, MISI February 2005 PEAKING
OF WORLD OIL PRODUCTION: IMPACTS, MITIGATION, & RISK MANAGEMENT
http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf
We know of no comprehensive analysis of how fast the Canadian and Venezuelan heavy oil production might be
accelerated in a world suddenly short of conventional oil. Recent statements by the World Energy Council (WEC)
guided our wedge estimates:143 • “Unconventional oil is unlikely to fill the gap (associated with conventional
oil peaking). Although the resource base is large and technological progress has been able to bring costs down to
competitive levels, the dynamics do not suggest a rapid increase in supply but, rather, a long, slow growth over
several decades.”
37
Oil
**High Prices Bad**
38
Oil
Economy Mod
Surge in prices kills the economy

Jonathan Tepperman, senior editor at Foreign Affairs, 5/1/2004, Charleston Daily Mail
A surge in oil prices would hurt everyone: consumers, by making transportation and heating far more expensive;
and producers, by increasing the cost of their energy and other raw materials. This would raise the price of
finished goods, decreasing sales and hitting consumers yet again. Worse, as we saw in the 1970s, a sudden jump
in oil prices could also cause interest rates to skyrocket, setting off a dangerous inflationary spiral.
Oil prices are key to the economy

The third and final factor in the geopolitics of oil is far more prosaic: price. If the United States and its
huge market determine who is in, and who is not, in oil geopolitics, and if the Saudis are the market
enforcers, the price of oil is the impulse, the electrical charge that sets the entire geopolitical machine in
motion. Price determines the direction and rate of flow of international money and political influence. Price
dictates how fast or slow economies grow, and whether recoveries take or falter. Price also controls how much
energy we use, and thus whether we consume or conserve, stay with current energy sources or develop
new ones.
Nuclear War
Walter Russell Mead, contributing editor to Opinion and a senior fellow at the Council on Foreign
Relations, Los Angeles Times, August 23, 1998, p. M1
Even with stock markets tottering around the world, the president and the Congress seem determined to spend the next six months arguing
about dress stains. Too bad. The United States and the world are facing what could grow into the greatest threat to world peace in 60 years.
Forget suicide car bombers and Afghan fanatics. It's the financial markets, not the terrorist training camps that pose the biggest immediate
threat to world peace. How can this be? Think about the mother of all global meltdowns: the Great Depression that started in 1929.
U.S. stocks began to collapse in October, staged a rally, then the market headed south big time. At the bottom, the Dow Jones industrial average
had lost 90% of its value. Wages plummeted, thousands of banks and brokerages went bankrupt, millions of people lost their jobs. There were
similar horror stories worldwide. But the biggest impact of the Depression on the United States--and on world history--wasn't money. It
was blood: World War II, to be exact. The Depression brought Adolf Hitler to power in Germany, undermined the ability of moderates to
oppose Joseph Stalin's power in Russia, and convinced the Japanese military that the country had no choice but to build an Asian empire, even
if that meant war with the United States and Britain. That's the thing about depressions. They aren't just bad for your 401(k). Let the world
economy crash far enough, and the rules change. We stop playing "The Price is Right" and start up a new round of
"Saving Private Ryan."
39
Oil
Economy Ext
High prices kill economy- indebted countries
Don Egginton, June 14, 2004, Oil and Gas Journal
High oil prices hurt the world economy's GDP growth. While GDP is not a complete measure of welfare -- it
misses out environmental costs, for example -- slower growth, especially in the HIPCs, is not to be
welcomed. A stronger case may have been made that high oil prices are good for the world's welfare if
McKillop had highlighted the environmental costs of hydrocarbon fuel use. Does this mean that a very
low price is good for the world economy? Again, ignoring the environmental impacts, the answer is: Yes, in
aggregate, the world's GDP will be greater even if the effects on GDP are smaller due to asymmetry effects.
There would be losers, of course, including the members of the Organization of Petroleum Exporting
Countries, but in principle at least they can be compensated for their losses through transfers from the increase
in the world's GDP. In particular, low oil prices would have significant benefits for HIPCs and, given the
predicament of these countries, a rise in their GDP would have to be a welcome development.
High oil devastates the global economy

Lutz 8
Bob Lutz, Why high oil prices make it hurt so bad, Newsweek, Vol. 151 Issue 24, Business Source Premier,
http://web.ebscohost.com/bsi/detail?vid=2&hid=109&sid=30846b13-5d43-4d6d-a617-
cb3713fc0d93%40sessionmgr109
As for the price of oil, when it goes up and stays up, it has a negative effect on the entire economy
because oil goes into making virtually everything, including steel, aluminum, plastics, rubber, fabrics,
transportation … and food. People don't generally associate food and petroleum, but petroleum is used to
make fertilizers and run the vehicles used for planting and harvesting, storage and processing, and the trip
to market and for the final sale from the freezer in the store to the freezer in a home. And food prices
affect everyone around the world.
General Motors and the U.S. economy in general are seeing a short-term disruption in growth caused by
rising oil prices. Fortunately for General Motors, we are a global producer, and we're well positioned in
the rapidly growing economies of China, Russia, India and Latin America. And while we experience
growth in those markets and position ourselves for a resurgent U.S. economy, we're going to increase our
R&D spending to expand alternative fuel solutions and advanced technology solutions to lessen and
ultimately eliminate everyone's dependence on petroleum.
40
Oil
A2 High prices key to economy
Price spikes limit economic recovery

Yet for many in the West, the Gulf War had simply reemphasized the fundamental flaws in the oil order. Even if OPEC had declared an era of
price stability, Western observers, particularly in the United States, continued to argue that as long as oil remained under the political control of
states like Saudi Arabia and Venezuela, volatility would pose an enormous risk to the fast-growing global economy.
Research showed that after each of the six major oil price spikes since the Second World War, global economic
activity had begun to fall within six months; typically, every five-dollar increase in oil prices brought a .5 percent decline in economic
growth. Worse, the effects of price hikes were “asymmetrical.” When prices came back down, economies usually
regained only about a tenth of what they had lost in the preceding spike. Cumulatively, according to energy
economist Philip Verleger, price spikes had cost the economy 15 percent in growth, and more than a $1.2
trillion in direct losses, “as well as uncountable costs in personal dislocations.”
41
Oil
A2 High prices key to investments

New investments wont happen
Malaysian Business, 7/1/2004
But there's another problem: the world is running out of oil. There is increasing evidence that world oil
discoveries peaked in the 1960s and have since steadily declined. OPEC's declaration of massive oil
reserves is at best suspect, since none are independently verifiable. Indonesia, the current president of OPEC and
the largest and most populous country in Southeast Asia, was once a net oil exporter, but its production has
fallen from 1.2 million barrels per day to 1.1 million - below its OPEC quota of 1.27 million. In the last
two months, Indonesia has slipped to become a net oil importer. Worse, no new investors are pouring money
into new discoveries as old ones face depletion. Were it not for world uncertainties, oil investors staying away
in droves at a time when world oil is fetching record prices would have seemed peculiar.
42
Oil
A2 High prices good for poor countries
High oil bad for poor countries

In essence, McKillop argues the following: Higher oil prices stimulate the non-OECD world economy and then stimulate growth inside the
OECD. Rapidly rising oil prices raise the prices of commodities, and this enables commodity-exporting countries to raise their consumption of
imports from both other non-OECD countries and OECD countries. Increases in activity raise the demand for oil, and the process iterates in a
Keynesian-multiplier fashion leading to higher world GDP. The heart of the argument is that higher oil prices raise the prices
of substitute fuels and other commodities, in turn raising the spending power of these countries, and the world's
GDP grows through a Keynesian spending multiplier. McKillop's view ignores the negative effect on oil importing
countries, which is highlighted in the standard view set forth here later, merely saying that the propensity to consume in commodity
exporters is higher than in the oil importing countries. These central themes are simply incorrect. Using The Economist "all-items" index in US
dollars as a measure of commodity prices, we find that this is negatively correlated with oil prices measured by the average of the Arab Light
and Arab Heavy oil prices. What this means is that nonoil commodity exporters also see their terms of trade worsen when oil
prices rise and the same effects as described in the standard view impact them. Furthermore, there is no evidence to suggest that
the propensity to spend of oil exporters is higher than the propensity to spend of oil importers. The International
Monetary Fund estimates that only about a third of the additional revenues is spent by oil producers in the first
year of rising oil prices, rising to three fourths after 3 years.n2 This produces a negative Keynesian-multiplier effect on the
world economy. These comments point to the uncomfortable truth: Poor commodity producing countries without net oil
exports are hurt by rising real oil prices. McKillop also contends that higher oil prices help poorer countries to develop oil, gas, and
coal resources; without higher oil prices, the funds to develop these resources will not be available. Higher oil prices will not help
poorer countries develop oil, gas, and coal resources if, in the short term, they are paying more for their oil
imports. Indeed, higher oil prices, by raising interest rates to offset inflation, might hinder development of these energy
sources. In fact, McKillop ignores the role of the world's capital markets in making resources available for economic development and,
consequently, a rise in oil prices is not a necessary prerequisite for investment in new oil fields.
High oil prices are bad for the global economy and indebted nations
The answer to the question, How much will high oil prices hurt? depends on how high oil prices rise,
how long they rise for, and which country is examined. The IMF study previously cited provides the
following estimates of a $ 5/bbl increase (20%) in the oil price. The rise in oil prices leads to a loss of
GDP over a protracted period. Moreover, although the losses in the developing countries are initially
smaller than in industrialized countries, the real impact on the poorest countries is masked by the
presence of oil exporters within this category. IMF estimates that, for the 29 most heavily indebted poor
countries (HIPC), the loss of GDP in the first year after the simulated 20% oil price rise will exceed the
0.1% fall shown in Table 2 for 28 of these countries. The average decline in GDP will be 0.8%, and for
Laos the decline would be 2.2% in the first year of the simulation.
43
Oil
Energy Mod
High prices kill energy research

Joe Barnes, research fellow at the Baker Institute for Public Police at Rice, Amy Jaffe, Fellow for Energy
Studies at the Baker Institute, and. Edward L. Morse, Executive Adviser at Hess Energy Trading
Company and was Deputy Assistant Secretary of State for International Energy Policy in 1979–81, Winter
2003/2004, originally printed in National Interest, http://www.saudi-us-
relations.org/newsletter2004/saudi-relations-interest-01-06.html
Lower oil prices should remain a U.S. goal, not only to wean unstable regimes from the ill-effects of
undiversified economies, but to give most of the world, including the 1.6 billion people on the planet lacking
energy services altogether, a chance to achieve prosperity. This goal can only be achieved by de-politicizing oil. The United
States should turn back to multinational agencies and push more seriously for new ways to bring the rules of global oil trade and investment in
harmony with the rules governing other trade in manufactures and services. Liberalization and open access to investment in all international
energy resources would mean their timely development rather than today's worrisome delays. Rather than try to accomplish this on an
American bilateral basis, the U.S. should lead the industrialized West to make a joint effort, possibly considering discriminating actively
against products from countries that do not permit investment in their energy resources, much the way most favored trade status and the WTO
have been used to bring better practices in other industrial sectors. This is a tough policy, but ultimately, few of the top oil producing countries
have used their oil wealth constructively to diversify their economies and improve the lot of their populations.
This causes poverty

Paul Roberts, energy expert and writer for Harpers,2004, The End of Oil, pg. 241-2
To many U.S. observers, Dhabol seemed yet another example of Enron’s greed and hubris. But to the rest of the world, and particularly to In-
dia, where the collapse of the deal has further delayed the slow rise from poverty, Dhabol is much more a lesson about the sheer challenge of
energy security in the developing world. In India, rural China, and Bangladesh, in large parts of Southeast Asia, Latin America, and the
Caribbean, and in most of Africa, 2.5 billion people still rely on wood, dried animal manure, or other so-called biomass for nearly every calorie
of energy used for cooking, heating, or lighting. Another 500 million people burn coal — not in furnaces, but in cooking fires and braziers —
producing poor-quality heat and constant clouds of asphyxiating soot. In all, some 3 billion people —roughly half the world’s population —
rely on energy systems that fail to meet even the most basic human needs. As developing nations have the fastest
population growth, energy poverty — the slow-motion failure of energy security — is sure to be one of the most serious
problems of the next several decades. On the surface, energy poverty is simply another measure of the generally poor economic
conditions the developing world faces. Like water or food, energy is a resource that is in chronic short supply. Yet because energy is so
interconnected with all other aspects of life, energy poverty tends to play a more significant and central role, one that creates
a ripple effect through a developing economy and has an inordinate impact on living standards, which can all but
destroy a population’s move toward modernity. Families that heat and cook with wood or dung spend hours each day hunting for fuel; in many
communities, villagers will travel for days to find enough fuel for the week, only to repeat the process the following week. Wood-based energy
economies also precipitate rapid deforestation of entire regions, causing erosion, landslides, and other environmental problems. Yet these
effects pale by comparison with the direct human costs. Wood fires produce clouds of toxic smoke, the leading cause of respiratory illness in
the rural third world, and especially among women and young girls, who do most of the cooking, and infants, who tend to be with their
mothers. Even when time might permit women and children to read or write, the light cast by a wood fire is so weak — typically less than that
from a flashlight — as to be useless for the purpose. “There are hundreds of mil lions of children who are trying to learn and study under the
dim light of a kerosene lamp,” said Kurt Hoffmann, director of Shell’s corporate giving. More generally, according to one aid agency report,
reliance on wood and other “traditional fuels . . . barely allows fulfillment of the basic human needs of nutrition, warmth
let alone the possibility of harnessing energy for productive uses which might begin to permit escape from the cycle
and light,
of poverty.” Conversely, even a tiny improvement in the level of energy services tends to raise living standards
remarkably. Replacing wood-fired cooking stoves with kerosene stoves means that families that once spent hours or days gathering wood
can now devote that time to earning more money, producing more food — even getting an education. “When you can alleviate even
some of the most basic energy needs, a lot of the usual stressors disappear’ says John Steinbruner, director of the Center for
International and Security Studies in Maryland. “Their world is fundamentally improved.”
44
Oil
Poverty Mod
Social spending saves biodiversity, preventing extinction - Spending alleviates poverty,

which is the root cause of population growth, witch destroys biodiversity, causing human
extinction
Dr. Peter Montague of the Environmental Research Foundation, RACHEL'S ENVIRONMENT &
HEALTH WEEKLY #472, ---December 14, 1995---, http://www.ejnet.org/rachel/rehw472.htm, accessed
January 23, 2003.
The loss of biodiversity is the most difficult problem we face. Loss of species is permanent. Ingenuity can replace a whale-oil
lamp with an electric light bulb, but it cannot replace the whales after we hunt them to extinction. [1] Driving species to extinction is probably
the only permanent change that people can make to the earth; anything else will probably be repaired, in the long run, by natural processes.
Extinction itself is a natural process. But humans have speeded up that process greatly; extinctions are now occurring at a rate 100 to 1000
times faster than the natural rate of extinctions (see REHW #441). [2] Extinctions are dangerous for humans, but it is not immediately clear
just how dangerous. In their 1984 book, EXTINCTION, Paul and Anne Ehrlich compare our situation to an airplane held together by rivets. As
time goes on, an occasional rivet will pop out. No single rivet is essential for maintaining flight, but eventually if we pop enough rivets, a crash
seems certain to occur. So it is with humans and the other species with whom we share the planet. No single species is essential to our well
being, yet it is certain that we need biological diversity in order to survive. Therefore each time we diminish
diversity, we take another irreversible step toward the brink of a dark abyss. In the process, we desecrate the wondrous
works of the creator. There is a growing body of scientific literature about the loss of biodiversity, which reveals a consensus that humans are
the cause of the speedup of species extinction, and therefore of the loss of biodiversity. [3] There are now about 5.7 billion humans on earth
and our numbers are growing at about 1.6% each year, doubling the total population every 44 years. Each month now, we add new people equal
in number to the population of New York City (about 8 million people)--a quarter of a million new mouths to feed each day. It will not be easy
to keep this up. The world's farm land is already stressed, and in short supply. Furthermore, soil erosion is reducing the available supply of
good land; each year about 12 million hectares (29.6 million acres) of arable land are destroyed and abandoned because of unsustainable
farming practices --0.8% of the world's total arable land lost each year. To adequately feed people a diverse diet requires about 0.5 hectares (1.2
acres) of arable land per person, but only 0.27 hectares (0.7 acres) is available today. According to David Pimentel (Cornell University), in 40
years available land will be down to 0.14 hectares (0.35 acres) per person because of soil erosion and population growth. [4] It is not easy to
assess the total impact of humans on the planet. There are various ways to look at it. For instance, humans have so far changed about half of
earth's ice-free land surface. [5] Furthermore, 43% of the earth's land surface has been judged "degraded," defined as "having diminished
capacity to supply benefits to humanity." [6] One more doubling of our population and we'll have changed a very large fraction of the planet's
vegetated surface, and will have degraded much of that. In addition, we humans are presently using, or preventing other species from using (for
example, by grazing our domestic animals), about 40% of terrestrial (non-oceanic) "net primary productivity." "Net primary productivity" is the
amount of new vegetable matter created each year by photosynthesis as plants use the energy of sunlight to combine water and carbon dioxide
into carbohydrates, the base of all the world's terrestrial food chains. [7]One more doubling of us and there will be precious little "net primary
productivity" left for other species --surely an ominous prospect. We humans depend upon other species. We seem to be gnawing holes in our
own lifeboat. Even more ominous is that we have run out of waste-disposal room on the planet. The world used to be empty, but now it is full.
[8] There is no place left to isolate our residues without harming something or someone. There is abundant evidence supporting this
proposition. Global warming. Depletion of the earth's protective ozone layer. Destruction of the world's forests. (Half the world's moist forests
--home to most of the world's species --have been destroyed, and the destruction is continuing.) The accelerated rates of species extinction,
already noted. The decline of amphibians. The bleaching of coral reefs. The appearance of phytoplankton blooms in numerous coastal waters.
The decline of sea urchins. Mass die-offs of seals and dolphins. Cancer epizootics in fish. [9] (An epizootic is a disease affecting large numbers
of animals of one kind at the same time.) Of course we humans are not exempt from these troubles. Our own rates of cancer are rising, as are
rates of nervous system disease, immune system disorders, hormone imbalances, and birth defects. (See, for example, REHW #385, #376,
#365, #446, #410, #411.) Solutions [10] In March of this year, 180 countries held a World Summit on Social Development, endorsing the
statement that "social development and justice are indispensable for the achievement and maintenance of peace and security within and among
nations." [11] They might as well have added "and among species," for preserving biodiversity will require us to curb human
population, and curbing human population will require us to end the absolute poverty that afflicts 1.5 billion
humans. When poverty diminishes, so does the pressure to have many children. But ending poverty will require the
developed world to reverse some traditional policies. As things now stand, the inequality between nations is growing larger each year. As time
passes, the rich nations are gathering more of the planet's available benefits unto themselves, leaving less and less for the rest of the world. In
1960, the richest countries with 20% of world population received 70.2% of global income, while the poorest countries with 20% of world
population received 2.3% of global income. Thus the ratio of income per person between the top fifth and the bottom fifth was 31:1 in 1960. In
1970, that ratio was 32:1; in 1980, 45:1; by 1991, the ratio had grown to 61:1. In constant [inflation-adjusted] 1989 U.S. dollars, the absolute
gap in per-capita annual income between the top fifth and the bottom fifth rose from $1864 in 1960 to $15,149 in 1989. [12] An immediate,
affordable positive step would be to cancel the debts accrued in recent years by the developing world. [13] Ending poverty will require
changes in parts of the developing world as well: for example, more education, better health care, and expanded political rights and
social opportunity for girls and women can create more productive social conditions. [14]
45
Oil
Poverty Ext
Poverty leads to terrorism
Lawrence Korb, director of studies at the Council on Foreign Relations, Arnold Kohen, international
coordinator of Global Priorities, and Peter Prove, member of the Lutheran World Federation's office for
international affairs and human rights, International Herald Tribune, August 22, 2002
In the last two years alone the military budget of the United States has increased by $80 billion. Partly
in the name of the war against terrorism, European nations are also being urged to augment their defense
budgets. But to the extent that vast resources are diverted from meeting human needs, we are only
postponing the day of reckoning. Worsening poverty throughout the world can only create conditions of
desperation that may lead to more terrorism. The substantially increased military spending that was
already taking place did not prevent the heinous terrorist attacks of Sept. 11, 2001. Even more military
spending in the future is no guarantee of success in the war against terrorism. Redressing the imbalance
between military spending and efforts to reduce poverty would create vast resources to tackle pressing
human and social needs. Such efforts would create a better quality of life for people on a worldwide
scale and foster a more harmonious global community. In concert with secular allies, religious
communities can play a vital part in addressing these disparities.
46
Oil
Shocks Bad- Economy
Shocks mess up the economy- 1970’s prove

Moynihan 2008 (The Third Oil Shock: Two Possible Outcomes,
http://www.huffingtonpost.com/michael-moynihan/the-third-oil-shock-two-p_b_109402.html)
The decision by the Fed yesterday to leave rates unchanged--despite inflationary pressures from soaring
oil prices on the one hand and a weakening economy on the other, testifies to the conundrum an oil shock
creates. There are, in essence, two possible choices when a shock sends prices soaring. One is to raise
rates to squeeze the inflation out of the economy. The other is to allow the inflation. Neither is a pleasant
option. However, they have quite different consequences.
To see the potential impact of either policy, one only needs to look at the first two oil shocks in the 1970s,
for each exemplifies one approach.
The First Oil Shock in 1973, was a watershed in economic history. The immediate trigger was the Yom
Kippur war pitting Israel against Egypt and Syria. However, the pre-conditions for the spike were already
present in the decision of Nixon to take the US dollar off the gold standard in 1971 which allowed the
dollar to depreciate reducing the revenues of oil producers combined with the failure of the Seven Sisters
oil companies to cut a deal with the still-docile oil producing nations on revenues. In October, when war
broke out, what we now call OPEC announced it had become a cartel and blocked oil shipments to
countries supporting Israel, ie the US, Europe and Japan, causing prices to spike.
Accustomed to getting endless oil for practically nothing--it was western companies like BP and Mobil
after all that had dug the oil wells in the desert--the West went into a panic. In the US, daylight savings
time was suspended, gas rationing went into place and auto races were cancelled. The US economy went
into recession. In due course, the CAFE standads came into being in 1975 and Americans began buying
small Japanese cars.
However, faced with this challenge, central bankers decided not to raise interest rates and, in fact, to cut
them once the economy tanked, allowing the economy to inflate. The result was what we now call
staglation, a stagnant economy combined with inflation that cut stock prices in half. Stagflation
characaterized the 70s in the US and in Europe set the stage for the drive for a European Union to combat
eurosclerosis.
Fast forward to 1979, the year of the Second Oil Shock. This time, the trigger was the Iranian revolution
and subsequent invasion of Iran by Iraq that cut production in both countries by about 6.5 million per day.
This time, however, the West reacted in a far different manner. As inflation soared, Central Bankers
decided to face it straight on and take the bitter medicine of monetarism. Fed Chairman Paul Volker began
raising rates until they rose into the double digits.
The result was another recession. However, the Fed kept the heat on, leaving rates high through 1981 and
putting the economy through the proverbial wringer. By 1984, inflation had been wrung out of the
economy and the US finished its conversion frrm an industrial to a post-industrial economy This
transition involved the shuttering of the steel industry, the shipping industry, the old electronics industry
and much of America's industrial base. However, in its wake emerged the post-industrial US economy of
finance and technology that characterized the expansions of the 1980s and 1990s.
Two shocks; two courses of action; two outcomes: stagflation, or wrenching restructuring of the economy.
47
Oil
Shocks Bad- Economy
Shocks devastate the economy

Kaiser and Daily 2008 (Emily & Matt, Oil shock threatens lasting changes to U.S. economy,
May, reuters, http://www.propeller.com/viewstory/2008/05/24/oil-shock-threatens-lasting-
changes-to-us-
economy/?url=http%3A%2F%2Fuk.reuters.com%2Farticle%2FoilRpt%2FidUKN23205969200
80523&frame=true)
Oil's relentless price rise has pushed U.S. drivers off the road, curbed consumers' appetite for expensive
goods, forced airlines into their deepest cuts in years and threatened car makers with a flood of red ink.
It all points to a dramatic shift in the U.S. economy as oil's surge above $130 per barrel forces already
cash-strapped households and companies to rethink business as usual, and the changes are likely to be
lasting, even if energy prices retreat.
"The weakness in the United States economy in housing, that we have read about for over a year, with the
mortgage crisis and credit crunch, was one blow. But oil is another blow, and it's probably one blow too
many," Dow Chemical (DOW.N: Quote, Profile, Research) Chief Executive Andrew Liveris told Reuters.
The consumer response has been modest so far, but the pattern is clear. The number of miles travelled on
U.S. roads fell 4.3 percent in March from a year earlier, the U.S. Department of Transportation said on
Friday, the sharpest yearly drop on record and the first decline in the month of March since 1979, when
the last major oil shock hit drivers.
Shocks kill the economy- multiple reasons

Federal Reserve Board, 2k4 (Oil Shocks and Monetary Policy, Sep 16,
http://www.federalreserve.gov/boarddocs/speeches/2004/20040916/default.htm)
Oil shocks have serious effects on the economy because they immediately raise prices for an important
production input--oil--and important consumer goods--gasoline and heating oil. They are also likely to
push up prices in other energy markets. These price increases are significant enough that they typically
show up as temporary bursts in the overall rate of inflation. They may even get passed through to
continuing rates of inflation if they become incorporated into price- and wage-setting behavior. Increases
in oil prices also reduce consumer spending power, in much the same way as when a new excise tax is
passed along by oil producers. To the extent that these producers are foreign, there should be a
corresponding drop in domestic demand. Even if the oil producers are domestic, a drop in domestic
demand could still occur if the producers do not spend as much of their new income as consumers would
have or if they do not recycle their profits to shareholders.
The economy won’t recover

Yet for many in the West, the Gulf War had simply reemphasized the fundamental flaws in the oil order.
Even if OPEC had declared an era of price stability, Western observers, particularly in the United States,
continued to argue that as long as oil remained under the political control of states like Saudi Arabia and
Venezuela, volatility would pose an enormous risk to the fast-growing global economy. Research
showed that after each of the six major oil price spikes since the Second World War, global economic
activity had begun to fall within six months; typically, every five-dollar increase in oil prices brought a
.5 percent decline in economic growth. Worse, the effects of price hikes were “asymmetrical.” When
prices came back down, economies usually regained only about a tenth of what they had lost in the
preceding spike. Cumulatively, according to energy economist Philip Verleger, price spikes had cost the
economy 15 percent in growth, and more than a $1.2 trillion in direct losses, “as well as uncountable
costs in personal dislocations.”
48
Oil
A2 Venezuela
The Venezuela economy sucks regardless of oil
Washington Post 8/26/2004 http://www.washingtonpost.com/wp-dyn/articles/A35980-2004Aug26.html
Chavez has done little to diversify the engines of Venezuelan economy. In the hemisphere, Venezuela
ranks only above Haiti in deregulating and reducing bureaucratic processes to facilitate starting or
running a business, according to the World Bank's Doing Business Project. This is very significant considering that 57
percent of the work force in Latin America is employed by micro, small or medium-size enterprises.
Oil reliance hurts Ven’s economy

Newsweek January 13, 2003 Lexis
Economists--and even politicians--have long understood that an excessive dependence on one
commodity can be unhealthy. But, in Hausmann's view, it's the country's very dependence that prevents
diversification: ups and downs in the price of oil result in gigantic exchange-rate fluctuations, which
turn investment decisions into a game of roulette and raise interest rates to a point at which no legitimate
business can afford to borrow. Deep structural problems are left to fester whenever oil prices rise. While
neighboring Colombia, for example, has diversified into nontraditional exports like cut flowers, oil still
accounts for a third of Venezuela's GDP. "You could almost say the oil rents have murdered the non-oil
economy," says energy specialist Victor Poleo.
49
Oil
A2 Venezuela
Other problems make collapse inevitable

Bank Loan Report September 23, 2002 Lexis
Sky-high oil prices have provided much-needed support to Venezuelan assets of late, and the country's
bonds sustained a month-long rally over August. But those who know the sovereign say high oil prices
have done little more than mask Venezuela's deeper problems. Venezuela's economic fundamentals are
dire, they say, and the outlook for the sovereign is far from promising. Venezuela is the world's fifth
largest oil exporter, and among its emerging market peers, its economy is the most dependent upon the
price of crude. Oil revenues account for over 80% of Venezuela's exports - 50% of government spending
and 30% of GDP - and so the talk of war that has caused oil prices to rise to a 19-month high of $30 per
barrel has boded well for the nation. Over the past two years, there has been a strong relationship
between crude oil prices and risk premiums associated with Venezuela assets."The two-year correlation
between 2027 spreads and the benchmark West Texas Intermediate (WTI) prices is statistically significant
at almost 50%," said David Spegel, emerging market sovereign strategist at ING Barings.With the
government's price assumption for 2002 at $16 per barrel, Venezuela has been in a prime position to reap
the benefits of higher oil prices over the past weeks. Revenue has been boosted, and spreads on
Venezuela's benchmark 2027 bond have narrowed by over 100 basis points in the past month, and traded
at close to 900 basis points over US Treasuries last week.The fiscal impact of changes in crude oil prices
is always a boon for oil producing emerging market countries, Spegel said, and exporters like Algeria,
Nigeria, Qatar and Venezuela stand to gain the most.Because bond prices are heavily correlated with oil
prices, they can have a huge impact on a country's current and fiscal accounts, said David Dali, portfolio
manager at One World Investments."At a time when the global economy is under pressure, there is an
increased focus on those countries that generate strong revenues from commodities," Dali said. But in the
case of Venezuela, the current run of positive sentiment is built on little more than high oil prices. Unlike
for other oil exporters such as Russia and Kazakhstan, where the bid from investors is genuine, the bid for
Venezuela is short-lived, sources say. "The bid for oil is conditional and depends very much on the
specific situation in any given country," said Charlie Cassel, portfolio manager at Standard Bank Asset
Management. "As soon as the price of oil starts to decline, the bid starts to fade and the underlying
fundamentals move back into perspective." In Venezuela's case, the combination of poor political and
economic fundamentals are a recipe for disaster. Political tension between the government under leftist
president Hugo Chavez and the opposition remains high, and on the economic front, the lack of fiscal
discipline means the government needs to fill an estimated $4.5 billion budget deficit by the end of the
year. Inflation reached 16.2% in June - the highest level in almost three years - and some predict that the
fiscal hole could widen to as much as $15 billion next year, as bills come due for debt repayments and
postponed spending. The combination of a 46% drop in the value of the bolivar versus the US dollar,
together with cuts in government expenditures, has plunged Venezuela into a deep recession. In past
instances of sustained oil price hikes, Venezuela has been able to use the extra revenue it gained to pay
down both its domestic and foreign debts and stockpile some reserves. This time, though, the hole is too
deep. "Venezuela should be rich in cash, but the lack of fiscal discipline and coherent government policies
have meant that the budget deficit is now at 3% of GDP," Dali said. "Russia, on the other hand, is the
exact opposite: its strong sense of fiscal discipline has enabled it to generate large amounts of cash."
Venezuela cannot either expect to be supported by high oil prices indefinitely. Indeed, news of Iraq's
agreement to re-admit United Nations weapons inspectors for the first time since 1998 triggered a slump
in the price of oil last week, and last Wednesday's decision by the Organization of Petroleum Exporting
Countries (OPEC) to keep production quotas at current levels - something Venezuela, Indonesia, Kuwait
and Qatar strongly supported - also caused prices to fall.
50
Oil
A2 Mexican Econ
Oil not key- consumer credit drives its economy and it’s tanked now
Mexidata 2008 (June23, Consumer Credit Card Debt Chilling the Mexican Economy Frontera NorteSur,
http://www.mexidata.info/id1885.html)
A serious trouble zone is emerging in the consumer credit sector, which has helped drive the Mexican
economy during the last four to five years.
New numbers from the federal government's National Commission for the Protection and Defense of
Financial Services Users (Condusef) report that the percentage of bank issued credit card debts in arrears
reached 7.6 percent in April of this year. The figure follows a steady rise in bad credit card debts from
June 2005, when only 3 percent of such loans were overdue.
Mexican officials have issued mixed messages about the slide of many consumers into unmanageable
debt. In 2007, Condusef President Luis Pazos predicted bad credit card debts would reach the 7.1 percent
threshold in June 2008, a number that was surpassed two months ago. Speaking last year, Pazos warned
that a 7.1 percent bad debt load would be dangerous to the health of the Mexican banking system.
51
Oil
A2 Texas Econ
Texas not key to national economy- 2007 proves

Sigala 2008 (Texas Finds Cover from U.S. Economic Storm,
http://www.dallasfed.org/research/swe/2008/swe0801b.cfm)
The 2007 Texas expansion was persistently underrated. While a national economic slowdown attracted
headlines, the state’s economy quietly grew at a rate that was Texas proud.
State job growth of 3.1 percent last year was triple the nation’s 1 percent—and exceeded the state’s long-
run average of 2.8 percent for the third year in a row (Chart 1).[1] While declines in homebuilding were
sizable, overall construction remained at high levels in Texas. Oil and gas drilling returned to heights not
seen since the early 1980s energy boom.
52
Oil
**High Prices Good**
53
Oil
Canada Mod
High prices are key to the Canadian economy
Prolifer Magazine 2006
(“Oil and Gas Dynamo Drives Economy,” http://www.nickles.com/MarketPlace/pdfs/OilGasDynamo-
gps06.pdf)
Well, we got another chance — and this time the boom is greater than anything ever experienced in the
Canadian oilpatch — with all the usual economic indicators, from Gross Provincial Product, to unemployment rates, to
housing prices, showing growth far beyond what was experienced during the Middle Eastern oil embargo days of the 1970s,
when oil prices increased five-fold and Calgary oil entrepreneurs drove Cadillacs with real gold trimming. Now the vehicles are
more likely to be Hummers or Lamborghinis and the million dollar mansions that were front page news in the 1970s are
commonplace. The Calgary Real Estate Board reported this spring that the average price for all residential real estate in the city
was $341,838, up 37.18% from the same period last year, with the average single family home priced at $376,726, up from
$273,953. At the current pace, housing prices will eclipse every major Canadian city. While the oil and gas boom is benefiting
other energy producing areas of Canada, including British Columbia, Saskatchewan, Newfoundland and the north, Alberta is
getting the lion’s share of the impact. So much so that, for the first time in Canada, financial service firms have launched Alberta
centred closed-end funds. It’s commonplace for fund managers to have country-centred funds or funds concentrating on certain
regions of the world, but the five firms that recently launched Alberta-focused funds are voting with their pocketbooks. “It’s not
hard to come up with a compelling story (for a fund emphasizing Alberta companies),” said Dean Orrico, managing director and
portfolio manager for Toronto-based Middlefield Capital, which recently launched the Alberta Focused Income and Growth Fund
(the first of the five Alberta-focused funds to go the market). One measure, compiled by Statistics Canada, says it all. The average
after-tax family income last year in Alberta was $61,800 a year, $12,000 a year more than the average for all the other nine
provinces. So what is driving this boom? Well, despite Alberta having a more diversified economy than in
the 1970s, with a petrochemical industry that didn’t exist before then, a growing manufacturing sector, and a strong retail sector,
the economic growth still comes primarily from energy. Just how much of an economic engine the oil and gas
industry is can be illustrated by a number of statistics and studies. For instance, a study of the profitability of the upstream oil and
gas sector by Calgary-based ARC Financial Corporation, commissioned by the Canadian Association of Petroleum Producers
(CAPP) late last year (the study only looked at the exploration and production sector and not at oilfield service companies or
refining and marketing), illustrates how far the industry has come in the last five years. Similar studies were conducted in 2001,
2002 and 2003. ARC points out that since its February 2003 study, crude oil and natural gas prices had risen 80% and 60%
respectively (as of March, 2006). “Such dramatic price appreciation, in a short period of time, has substantially jolted the normal
course fiscal dynamics of the Canadian oil and gas industry, and given momentum to trends like oilsands and unconventional gas
development, constrained services and cost inflation,” says ARC in its analysis, led by well known energy industry economist
Peter Tertzakian. After the last Canadian oil boom went bust, it was common to see bumper stickers in Calgary pleading for
another chance at oil riches. The study concludes that the upstream oil and gas industry, which generated $100
billion of revenue for the first time ever in 2005, will be able to sustain that level through to 2008. Although
ARC predicts oil prices will moderate to the $52 per barrel range by 2008, from levels in the mid $70 range earlier this year, it
says rising production volumes, mostly from the oilsands, will allow the industry to continue generating $100 billion in annual
revenue or more through to 2008. Other observations and conclusions include: Rising oil and gas prices have roughly
doubled government revenues from crown royalties, land sales and cash taxes paid by exploration and production
companies, adding up to an estimated $27 billion in 2005, up from $14 billion in 2003. That doesn’t include taxes paid by oilfield
service firms and other peripheral activity; While revenue is up dramatically for the industry, so are its costs, with oilfield
services, wages, office space, pipelines and land costs rising at 15% a year for the last three years; The oilsands area of northern
Alberta now accounts for 33% of total crude production, or one million barrels a day. Over the next 10 years there are expected to
be over $60 billion of direct capital expenditures into developing the oilsands, as compared to $93 billion in conventional oil and
gas development up to 2008. Oilsands production is expected to rise to 2.7 million barrels daily by 2015; Momentum is also
growing behind unconventional natural gas production, with coalbed methane grabbing an increasing share of exploration
expenditures. For example, of the 21,925 wells drilled in 2005 (a tripling from levels in the 1990s), 70% targeted natural gas and
20% of those, or 3,000, were pursuing coalbed methane; ARC also notes the growing role of royalty trusts in the Canadian oil
and gas industry. For instance, it notes that in 2003, when its last report was published, trusts controlled 513,000 barrels of oil
equivalent per day, representing nine percent of all Canadian production (including the oilsands). Today there are over 35 trusts,
producing about 800,000 BOE/d, or about 14% of Canadian production. ARC expects those levels to remain constant through
2008; The oil and gas industry is the most profitable sector in Canada, with an average return on capital averaging 13% and
return on equity averaging 19%. However, ARC warns that much of that profitability stems from earlier discovered, lower-cost
production, saying the higher costs now being experienced by the industry will eventually lead to lower margins. That warning
aside, the industry has never seen better times, as statistics gathered by Nickle’s Energy Group show. The most telling
figure is the one measuring industry cash flow, the key metric the industry uses to gauge its success. In 2005 the combined cash
flow for the industry was up 35% from 2004, hitting $49.3 billion (more than $12 billion above the previous 2004 record).
54
Oil
Canada Mod
Cont…………
Meanwhile, capital spending by those same producers hit $52.007 billion, a seven percent increase from 2004, even though
spending on acquisitions declined to $10.7 billion from $17.41 billion in 2004 (when there were several major takeovers). Those
dollars definitely trickled down to the oilfield service sector, with producers having invested over $39 billion on field work such
as drilling, land and facilities last year, a 41% increase from the $27.66 billion in 2004 (and an indication also of the worrisome
cost increase ARC warns about). Despite natural gas prices being down by more than half from a peak of around $15 per mcf last
year, producers have announced plans to spend about $47 billion this year on exploration and production. And no wonder, since
profits in the sector hit a record $22.7 billion in 2005, 30% more than the previous all time high of $16.7 billion in 2004. In the
last quarter of 2005 alone, thanks to surging oil and gas prices, the industry recorded profits of $10.2 billion, accounting for 45%
of the total annual profits in 2005. The new century has brought a bonanza for the oil and gas sector, with
Nickle’s records showing Canadian producing companies achieving over $86 billion in profits and over $193 billion in cash flow
between 2000 and 2005. By comparison, over the decade of the 1990s, profits totaled only $15.4 billion and cash flow amounted
to $83.8 billion. Capital spending by the Canadian oil and gas sector has been a huge driving force in the
total Canadian economy, with investments of $214.5 billion in the five years through to 2005, compared to $111.9 billion in
the 1990s. Those benefits to the country’s economy don’t include the returns experienced by investors in public companies and
trusts from dividends and distributions and share and unit appreciation. Of course, this bonanza can be largely attributed
to high oil and natural gas prices. In an industry that had to cope with prices as low as $10 a barrel in the early 1990s,
average crude prices of $56.12 a barrel and gas prices of $9.07 per mcf was welcome news. While all boats were lifted by the
rising tide, some floated far above the rest. For instance, in terms of year-over-year growth in production per share, stand-outs
included Rock Energy Inc. (264% growth in production per share), Galleon Energy Inc. (160% growth), ProEx Energy Ltd.
(141% growth), Storm Exploration (140% growth), Cyries Energy Inc. (129% growth) and Rider Resources (100% growth). As
an illustration of how the good times are rolling, Calgary-based EnCana Corp. recorded the highest profit ever achieved by a
Canadian producer last year, over $3 billion. In addition, three other producers, Imperial Oil Ltd., Shell Canada Ltd. and Husky
Energy Inc. topped the $2 billion profit mark. Another five producers recorded profits over $1 billion, including PetroCanada,
Talisman Energy Inc., Suncor Energy Inc. Nexen Inc. and Canadian Natural Resources Ltd. Although the ARC analysis — and
those by others looking forward — suggest the good times for the Canadian energy industry won’t continue at the same frenzied
pace as last year, they also don’t envision a collapse, like that which followed previous energy booms. Given that scenario, it’s
likely those benefiting from the newest energy good times, including the citizens of all of Canada’s producing provinces, will
have several years before they have to worry again about exhausting the wealth now flowing into their economies and
pocketbooks.
Canada key to US economy

State Department September 2007
(“Background Note: Canada,” http://www.state.gov/r/pa/ei/bgn/2089.htm)
The United States and Canada enjoy an economic partnership unique in the world. The two nations share
the world's largest and most comprehensive trading relationship, which supports millions of jobs in each
country. In 2006, total trade between the two countries exceeded $500 billion. The two-way trade that crosses the Ambassador
Bridge between Detroit, Michigan and Windsor, Ontario equals all U.S. exports to Japan. Canada's importance to the
United States is not just a border-state phenomenon: Canada is the leading export market for 39 of the 50
U.S. States, and ranked in the top three for another 8 States. In fact, Canada is a larger market for U.S.
goods than all 25 countries of the European Community combined, whose population is more than 15 times that of
Canada. The comprehensive U.S.-Canada Free Trade Agreement (FTA), which went into effect in 1989, was superseded by the
North American Free Trade Agreement among the United States, Canada and Mexico (NAFTA) in 1994. NAFTA, which
embraces the 443 million people of the three North American countries, expanded upon FTA commitments to move toward
reducing trade barriers and establishing agreed upon trade rules. It has also resolved long-standing bilateral irritants and
liberalized rules in several areas, including agriculture, services, energy, financial services, investment, and government
procurement. Since the implementation of NAFTA in 1994, total two-way merchandise trade between the United States
and Canada has grown by 250%, creating many new challenges for the bilateral relationship. The Security and Prosperity
Partnership of North America, launched by the three NAFTA countries in March 2005, represents an effort to address these
challenges and others on a continental basis.
55
Oil
Texas Econ Mod

High prices key to the Texan economy
Perryman, president and CEO of The Perryman Group, 12/7/2007
(Ray, “High oil prices produce silver lining in Texas,”
http://dallas.bizjournals.com/dallas/stories/2007/12/10/editorial3.html?page=2)
There is, however, "the rest of the story." Because of the established presence of the oil industry in Texas,
higher oil prices are not the grim circumstance they are in states without production and refining capacity.
In contrast, the Texas economy benefits from increased activity in the energy sector, which lessens the
detrimental effects of high oil prices to other parts of the economy. The Texas economy has been tied to
oil prices since the 1880s, and especially after the "Spindletop" gusher more than a century ago.
Historically, the Lone Star State actually faced economic losses with low oil prices and economic benefits
with high oil prices. The price of oil had a tremendous impact on the economy in the 1970s and early
1980s when Texas' economy quickly expanded, adding both employment and income growth as the
national outlook sputtered. (The "Energy Crisis" in the rest of the United States was an "Oil Boom" in
Texas.) Seeing the benefits The Texas economy is now far more diversified than it was 20 years ago, but
oil continues to play a large role. A study by the Federal Reserve Bank of Dallas found that while our
economy has become less sensitive to oil price fluctuations, it still responds favorably overall to higher
energy prices. I have been modeling the Lone Star State almost 30 years and have consistently found a
similar phenomenon even though we have changed from a sizable exporter to a sizable importer of
petroleum. We aren't the only state to benefit from high oil prices. Trends reveal that unemployment rates
in coastal Gulf states such as Louisiana, Mississippi and Alabama decrease in response to increases in oil
prices. Personal income also tends to rise with oil prices.
Texas key to the US and global economy

McLean, president of the Southwest Bank of Texas, October 19 2004
(Scott, “Q3 2004 Southwest Bank of Texas Earnings Conference Call – Final,” Fair Disclosure wire,
lexis)
SCOTT MCLEAN, PRESIDENT, SOUTHWEST BANK OF TEXAS: Thanks, Paul. And I would like to
add my welcome to the call as well. My comments this morning will focus on the underlying strengths of
our economy and the resulting loan demand, why the Klein merger is an exciting addition, and a few
comments about our competitive posture relative to deposit growth. It is worth noting, again, that we are
operating a great geographical area, that is fundamentally driven by growth in population. From April
2000 to July 2003, Texas added 1.3 million people, second only to California. In terms of the scale of the
Texas economy, it is the eighth largest in the world and the second largest in the country. Texas has led all
states in net job creation since 1990 and accounts for roughly 7.3% of total U.S. employment. Another
key statistic, Texas is the top U.S. exporting state accounting for more than 13% of total U.S. exports,
surpassing New York and California. In fact, 75% of our country's commerce with Mexico travels through
our state. Another frequently asked question about our economy is the impact of the energy industry. For
Houston, robust energy demand and increased oil and natural gas prices are clearly positives. Although
prices are high, we don't see excessive spending and irrational financial behavior. People are being
disciplined about managing their businesses.
56
Oil
Central Asia Mod
High oil prices solve Russian domination of Central Asia

Starr, chairman of the Central Asia-Caucasus Institute and a research professor at Johns Hopkins, and
Cornell, research director of CACI and assistant research professor at Johns Hopkins, Winter 2005
(S. Frederick and Svante E., "The Politics of Pipelines: Bringing Caspian Energy to Markets," Paul H.
Nitze School of Advanced International Studies, http://www.sais-
jhu.edu/pubaffairs/publications/saisphere/winter05/starr-cornell.html, accessed October 19, 2007)
The oil and gas deposits of the Caspian basin constitute less than a twentieth of the world’s reserves, but
they are significant nonetheless. They are among the largest new reserves to be exploited in recent years,
and hence are important to the highly fungible world oil market. And because hydrocarbons are by far the
biggest source of wealth in three of the newly independent countries (Azerbaijan, Kazakhstan and
Turkmenistan), a major factor in a fourth (Uzbekistan) and can provide decisively important transit fees
and duties to two otherwise impoverished countries (Afghanistan and Georgia), earnings from oil and gas
will decisively affect the economies, and the sovereignties, of at least five geopolitically important states.
As oil prices roar upwards of $70 per barrel, the task of extracting and bringing to market oil and gas
resources from distant areas becomes a pressing concern of every consumer country. This once again puts
the spotlight on the Caspian basin. Here are significant reserves, but reserves that are located at great
distance from all their potential consumers in Western Europe and Eastern Asia. Moreover, the only way
these resources can reach those markets is by traversing vast territories overland by means of pipelines, a
far less efficient means of transporting energy than sea tankers. Worse, the pipelines must often pass
through topographically challenging and politically complex territories, further adding to their cost.
Added to the geographical problem is the political legacy of the U.S.S.R., which bequeathed to the new
states a “one-hub” energy transmission system that sent all ”colonial energy” to the center and none
directly abroad. Somehow, the producer states must break out of this straightjacket. These two liabilities
long impeded the development of these resources.
Under such circumstances, it is no wonder that each of the many pipeline routes and projects proposed
over the past decade presents its own technical and financial challenges, and each involves the most
intricate combinations of corporate and state interests. Nor is it any wonder that all this has led often to a
state of confusion, in which practical schemes have been dismissed as unworkable and in which grandly
impractical schemes are deemed somehow practical. Talk of a pipeline to bring Russian gas to India via
Tibet is only the most flabbergasting of many examples of the fanciful direction such speculation has
taken.
The fundamental change in the fate of Caspian oil has been the rise in world prices. Thanks to this, many
projects that once seemed laughable now merit serious attention. Hence, building pipelines from Central
Asian states through Afghanistan to Pakistan or even beyond to India is now being considered, while
concrete plans are being made for a pipeline connecting Kazakhstan’s oil fields with China. A major
project that was considered all but dead five years ago has now been completed: the Baku-Tbilisi-Ceyhan
(BTC) pipeline bringing Azerbaijani Caspian oil to the Turkish Mediterranean coast. Although this
remarkable achievement makes West Caspian oil available to world markets in serious quantities, the
same is not true for the East Caspian and onshore Central Asian resources, which continue to be exported
mainly to Russia at prices that are unfavorable conditions for producers. Even this, however, may be
about to change.
During the last decades of the U.S.S.R., its Russian leaders focused their energy investments on West
Siberia, which they saw as safely “Russian,” to the neglect of existing oil fields in Azerbaijan and
undeveloped fields in Kazakhstan, which they feared were dangerously subject to influence by the local
Turkic peoples. Such fears were driven by census data that showed high birth rates among the Turkic
peoples of the Caspian basin and low rates for Russians and Slavs. Similar fears also assured that all
pipelines from the Caspian basin would head directly to Russia and its centralized grid.
57
Oil
Pipeline Mod
Low prices delay the Beku-Ceyhan pipeline
Panorama, BBC, 11-10-2001
Sometimes one can hear references to recent statements by American officials on their support for the project (as if such statements were not
made before). There are also more serious arguments which appear to give grounds for reviving interest in the project.
These can hardly be said to include the positive results of exploratory operations in Kashagan Kazakh offshore oilfield , at least for the
moment: even if these positive signs are confirmed, it will take too long for the question of transportation to international
markets to become a pressing one for the oil from the shelf. The prolonged period of high oil prices is more likely to
provide such grounds. But the current slump in these prices changes the picture, and if this becomes a long-term
trend you can forget about the Baku-Ceyhan pipeline. Nor is it clear yet where the oil to fill the pipeline will come from, although
supporters of the project traditionally assure us that this issue can be resolved, as, for example, the US ambassador in Kazakhstan said at the
latest Kazakhstan International Oil and Gas Exhibition and Conference. It is possible that the problems surrounding the launch of the Caspian
Pipeline Consortium recently completed project to build pipeline linking West Kazakhstan with Russian Black Sea port of Novorossiysk also
provide certain hope in this regard to the supporters of the Caucasian route.
No pipeline kills US hegemony

Llewellyn Howell, professor of international policy studies, American Graduate School of International
Management, USA Today, 3-1-99
For a combination of business-economic, political, and military-strategic reasons, the Clinton
Administration has placed all its bets on the Baku-Ceyhan choice. If another is selected by the oil companies, the
Administration is sure to come under fire as having lost a critical battle in the post-Cold War effort to maintain its
number-one position in the international hierarchy of nations. Its ability to manage other pieces of the global
political-economic puzzle might suffer.
Hegemony solves multiple scenarios for nuclear war

Zalmay Khalilzad, RAND, Washington Quarterly, Spring, 1995
Under the third option, the United States would seek to retain global leadership and to preclude the rise
of a global rival or a return to multipolarity for the indefinite future. On balance, this is the best long-
term guiding principle and vision. Such a vision is desirable not as an end in itself, but because a world
in which the United States exercises leadership would have tremendous advantages. First, the global
environment would be more open and more receptive to American values -- democracy, free markets,
and the rule of law. Second, such a world would have a better chance of dealing cooperatively with the
world's major problems, such as nuclear proliferation, threats of regional hegemony by renegade states, and low-
level conflicts. Finally, U.S. leadership would help preclude the rise of another hostile global rival, enabling the
United States and the world to avoid another global cold or hot war and all the attendant dangers, including a
global nuclear exchange. U.S. leadership would therefore be more conducive to global stability than a
bipolar or a multipolar balance of power system.
58
Oil
Mexico Econ Mod
High prices upholds the Mexican economy

Business Week in 8/16 2004, Geri Smith,
The Mexican economy also has been buoyed by low global interest rates and high oil prices -- Mexico is the
world's sixth-largest oil producer. Moreover, the bursting of the tech bubble in 2000 hurt the U.S. market more
than it did Mexico's. For all these reasons, Mexican stocks have become something of a blue-chip emerging-
market play. ``When markets struggle globally, Mexico tends to outperform,'' says Berges. LOCAL HEROES
To be sure, Mexico is still dependent on trade with the U.S., where it sends nearly 90% of its exports. The U.S.
economic slowdown from 2000 to 2003 hurt Mexican electronics and auto-parts exporters. But experts say the
export downturn was offset by rapid growth in domestic businesses, such as retailers, food processors, beverage
companies, cement makers, and mobile telecom providers. Overall, the Mexican economy is expected to grow 4%
this year, while corporate profits have increased 28% on an annual basis in the first half. The profit growth has
pushed up prices of domestic-centered stocks such as TV network Grupo Televisa, which should benefit from
greater advertising expenditures. Its shares are up 20% this year. Another rising star is America Movil, the regional
wireless carrier controlled by tycoon Carlos Slim. Its stock has soared 30% this year. One reason for the fat profits
at big Mexican companies: lax regulation. That has made it easy for monopolies and oligopolies. ``They make a
lot of money, and that's good for their stock,'' says Mario Epelbaum, Latin America strategist at Morgan Stanley.
While that may seem good for investors in the short run, Mexico's failure to complete the structural reforms that
would make the economy more competitive could cramp growth over the long haul. Even so, stockpickers see
continued upside potential. ``Mexico is a growth story, an emerging-markets story, and a valuation story, and I
think it will be one of the big winners this year,'' says Geoffrey Dennis, a Latin America equities strategist at Smith
Barney. A winner? No one's saying that about the S&P 500.
Mexican economy key to global market

Dallas Morning News, November 28, 1995
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.
Global war results from economic decline

Walter Russell Mead, Los Angeles Times, August 23, 1998
Think about the mother of all global meltdowns: the Great Depression that started in 1929. U.S. stocks
began to collapse in October, staged a rally, then the market headed south big time. At the bottom, the
Dow Jones industrial average had lost 90% of its value. Wages plummeted, thousands of banks and
brokerages went bankrupt, millions of people lost their jobs. There were similar horror stories
worldwide. But the biggest impact of the Depression on the United States--and on world history--wasn't
money. It was blood: World War II, to be exact. The Depression brought Adolf Hitler to power in
Germany, undermined the ability of moderates to oppose Joseph Stalin's power in Russia, and
convinced the Japanese military that the country had no choice but to build an Asian empire, even if that
meant war with the United States and Britain. That's the thing about depressions. They aren't just bad for
your 401(k). Let the world economy crash far enough, and the rules change. We stop playing "The Price is
Right" and start up a new round of "Saving Private Ryan."
59
Oil
Mexico Ext
Low prices destabilize
Because price is so critical, players are forever seeking to manipulate it. Big importers like the United States and
Europe, whose economies are built on cheap oil, do everything they can to keep prices on the low side and will
routinely bring diplomatic pressure to bear on OPEC when prices get too high. (The United States will also
pressure OPEC when oil prices are too low, because low prices hurt U.S. oil companies and destabilize oil-depend-
ent allies like Mexico.) Oil companies, too, try to manipulate the market, exploiting everything from rumors to
artificial disruptions in supply to move prices and make money. In a tactic known as “squeezing the market’ for
example, oil companies will buy up twenty or thirty tanker loads of a particular grade of oil, such as Arab Extra-
Light, or West Texas Intermediate. Such a move can temporarily drive up prices for that particular grade by as
much as five dollars per barrel — and allow oil companies to make a tidy profit when the “squeezed oil” is sold.
High prices lead to diversification

Staff Business Week in 2004
Mexico continues to benefit from the resurgent American economy. However, there are indications that demand at
home is beginning to improve as well. In May, exports soared 21.1% from a year ago. The gain is due largely to a
jump in oil exports, aided by the higher price of crude. The economic recovery in the U.S., destination for 90% of
Mexico's exports, also helped. Based on recent U.S. economic data, demand from Mexico's northern neighbor is
set to remain strong in the second half of the year. Foreign demand is keeping factories busy. Industrial production
in April expanded 4% from a year ago. As a result, companies are creating jobs and ratcheting up capital
equipment purchases. Fixed investment surged 7.1% from a year ago in March, while the jobless rate dropped to
3.5% in April. Increased hiring, in turn, is sparking growth in consumer demand. April retail sales rose 3% from a
year ago, while vehicle sales in April improved for a fourth consecutive month. The brighter economic picture
prompted the Mexican government to lift its growth forecast on June 23, from a 3%-to-3.5% range up to 4%.
60
Oil
Mexico Ext
High oil prices are spurring Mexico’s economic growth
LA Times, 5/26/2004
Mexico, the world's No. 8 oil exporter, plans to boost crude oil exports to 1.95 million barrels a day this year, up
from the current level of 1.88 million barrels, Energy Minister Felipe Calderon said Tuesday. The move would
take oil exports up to the level fixed by Mexico's congress for 2004, helping to ease some of the pressure on oil
markets as the OPEC oil cartel keeps the world guessing about whether it will increase output at a June 3 meeting.
The increase in exports also will mean more money for the Mexican government, which depends on oil sales for a
third of its revenue. Robust oil revenue is bolstering Mexico's foreign reserves and economic growth but also is
stoking inflation. The U.S. benchmark price of crude oil closed Tuesday at $41.14 a barrel on the New York
Mercantile Exchange, after hitting a record Monday of $41.72 a barrel amid concern that rapid growth in demand
for fuel would outpace supplies. U.S. crude oil futures prices are up 41% from a year ago. Mexico, whose chief
customer is the United States, isn't a member of the Organization of the Petroleum Exporting Countries. But
Mexico has kept its crude oil exports at about 1.88 million barrels a day since Feb. 1, 2003, under a price-
stabilization deal with the cartel.
It’s proven now

Business Week in 8/16 2004, Geri Smith,
The Mexican economy also has been buoyed by low global interest rates and high oil prices -- Mexico is the
world's sixth-largest oil producer. Moreover, the bursting of the tech bubble in 2000 hurt the U.S. market more
than it did Mexico's. For all these reasons, Mexican stocks have become something of a blue-chip emerging-
market play. ``When markets struggle globally, Mexico tends to outperform,'' says Berges. LOCAL HEROES
To be sure, Mexico is still dependent on trade with the U.S., where it sends nearly 90% of its exports. The U.S.
economic slowdown from 2000 to 2003 hurt Mexican electronics and auto-parts exporters. But experts say the
export downturn was offset by rapid growth in domestic businesses, such as retailers, food processors, beverage
companies, cement makers, and mobile telecom providers. Overall, the Mexican economy is expected to grow 4%
this year, while corporate profits have increased 28% on an annual basis in the first half. The profit growth has
pushed up prices of domestic-centered stocks such as TV network Grupo Televisa, which should benefit from
greater advertising expenditures. Its shares are up 20% this year. Another rising star is America Movil, the regional
wireless carrier controlled by tycoon Carlos Slim. Its stock has soared 30% this year. One reason for the fat profits
at big Mexican companies: lax regulation. That has made it easy for monopolies and oligopolies. ``They make a
lot of money, and that's good for their stock,'' says Mario Epelbaum, Latin America strategist at Morgan Stanley.
While that may seem good for investors in the short run, Mexico's failure to complete the structural reforms that
would make the economy more competitive could cramp growth over the long haul. Even so, stockpickers see
continued upside potential. ``Mexico is a growth story, an emerging-markets story, and a valuation story, and I
think it will be one of the big winners this year,'' says Geoffrey Dennis, a Latin America equities strategist at Smith
Barney. A winner? No one's saying that about the S&P 500.
61
Oil
Renewables Mod
Low prices undercuts renewable research

Leonardo Maugeri, ENI SPA's senior vice-president of corporate strategies and international relations,
senior fellow at the World Economic Laboratory at MIT, a senior fellow at the Foreign Policy
Association, and a member of the executive council of the Center for Social Investment Studies, degree in
petroleum economics and a PhD in international political economy,, 12/15/2003, Oil & Gas Journal
Hysteria aside, cheap oil has always been and remains a curse for industrialized countries and the most elusive
enemy of oil security. It hampers any possibility of dealing with new energy alternatives to oil -- which are all
very expensive -- or with the development of new oil regions. It maintains Western habits -- and particular
those of the US -- of not promoting any form of energy-saving. Finally, it increases consumer dependence
on a limited group of countries with the lowest production costs, which today still are those in the Persian Gulf.
However, cheap oil is a curse for them too.
Consumers will only turn to renewables if it is apparent that high oil prices are permanent
Deutsche Presse-Agentur, 4/20, 2002
Oil prices have steadily risen since the start of this year, at one point even going beyond 28 dollars per barrel,
and while this is worrisome to most people, one sector of German industry is expectantly rubbing its hands:
the renewable energy companies. "An increased use of regenerative energies and a change in consumer
behaviour...will first set in when the 30 dollar (per barrel) mark is exceeded," says Norbert Allnoch,
director of the International Economic Forum for Regenerative Energy (IWR). Only when the expectation
sets in that "over the long term will there be higher oil prices" can a change in consumers' habits be expected, adds
Allnoch of the Muenster-based think tank. Regenerative energy is a grab-bag term to cover a wide range of
alternatives to fossil or nuclear fuels, including solar cells, hydroelectricity, wind power and bio-gas.
62
Oil
Economy mod
High prices stabilize the economy on a worldwide level- empirical

Andrew McKillop, April 19, 2004, Oil and Gas Journal
The real impact of higher oil prices, certainly up to the range of about $ 60/bbl, is to increase economic growth at
the composite worldwide level. This is the main reason why demographic oil demand during 1975, with oil prices
at $ 40-65/bbl in 2003 dollars, was significantly higher than it is today. It should be clearly understood that if the
demographic demand rate in 2003 was the same as in 1979, then world oil demand in 2003 would have been 95.4
million b/d. Relative to real total world oil demand at this time (about 78 million b/d), the additional capacity
needed would be close to two times Saudi exports, more than three times Russia's export offer, or well above five
times Venezuela's current export capacity. There is no certainty at all that world oil supply would or could have
been able to meet this demand. Higher oil prices operate to stimulate first the world economy, outside the member
countries of the Organization for Economic Cooperation and Development, and then lead to increased growth
inside the OECD. This is through the income, or revenue, effect on oil exporter countries, and then on metals,
minerals, and agrocommodity exporter countries, most of them low income (per capita gross national product
below $ 400/year). Almost all such countries have very high marginal propensity to consume. That is to say that
any increase in revenues, due to prices of their export products increasing in line with the oil price, is very rapidly
spent on purchasing manufactured goods and services of all kinds. During 1973-81, in which oil price rises before
inflation were 405%, the New Industrial Countries (NICs) of that period -- notably the so-called "Asian Tigers"
Taiwan, South Korea, and Singapore -- experienced very large and rapid increases in solvent demand for their
export goods. In easily described macroeconomic terms, the revenue effect of higher oil prices "greasing
economic growth" was and is much stronger than the price effect on industrial producers. NICs as a group or bloc
of economies rapidly expanded their oil imports and increased their oil consumption as prices increased in 1974-
81, because demand for their export goods had increased, due to the global economic impacts of higher oil and
"real resource" prices. This has very strong implications for oil demand of today's emerging and giant NICs with
large populations and immense internal markets: China, India, Brazil, Pakistan, and Iran. For the much smaller
NICs of 1975-85, their oil import trends during 1974-81 show dramatic growth only slightly impacted by the
major price rises of the period. In general terms, the NICs Taiwan, South Korea, and Singapore increased their oil
demand by about 60-80% in volume terms in this period of a 405% increase in nominal prices (Table 2).
Nuclear war
Even with stock markets tottering around the world, the president and the Congress seem determined to spend the
next six months arguing about dress stains. Too bad. The United States and the world are facing what could grow
into the greatest threat to world peace in 60 years. Forget suicide car bombers and Afghan fanatics. It's the
financial markets, not the terrorist training camps that pose the biggest immediate threat to world peace. How can
this be? Think about the mother of all global meltdowns: the Great Depression that started in 1929. U.S. stocks
began to collapse in October, staged a rally, then the market headed south big time. At the bottom, the Dow Jones
industrial average had lost 90% of its value. Wages plummeted, thousands of banks and brokerages went bankrupt,
millions of people lost their jobs. There were similar horror stories worldwide. But the biggest impact of the
Depression on the United States--and on world history--wasn't money. It was blood: World War II, to be exact. The
Depression brought Adolf Hitler to power in Germany, undermined the ability of moderates to oppose Joseph
Stalin's power in Russia, and convinced the Japanese military that the country had no choice but to build an Asian
empire, even if that meant war with the United States and Britain. That's the thing about depressions. They aren't
just bad for your 401(k). Let the world economy crash far enough, and the rules change. We stop playing "The
Price is Right" and start up a new round of "Saving Private Ryan."
63
Oil
Economy Ext
Key to global economy

Andrew McKillop, April 19, 2004, Oil and Gas Journal
The standard comment that "high oil prices hurt economic growth" is totally undermined by real-world and real-
economy trends. Comparing oil and natural gas price averages in the US in late 1998 with price averages in late
2003, we find that crude oil import prices and bulk gas supply prices have risen more than 200%. Meanwhile,
claimed economic growth of the US economy was running at more than 7% on an annual basis in late 2003. It is
therefore not difficult to argue that sharply rising oil and gas prices in fact increase economic growth rates, not the
reverse. Logically, low or suboptimal economic growth rates would tend to lower energy demand growth rates,
which in turn would lower oil and gas prices. This has many "perverse," or apparently illogical, implications. The
worldwide economic mechanism that maintains oil demand growth at low levels when oil prices are low is
complex and ramifying. The components of this simple fact of world economic history notably include the world
average per capita, or "demographic," demand for oil, which reached its most recent peak when oil prices reached
their most recent all-time high. In 1978 world average demand on a per capita basis was 5.5 bbl/year. Since the
mid-1980s, it has been around 4.5 bbl/capita/year (bcy). Because of this fact, any argument that higher oil prices
-- at least up to the point where they rise to perhaps $ 75-100/bbl -- will or can result in a fall in world oil demand
is doomed to failure when tested by real-world and real economic data. The major reason for "price inelasticity" --
or in fact "reverse elasticity," which is demand tending to rise with rising prices -- is that world economic growth
tends to increase when oil prices rise. Demographic demand, oil prices World annual average demographic oil
demand increased, regularly but erratically, through the 1970s, to a peak of a little more than 5.5 bcy in 1979 from
about 4.7 bcy in 1970. Since that time the demographic rate bottomed in the low oil price period of 1986-99 and
has now started, slowly, to increase again. Table 1 shows how demographic demand has varied since 1979.
64
Oil
A2 Economy
High prices don’t collapse the economy

Russ Wiles, 12-30-2007, Gannett News Service, “Oil prices aren't everything,”
http://www.app.com/apps/pbcs.dll/article?AID=/20071230/BUSINESS/712300340/1003
When it comes to rising energy prices, it's easy to assume the worst and repeat the same old mantras that
seemed to work in the past. Hardly a day passes when some economist or stock-market prognosticator
doesn't warn about the danger of lofty oil prices and the damage they're certain to inflict on a teetering
economy. Americans recall oil-price shocks of past decades and can't help but wonder what's around the
corner, especially now that China, India and other developing nations are squeezing into the oil market,
while supply lines stretching to the Persian Gulf, Venezuela and other trouble spots seem less tenable than
ever. The natural assumption is that one more energy straw will break the economy's back. And yet the
facts, to a large degree, speak otherwise. Crude-oil prices surged 96 percent this year from their mid-
January low to a late-November peak near $100 a barrel — and they remain about 80 percent higher. Yet
the economy didn't collapse, corporate profits didn't dry up, the stock market remains above where it
started the year and inflation hasn't gone through the roof (although a November uptick bears watching).
Even with dramatically higher oil prices, Gross Domestic Product rose a brisk 4.9 percent in the third
quarter — and that despite the drag exerted by the real estate slump, tighter credit conditions and
banking-industry struggles. So why didn't an 80 percent-plus spike in crude-oil prices cause more
damage? One explanation relates to the imperfect link between oil and gasoline prices. Simply put, crude
oil accounts for little more than half the cost of a gallon of gasoline, with taxes, refining and distribution
expenses, profits and other ingredients representing the rest. These other inputs haven't risen nearly as
much as crude itself, helping to dampen the impact at the pump. At about $3 a gallon, gasoline prices are
up 30 percent this year. That's not insignificant, but it's not an 80 percent spike, either. More telling,
people can afford higher prices now because energy doesn't count as heavily in the average consumer's
budget as it once did. Household energy consumption is certainly much lower than the last time rising
energy costs precipitated a recession in the 1970s, said James Swanson, chief investment strategist at
MFS Investment Management in Boston. Energy accounts for about 6 percent of consumer spending
these days, Swanson said, citing information from the Bureau of Economic Analysis. That's down from
more than 9 percent in the late 1970s and early 1980s.
65
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Venezuela Mod
Decreased production guts the Venezuela’s economy
Time Magazine 7/26/2004
The curtain is rising this summer on Rodriguez's most interesting act yet: a five-year, $37 billion PDVSA plan to
revive and expand oil production while budgeting almost $2 billion a year for antipoverty initiatives ranging from
potable-water to literacy projects. Making PDVSA (called Pedevesa) an oil firm cum development agency will be
daunting, even with crude prices hovering near $40 a bbl. Venezuela's oil industry has been waylaid by political
turmoil, including a reckless near shutdown by anti-Chavez managers and other employees at PDVSA in 2002 and
2003, intended to paralyze the industry and force Chavez's resignation. The stoppage, which Rodriguez calls
"sabotage," at one point slashed the nation's oil output to a scant 50,000 bbl. a day and cost the economy well over
$7 billion. It dented U.S. imports for months and ended in the dismissal of 19,000 PDVSA employees, half the
company's work force. Though Rodriguez insists that PDVSA is pumping more than its prestrike level of 3.1
million bbl. a day, analysts say the company is barely reaching 2.5 million bbl. a day. "The market," says a U.S. oil
analyst, "is watching Ali Rodriguez perhaps more closely than any other oil executive in the world right now."
This triggers a global recession

The Times of India 2003 “America's war could induce recession,” February 08,
http://timesofindia.indiatimes.com/articleshow/36892893.cms]
The answer lies in oil. Wars may not cause recessions, but high energy prices do. The first oil shock of 1973-74,
when prices quadrupled, led to a major global recession. So did the second oil shock of 1979-80. So did high oil
prices in 1990-91, related to Saddam Hussein's invasion of Kuwait and subsequent expulsion. The rise of oil prices
to $30 per barrel in 2000 was one cause of the global recession in 2001. Today, the US oil price has crossed $32
per barrel. This partly reflects fears of an Iraq war, partly a strike in the Venezuelan oil industry, and partly a surge
in consumption generated by cheap oil in most of the 1990s (the price fell to $10 per barrel in 1998). It also
reflects a cold wave in most of North America that has increased energy used for heating. Remember that a
similar cold wave hit the US in the winter of 2000-01, sending energy prices soaring. Remember that the US
economy slipped into recession immediately afterwards. So, global prospects would be murky even without an
Iraq war. The war could ensure that high oil prices continue for a year or more. In 1991, George Bush Sr
steamrollered into the region. Saddam set fire to Kuwait 's oilfields as he retreated, and it took more than eight
months to repair the damage and start the oil flowing again. The recession that followed cost Bush Sr the next
presidential election. What an irony, that Saddam Hussein kept his job while Bush lost his. History could just
repeat itself. George Bush Jr plans another war on the same enemy, and will surely win again. But he could create
another global recession at the very start of the campaign for the next presidential election in 2004, and so end up
committing political suicide. In the event of a US attack, Iraqi artillery will try to blow up Kuwait 's oilfields,
which are in easy range. Iraq could set fire to its own giant Rumaila field, which stretches down to the Kuwait
border and beyond. This will create an inferno of smoke and fire that acts as a barrier to US tanks, and disrupts the
working of US heat-seeking missiles, infra-red weaponry and laser-guided weapons. Huge oilfields are also
located in Northern Iraq , which may experience another US armed thrust via Turkey . Those fields too may be
set on fire. Dictators often follow a scorched-earth policy as they retreat to make a final stand. Saddam is likely to
do the same. Iraq 's entire oil industry is likely to go up in flames. It took eight months to put out the fires in
Kuwait in 1991. It may take two years to put out all the fires in Iraq and resume production. Much has been said in
the press of Iraq 's huge geological reserves, of the prospect of greatly increasing Iraq 's output once Saddam is
deposed, UN oil sanctions are lifted, and foreign investment floods in. Very true, but that process will increase oil
flows and reduce prices only after two years or so. War will immediately mean slashed production, and oil prices
could spike to $40-50 per barrel. However, that will be temporary. Saudi Arabia can, with a month or two of
notice, increase its output to make good much of the Iraqi shortfall. Yet it is in Saudi Arabia 's interest to keep oil
prices above $30 per barrel. Every OPEC producer knows that prices may crash when Iraqi oil floods the
market, and will want to cash in on the preceding scarcity. That could cause a global recession, or at least reduce
global growth to a crawl.
66
Oil
Venezuela Link Ext
High prices stabilize Ven.

World Markets Analysis February 17, 2003 Lexis
* Venezuela: It will come as little surprise
Venezuela, Mexico and Peru all reported their preliminary 2002 GDP figures last week.
that 2002 GDP growth figures are poor. At -8.9% of GDP they are, however, broadly in line with
expectations, particularly given the effects of a general strike during almost all of December. Although
Venezuelan growth swings more wildly than other states in Latin America, given its high oil exports, the
average oil price over 2002 has been relatively high in comparison with previous years. This emphasises
that 2002's contraction is largely the product of internal political and economic dynamics. The outlook
for 2003 is extremely cloudy. The roll-out of draconian economic policies (foreign-exchange controls, price controls) can only
weigh more heavily on the suffering non-oil sector. However, the general strike has lifted, and there is some
countervailing influence from the potential of high oil prices in 2003. Nevertheless, further contraction -
if more mild - is to be expected.
67
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Venezuela Impact Ext

Conflict
James L. Williams (President of WTRG Economics) and A.F. Alhajji (Professor of Economics at Ohio
Northern University) 2003 “The Coming Energy Crisis?,” Oil & Gas Journal, February 3,
http://www.wtrg.com/EnergyCrisis/
Various measures of US energy security indicate that the US might be heading for an energy crisis.
Many of the warning signs that existed before the energy crises of 1973 and 1979 exist today and they
indicate that the current situation could be even worse. US dependence on petroleum imports has grown
steadily for over a decade and has been at record levels for several years. Petroleum inventories are low
and the ability of Strategic Petroleum Reserves (SPR) and commercial petroleum stocks to cope with an
interruption in imports matches the historic lows preceding the 1973 and 1979 energy crises. The
potential for an energy crisis has never been higher. Oil prices have recently exceeded $30 per barrel and
they may continue to increase. The disruption of Venezuelan oil supplies has increased the US
dependence on Middle Eastern oil and made the US more susceptible to supply interruption. With the
crisis in Venezuela, the capacity of OPEC to meet any additional supply interruption is limited and a war
with Iraq would put OPEC at its limit. Any energy crisis in the near future will hinder President Bush’s
efforts to stimulate the economy through tax cuts and other fiscal measures. An energy crisis could
cause a recession, inflation, and higher unemployment. In this article we will discuss various measures
of energy security, import dependency and vulnerability to assess the current US energy situation. II.
What Constitutes an Energy Crisis? Energy crisis is a situation in which the nation suffers from a
disruption of energy supplies (in our case, oil) accompanied by rapidly increasing energy prices that
threaten economic and national security. The threat to economic security is represented by the
possibility of declining economic growth, increasing inflation, rising unemployment, and losing billions
of dollars in investment. The threat to national security is represented by the inability of the US
government to exercise various foreign policy options, especially in regard to countries with substantial
oil reserves. For example, the recent disruption of Venezuelan oil supplies may limit the US policy
options toward Iraq. Looking at the two energy crises of 1973 and 1979, we find some common
elements between the two. Both events: 1. started with political turmoil in some of the oil producing
countries. 2. were associated with low oil stocks. 3. were associated with high import concentration
from a small number of suppliers. 4. were associated with declining US petroleum production. 5. were
associated with high dependency on oil imports. 6. were associated with low level of oil industry
spending 7. led to speculation 8. caused an economic downturn 9. limited US policy options in the
Middle East The same indicators and warning signs that existed prior to the energy crises of 1973 and
1979 exist today: a political crisis in Venezuela that halted most of the Venezuelan oil exports, the threat
of war with Iraq, stocks at their lowest level in twenty six years, imports nearly record high, more
concentrated imports than ever, and low upstream expenditures. However, the current problem is even
worse than the previous two energy crises because, unlike the 1970s, we are starting from a case of low
economic growth. The massive stimulus package that is planned by the Bush administration could
exacerbate the situation by increasing the demand for oil.
68
Oil
High prices good- shocks
Low prices only delay shocks

Richard N. Haass, Vice President and Director, Foreign Policy Studies, 2/24/2000, “Economic and
Security Implications of Oil Price Increases,”
http://www.brook.edu/dybdocroot/views/testimony/haass/20000324.htm
Implicit in this suggestion is an acceptance of the notion that low prices per se should not be a goal of
American energy policy. I say this for reasons that go beyond the adverse impact of low prices on
American businesses and communities that depend on income from oil production or from the reality
that low prices encourage consumption with all that does to worsen the balance of payments and the
environment. Low prices also discourage exploration and production, which over time all but guarantees supply
shortages and higher prices. In addition, low prices, such as existed a year ago, cause great economic,
social, and political hardship for producer countries, including Mexico and Saudi Arabia, whose stability
is arguably a vital national interest of the United States.
69
Oil
A2 Shocks- No impact
No internal link- oil doesn’t impact the economy
Cait Murphy, Fortune, March 20, 2000
Relax: This is not an oil shock. It is not even an oil tremor. It is something along the lines of an oil belch: Not
particularly appealing to experience, with an unpleasant aftertaste--but hardly threatening. How can that be? The
price of a barrel of oil has tripled over the past year--surely, that has to be a problem. Ah, but when it comes to oil,
self-evident truths vaporize like a tank of gas in a '67 Chevy. The bottom line is that the recent run-up in oil prices
will hurt a few people for a little while, such as truckers and residents of drafty, old, oil-heated homes. The rest of
us will shrug it off. The price shock has been a couple of years in the making. In 1998 everything went wrong for
oil exporters. Consumption rose only 0.1%, far less than anticipated, because of a mild winter and unexpected
economic crises in Asia and Russia. OPEC, in a ludicrously awful bit of timing, had just turned on the taps,
agreeing in November 1997 to increase production. Lots of supply, low demand. The result: Prices crashed. In
1999 the opposite happened. Asia's unexpectedly robust recovery led an increase in demand for oil; the U.S. winter
was cold. And OPEC, in a remarkably adept bit of timing, had coaxed production cuts. As supplies and inventory
waned, prices rose, hitting $ 31 the first week of March. Because the oil shock of the 1970s had such a massive
effect on the public psyche, there is a knee-jerk fear whenever prices rise a lot. But this time prices tripled from
abnormally low, even derisory levels (see chart); in real life, $ 30 a barrel is not outrageous. Besides, oil ain't what
it used to be. As a share of the U.S. economy, oil accounts for only 3% of GDP, down from almost 9% in the late
1970s. More wealth is being generated by industries that don't use much oil, like IT. For each dollar of GDP
America generates, it uses half as much oil as a generation ago. (For more, see The Web Page.) Even
manufacturing appears untroubled. Many companies hedge their energy risks through futures contracts. Few plants
use oil for power generation anymore, and those that do often have the ability to switch to another source
(typically gas) if prices soar. "Given that we got through the Asian crisis hardly breaking stride, I think $ 30 oil
isn't really a problem," says Joe Kennedy, economist at the Manufacturers' Alliance.
No impact
Pietros Nivola, senior fellow at the Brookings Institute, 2/11/2001, Los Angeles Times
Alas, this critique did not pause to ponder an obvious puzzle. In 1973, when this country imported little
more than a third of the petroleum it consumed, why did the economy prove far more, not less, exposed to the
shock of rising international oil prices than it did last year when those prices soared while our dependence
on foreign oil reached an all-time high? Economic security is not a function of how much energy a nation
produces domestically or buys from abroad. Britain, for instance, produces more oil than it needs. Yet Britain's
self-sufficiency scarcely shielded British consumers from the sudden spike in gasoline prices last summer. The
reason: Petroleum prices everywhere are set in a world market, and no country, even a net exporter, can readily
repair to an energy policy that says, in effect, "Stop the world. I want to get off." More consequential for
economic stability than the share of fuel supplied by foreign sources is a nation's level of energy consumption
and susceptibility to inflationary pressures. The United States today is much more energy efficient than it was in
1973. All things being equal, our economy now is roughly half as vulnerable to the effects of energy price
increases. The economy is also far less inflation-prone than in the 1970s. Consequently, even the tripling of
global crude-oil prices between 1998 and 2000 did little damage.
70
Oil
**Dependency Good**
71
Oil
Terrorism Mod
Dependency key to stabilize terrorist regimes

The Union Leader, 2/14/2002
Leftist critics of American involvement in the Middle East are urging the United States to raise federal
fuel efficiency standards to reduce dependence on foreign oil. They claim that our purchasing of oil
from that region is angering radical terrorists who would leave us alone if only we removed our
presence and never again set foot on their sand-swept shores. Conservative critics of foreign oil
dependency say the United States must discover and use additional domestic sources of oil because
buying oil from Arabs indirectly funds Middle Eastern terrorist organizations. Once we have these new
sources of oil, we can stop writing checks to Mohammed and let that region alone. Either way, the result
is the same: Scared by the Sept. 11 attacks, the United States will have pulled out of the Middle East and
turned inward. If this happens, the unavoidable conclusion that all Islamist jihad warriors will come to is
that terrorism against the United States works. There is another answer, however. The United States
does not have to turn tail and run. Instead, we could solve the problem. And dependence on oil from the
Middle East is not the problem. The problem is the theocratic Middle Eastern regimes that control the
oil and use Western dollars to fund terrorist organizations. This includes “friendly” countries like Saudi
Arabia.
Extinction
John Steinbruner, senior fellow at the Brookings Institution, chair of the committee on international
security and arms control of the National Academy of Sciences, Foreign Policy, December 22, 1997
That deceptively simple observation has immense implications. The use of a manufactured weapon is a
singular event. Most of the damage occurs immediately. The aftereffects, whatever they may be, decay
rapidly over time and distance in a reasonably predictable manner. Even before a nuclear warhead is
detonated, for instance, it is possible to estimate the extent of the subsequent damage and the likely level
of radioactive fallout. Such predictability is an essential component for tactical military planning. The
use of a pathogen, by contrast, is an extended process whose scope and timing cannot be precisely
controlled. For most potential biological agents, the predominant drawback is that they would not act
swiftly or decisively enough to be an effective weapon. But for a few pathogens - ones most likely to
have a decisive effect and therefore the ones most likely to be contemplated for deliberately hostile use -
the risk runs in the other direction. A lethal pathogen that could efficiently spread from one victim to
another would be capable of initiating an intensifying cascade of disease that might ultimately threaten
the entire world population. The 1918 influenza epidemic demonstrated the potential for a global
contagion of this sort but not necessarily its outer limit.
72
Oil
Terrorism D
Tech barriers mean no nuclear war

James STERNGOLD 2004, “Assessing the Risk of Nuclear Terrorism,” San Francisco Chronicle
Michael May, a former director of the Lawrence Livermore National Laboratory, where U.S. nuclear
weapons are designed, and now a professor emeritus at the Center for International Security and
Cooperation at Stanford, said the technological hurdles to a terrorist bomb remain, realistically, quite
high. He discounted the possibility terrorists could make use of a stolen warhead because of all the
sophisticated security devices built into them. He also said it would be all but impossible for a non-state
terrorist group to develop the capability of making its own weapons-grade uranium, because of the
industrial infrastructure required.
Less than 1% risk that terrorists could build a big bomb

James STERNGOLD 2004, “Assessing the Risk of Nuclear Terrorism,” San Francisco
Chronicle
David Albright, president of the Institute for Science and International Security, a leading Washington
think tank on nuclear weapons issues, said that to some immeasurable degree, the chances of such a strike
do appear to be growing, particularly because of revelations about how Pakistan was able to spread
weapons technology with the help of businessmen in places like Malaysia and Dubai. He agreed with
Allison that the Bush administration needed to do more, and quickly, to safeguard the hundreds of tons of
weapons-grade uranium in Russia. That fuel could be transformed into a nuclear device or an effective
dirty bomb, which would disperse a lethal cloud of radioactive dust. "What's not understood is why we
haven't been hit by one already," said Albright of dirty bombs. He added that he placed the probability of
terrorists developing a working nuclear-fission bomb -- in which the detonation triggers a nuclear chain
reaction releasing an immense burst of energy, as at Hiroshima and Nagasaki -- at "less than 1 percent."
73
Oil
US-Israel Relations Mod
Oil dependency key to stabilize US-Israel relations

Ross Gelbspan, editor and reporter at The Boston Globe and The Washington Post and professor at the
Columbia University School of Journalism , The Heat is On, 1997, p. 191
It would require a jolt of stand-up social courage from us all. For one thing, this undertaking will have costs. The most obvious costs
will be felt by the nations and companies that most depend on fossil fuels for their economic wealth. Australia would lose a lot of
money from the coal it exports. Saudi Arabia, Kuwait, and the other oil-producing nations would become poorer relative to other countries.
They could recover some measure of their loss by constructing vast solar farms. But their oil wealth may well prove to have been a fragile
historical bubble, a fifty-year windfall for the Middle East. (The plan might also cause unease in Israel. As the strategic impor-
tance of Middle Eastern oil declines, the U.S. commitment to that country might decline as well.)
This leads to a violent lashout

Arlene Hoag (Psychology U of California at Santa Cruz) The Communist Threat. Survival, Disaster
Preparedness, Food Storage and Shelters. 1998 http://www.nodoom.com/chapter13to14.html
Nuclear weapons and technology are rapidly being proliferated throughout the third world countries. Many of these
new members to the nuclear club are not friendly to the U.S. North Korea, Iran, Libya and Iraq are several examples. In fact, U.S. intelligence
agencies say that North Korea has developed a nuclear weapon and an ICBM delivery system. These rockets include the 1,300-kilometer range
Nodong-I ICBM, which is now operational, the 2,500-kilometer range Nodong-II and the 5,000+ kilometer range Nodong-III. The 5,000+
kilometer range Nodong III could reach the United States with a nuclear payload. A 1995 CIA report to Congress revealed that Iran obtained
four ballistic missile launchers from North Korea. Despite U.S. protests, Russia is still going ahead with its sale of a nuclear
reactor to Iran. U.S. intelligence experts suggest that Iran could have nuclear missile capability by or before the year 2000. The
potential ramifications of this situation in relation to Israel are dire, and history has shown that if Israel feels
threatened, its inclination is to make a preemptive strike. Even more ominous is the fact that the last major Arab-
Israeli conflict brought the United States and the Soviet Union to the very brink of world war.
Nuclear War
John Steinbach. “Israeli Nuclear Weapons: A Threat to Piece.” 3 Mar. 2002.
http://www.converge.org.nz/pma/mat0036.htm
Meanwhile, the existence of an arsenal of mass destruction in such an unstable region in turn has serious implications for future arms control
and disarmament negotiations, and even the threat of nuclear war. Seymour Hersh warns, "Should war break out in the Middle East
again,... or should any Arab nation fire missiles against Israel, as the Iraqis did, a nuclear escalation, once unthinkable except as a last
resort, would now be a strong probability."(41) and Ezar Weissman, Israel's current President said "The nuclear issue is gaining
momentum (and the) next war will not be conventional."(42) Russia and before it the Soviet Union has long been a major (if not the
major) target of Israeli nukes. It is widely reported that the principal purpose of Jonathan Pollard's spying for Israel was to furnish satellite
images of Soviet targets and other super sensitive data relating to U.S. nuclear targeting strategy. (43) (Since launching its own satellite in
1988, Israel no longer needs U.S. spy secrets.) Israeli nukes aimed at the Russian heartland seriously complicate disarmament and arms control
negotiations and, at the very least, the unilateral possession of nuclear weapons by Israel is enormously destabilizing, and
dramatically lowers the threshold for their actual use, if not for all out nuclear war. In the words of Mark Gaffney, "... if the
familar pattern(Israel refining its weapons of mass destruction with U.S. complicity) is not reversed soon- for whatever reason- the
deepening Middle East conflict could trigger a world conflagration."
74
Oil
Economy Mod
Saudi Oil investments key to the economy
John Bacher, chair of the Niagra River Restoration Council and past president of the Preservation of
Agricultural Lands Society, 3/22/2002, Earth Island Journal
Increasing the affordability of solar power is critical to phasing out fossil fuels. Politicians in Congress who are
allied to oil interests understand this quite well -- in a negative sense. The successful battle to keep oil drilling out of
the Arctic National Wildlife Refuge and its two complementary Canadian national parks shows that, in a fully democratic society, oil power
ultimately loses when confronted by a strong environmental movement. The deadly trinity of oil, war and dictatorship presents the greatest
challenge to humanity at the start of the new millennium. Fortunately, with conservation and by replacing fossil fuels and nuclear energy with
renewables, it is possible to foster instead a holy trinity of peace, human rights and environmental sustainability Bush's Petrodollar Conflict
There is a flip-side to the oil equation that Big Oil and the White House would like to keep hidden: the US money
that flows to foreign Petrotyrannies that is reinvested in the US economy. Saudi billionaires have invested an
astonishing $ 600 billion in the US economy -- in banks, defense, telecommunications, shopping malls and real
estate. Saudi Prince Alwaleed bin Talal has invested nearly $ 10 billion in Citigroup and nearly $ 1 billion in AOL
Time Warner. If these Middle East billionaires suddenly decided to "disinvest" in the US, the impact on the US
economy would be devastating.
Nuclear war
Even with stock markets tottering around the world, the president and the Congress seem determined to spend the next six months arguing
about dress stains. Too bad. The United States and the world are facing what could grow into the greatest threat to world peace in 60 years.
Forget suicide car bombers and Afghan fanatics. It's the financial markets, not the terrorist training camps that pose the biggest immediate
threat to world peace. How can this be? Think about the mother of all global meltdowns: the Great Depression that started in 1929.
U.S. stocks began to collapse in October, staged a rally, then the market headed south big time. At the bottom, the Dow Jones industrial average
had lost 90% of its value. Wages plummeted, thousands of banks and brokerages went bankrupt, millions of people lost their jobs. There were
similar horror stories worldwide. But the biggest impact of the Depression on the United States--and on world history--wasn't money. It
was blood: World War II, to be exact. The Depression brought Adolf Hitler to power in Germany, undermined the ability of moderates to
oppose Joseph Stalin's power in Russia, and convinced the Japanese military that the country had no choice but to build an Asian empire, even
if that meant war with the United States and Britain. That's the thing about depressions. They aren't just bad for your 401(k). Let the world
economy crash far enough, and the rules change. We stop playing "The Price is Right" and start up a new round of
"Saving Private Ryan."
75
Oil
A2 Hurts Economy
Dependency doesn’t threaten world economy

John Mitchell et all, Chairman of the Energy and Environment Programme at the Royal Institute of
International Affairs, Koji Morita, Norman Selley, and Jonathan Stern, Fellows at the Energy and
Environment Programme at the Royal Institute of International Affairs, The New Economy of Oil, 2001
pg.191
Economics matter for national security because the strength of the economy affects the ability of a country to sustain a military defense policy
and to support its foreign policy with economic and, if necessary, military means. But from the security point of view the important
question is not whether the risks of energy trade with the Middle East can be avoided, but whether importing countries which are industrial or
political rivals will be differently affected, and how big the effects might be in relation to the alternatives. Figure 7.4 gives a broad picture of
the importance of Middle East oil in terms of world energy and oil supplies, and in the international oil trade now and in the ‘conventional
vision’ for 2020 taking the ELA reference (International Energy Outlook 2000) view of Middle East oil production capacity. In absolute
numbers, the Middle East supplies about 26% of the world’s liquid fuel supplies and about 10% of the world’s energy
supplies. By 2020, using rather positive assumptions about growth in oil demand, these percentages could grow to about 36%
of oil supplies and about 13% of world energy supplies.8 Today the Middle East oil accounts for about 5% of US
energy consumption and about 10% of European energy consumption. For 2020 the proportions will be roughly the same. In the
long run, this level of dependence should not be regarded as life-threatening to the world economy or as carrying
intolerable economic risks to energy users.
76
Oil
A2 Iran prolif
Iran’s arsenal will be opaque

Barry R. Posen 2006 “A Nuclear-Armed Iran: A Difficult but Not Impossible Policy Problem”
CENTURY FOUNDATION http://www.tcf.org/publications/internationalaffairs/posen_nuclear-armed.pdf
Precisely because even a single nuclear explosion is so destructive, Iran does not need a particularly large
nuclear force to deter nuclear attacks by other nuclear states. If Iran’s secondary purpose is to discourage
further any effort to conquer Iran and change the government, then the state attempting to do that will
inevitably present lucrative proximate targets for Iranian nuclear weapons. To deter its neighbors, or
invaders, Iran does not need particularly long-ranged survivable systems—short-range mobile missiles
should be sufficient and these are the easiest to hide. Iran’s most reasonable strategy is to disperse and
hide its small force as best it can, and keep it quiet so that foreign intelligence means cannot attack it. This
means eschewing dangerous alert postures, first strike doctrines, and the like. Dispersal, secrecy, stealth,
and communications security are the means to survival, though they may present some command and
control issues, and some nuclear security issues. There is no reason in principle, however, why a state
such as Iran cannot use multiple-key arrangements to ensure against the unauthorized launch of its
weapons.
Nuclear Iran creates stability and dialogue in the Middle East preventing future warfare.
Ehsaneh I. Sadr (graduate student in the department of government and politics at the University
of Maryland, College Park) SUMMER 2005 “THE IMPACT OF IRAN’S NUCLEARIZATION ON ISRAEL” MIDDLE EAST POLICY, VOL. XII, NO. 2
The above analysis indicates that a nuclearized Iran is extremely unlikely to pose an existential threat to Israel. The
doctrine of Mutually Assured Destruction holds in the Iranian context: Iran’s clerical rulers, anxious to protect
their own power, citizens and civilization, will not launch a war that will lead to their own destruction. Iran’s rulers
are extremely unlikely to pass nuclear material on to terrorist actors whose loyalty they cannot ensure. They are
also unlikely to step up conventional or terrorist harassment of Israel for fear of the escalation of hostilities to nuclear
warfare. The impact of Iran’s acquisition of nuclear weapons upon Israel’s regional interests is less problematic than one might think. Although the regime-change option would be off the table, it is not clear that it has
ever been a feasible alternative given current geopolitical realities. Any increase in domestic political support for the Iranian regime is likely to be temporary. Iran may indeed be empowered to
pursue its own regional interests, but such pursuit is not necessarily bad for Israeli interests. Finally, it will be many
years before Iran’s weapons stockpile begins to approach Israel’s and the latter is compelled to engage in an
expensive arms race. Indeed, there is reason to believe that Iran’s access to nuclear weapons may increase the prospects
for regional stability and even Middle East peace. Given the horrendous consequences of an accidental nuclear war, it will be
imperative that Iran and Israel develop some sort of ability to communicate with one another directly. It is not outside
the realm of possibility that the institutionalization of such communications may be the first step in the normalization of
relations between the two countries and the future integration of Israel into its neighborhood.
77
Oil
**Dependency Bad**
78
Oil
Economy Mod
Dependency kills the economy- multiple reasons
Victor, Deutch, Schlesinger 2006 (National Security Consequences of .S. Oil Dependency,
http://www.cfr.org/content/publications/attachments/EnergyTFR.pdf)
The growing worldwide demand for oil in the coming decades will magnify the problems that are already
evident in the functioning of the world oil market. During that period, the availability of low-cost oil
resources is expected to decline; production and transportation costs are likely to rise. As more
hydrocarbon resources in more remote are a saretapped, the world economy will become even more
dependent on elaborate and vulnerable infrastructures to bring oil and gas to the
markets where they are used. For the last three decades, the United States has correctly followed
a policy strategy that, in large measure, has stressed the importance of markets. Energy markets, however,
do not operate in an economically perfect and transparent manner. For example, the Organization of
Petroleum Exporting Countries (OPEC), quite notably, seeks to act as a cartel. Most oil and gas resources
are controlled by state-run companies, some of which enter into supply contracts with consumer countries
that are accompanied by political arrangements that distort the proper functioning of the market. These
agreements, such as those spearheaded by the Chinese government in oil-rich countries across Africa and
elsewhere, reflect many intentions, including the desire to ‘‘lock up’’ particular supplies for the Chinese
market. Some of the state companies that control these resources are inefficient, which imposes
further costs on the world market. And some governments use the revenues from hydrocarbon sales for
political purposes that harm U.S. interests. Because of these realities, an active public policy is needed to
correct these market failures that harm U.S. economic and national security. The market will not
automatically deliver the best outcome.
79
Oil
Economy Ext
Dependency kills competitiveness killing the economy

Dr. John Scire Adjunct Professor of Political Science at UNR “Oil dependency, national security”
February 10, 2008 http://www.nevadaappeal.com/article/20080210/OPINION/227691244
The economic costs include net capital outflows, loss of competitiveness in world markets and the costs
of supply and demand disruptions. In 2007, estimated net capital outflows from the U.S. to oil exporters
exceeded $150 billion. The money used to purchase oil today is not repatriated in purchases of U.S. goods
and services by oil exporting states as it was in the 1970s. As a result, the American economy loses $150
billion every year and that money only increases other countries' competitiveness. Supply disruptions are
another economic cost of dependency. In a 2003 report, the National Defense Council Foundation
(NDCF) estimated total costs to the American economy from supply disruptions in 1973, 1979, and 1990
at $2.3 to $2.5 trillion. A new term, demand disruption, has recently emerged in the financial press to
explain the current high price of oil. Demand disruptions occur when demand exceeds supply. While
supply disruptions tend to be short-term and fairly easily resolved, demand disruptions are longer-term
and much more difficult to resolve. Other than paying up for oil and suffering the economic
consequences, our only solution during extended demand disruptions would be to be capable of rapidly
switching to alternative motor fuels or other means of transportation.
More ev
SENATE DEMOCRATIC COMMUNICATIONS CENTER 8
Senate Democratic Communications Center for Congressional Documents and Publications, U.S. Senate
documents. “Bush Republican Policies Have Weakened America's Energy Security”. May 5, 2008.
Lexis.Bush Has Failed to Reduce the Nation's Oil Dependency. "America's oil addiction has worsened.
Since 2001, America's dependency on foreign oil has steadily increased even as the cost of oil has more
than doubled. The Bush administration's approach to this challenge has been to concede that there is a
crisis while opposing new policies or strategies that would change the status quo. In his 2006 State of the
Union address, President Bush declared that America is addicted to oil, but in the days and weeks that
followed his administration failed to adopt a new energy policy or support adequate funding for new
initiatives that would significantly reduce the country's oil dependency." [Center for American Progress,
8/06] High Oil Prices Can Cripple the American Economy "America now faces a crisis of historic
proportion: a liquid transportation fuels crisis. Oil, the lifeblood of our economy, is in increasingly short
supply and oil and derivative product prices have recently soared to record levels." [Southern States
Energy Board, Building a Bridge to Energy Independence and to a Sustainable Energy Future, 7/06]
80
Oil
Economy Ext
Terrorist will attack our reserves collapsing the economy- 2005 proves
Cohen, phd, 2006 (Reducing U.S. Dependence on Middle Eastern Oil, heritage foundation,
http://www.heritage.org/Research/Features/NationalSecurity/bg1926.cfm)
The oil market operates today without cushions of additional production capacity or significant strategic
petroleum reserves beyond the U.S. reserves. For example, al-Qaeda’s February 24, 2005, attack on the
Aramco facility in Abqaiq, Saudi Arabia, sent shock waves through the world’s financial markets. On the
same day, the price of oil on international markets jumped nearly $2, despite the attack’s complete failure.
(The terrorists and two security guards were killed.)[11]
Most analysts agree that this attack and an averted attempt on March 28 were merely trial runs in a much
longer campaign designed to disrupt the global economy, particularly the oil and gas industry.[12] As the
September 2001 World Trade Center attacks demonstrated, al-Qaeda tends to return to the scene of the
crime, so another strike on Abqaiq and other oil targets is likely.
Both Osama bin Laden and Ayman al-Zawahiri have repeatedly called for attacks on key Western
economic targets, especially energy sources.[13] In a tape aired by Al Jazeera, Zawahiri said:
I call on the mujahideen to concentrate their attacks on Muslims’ stolen oil, most of the revenues of which
go to the enemies of Islam while most of what they leave is seized by the thieves who rule our
countries.[14]
81
Oil
Terrorism Mod
Dependency causes terrorism

Oil dependency forces the U.S. to support oil regimes that oppress their citizens. As a result, other states
and the citizens of oppressive oil regimes see the U.S. as their real enemy. It isn't surprising that Osama
bin Laden's first Fatwah was against the U.S. for stationing troops in Saudi Arabia to protect the
oppressive Saudi Royal Family. U.S. oil dependency also strengthens worldwide Islamist terror
campaigns as funding for these groups comes primarily from Middle Eastern Islamic charities, located
primarily in Saudi Arabia. Because of oil dependency, we both motivate the terrorists and provide the
money to fund their attacks on us. American oil dependency also strengthens other states opposed to American foreign
policy interests, such as Venezuela and Russia. Foreign policy options are further reduced when other oil importing countries,
such as China, block our UN Security Council resolutions targeted at their sources of oil. This has already occurred in regard to
Sudan and Myanmar.
Extinction
John Steinbruner, senior fellow at the Brookings Institution, chair of the committee on international
security and arms control of the National Academy of Sciences, Foreign Policy, December 22, 1997
That deceptively simple observation has immense implications. The use of a manufactured weapon is a singular event. Most of the damage
occurs immediately. The aftereffects, whatever they may be, decay rapidly over time and distance in a reasonably predictable manner. Even
before a nuclear warhead is detonated, for instance, it is possible to estimate the extent of the subsequent damage and the likely level of
radioactive fallout. Such predictability is an essential component for tactical military planning. The use of a pathogen, by contrast, is an
extended process whose scope and timing cannot be precisely controlled. For most potential biological agents, the predominant
drawback is that they would not act swiftly or decisively enough to be an effective weapon. But for a few pathogens -
ones most likely to have a decisive effect and therefore the ones most likely to be contemplated for deliberately hostile use - the
risk runs in the other direction. A lethal pathogen that could efficiently spread from one victim to another would be
capable of initiating an intensifying cascade of disease that might ultimately threaten the entire world population.
The 1918 influenza epidemic demonstrated the potential for a global contagion of this sort but not necessarily its outer limit.
82
Oil
Terrorism Ext
Dependency forces the US to increase relations with terrorist networks

David Sandalow, an Energy and Environment Scholar for The Brookings Institution. “Ending Oil
Dependence”(7). January 22, 2007.
http://www.brookings.edu/views/papers/fellows/sandalow20070122.pdf
Oil dependence lies behind the jihadist threat – not as the only cause, but as an important one. For
example, according to Brent Scowcroft, National Security Adviser at the time of the first Gulf War, “…
what gave enormous urgency to [Saddam’s invasion of Kuwait] was the issue of oil.”5 After removing
Saddam from Kuwait in 1991, U.S. troops remained in Saudi Arabia where their presence bred great
resentment. Osama bin Laden’s first fatwa, in 1996, was titled “Declaration of War against the Americans
Occupying the Land of the Two Holy Places.” Today, deep resentment of the U.S. role in the Persian Gulf
remains a powerful recruitment tool for jihadists. That resentment grows not just from the war in Iraq, but
from the U.S. relationship with the House of Saud, the presence of U.S. forces throughout the region and
more. Yet the United States faces severe constraints in responding to this resentment. With half the
world’s proven oil reserves, the world’s cheapest oil and the world’s only spare production capacity, the
Persian Gulf will remain the indispensable region for the global economy so long as modern vehicles run
only on oil. To protect oil flows, the U.S. policymakers will feel compelled to maintain relationships and
exert power in the region in ways likely to fuel the jihadist movement Compounding this problem, the
huge money flows into the region from oil purchases help finance terrorist networks. Saudi money
provides critical support for madrassas with virulent anti-American views. Still worse, diplomatic efforts
to enlist Saudi government help in choking off such funding, or even to investigate terrorist attacks, are
hampered by the priority we attach to preserving Saudi cooperation in managing world oil markets.
83
Oil
Iran Prolif Mod
Oil dependence allows Iran to ignore US policies in pursuit of a nuclear arsenal

Victor, Deutch, Schlesinger 2006 (National Security Consequences of .S. Oil Dependency,
http://www.cfr.org/content/publications/attachments/EnergyTFR.pdf)
First, the control over enormous oil revenues gives exporting coun-tries the flexibility to adopt policies
that oppose U.S. interests and values. Iran proceeds with a program that appears to be headed toward
acquiring a nuclear weapons capability. Russia is able to ignore Western attitudes as it has moved to
authoritarian policies in part because huge revenues from oi land gas exports are available to finance that
style of government. Venezuela has the resources from its oil exports to invite realignment
in Latin American political relationships and to fund changes such as Argentina’s exit from its
International Monetary Fund (IMF) standby agreement and Bolivia’s recent decision to nationalize its oil
and gas resources.Becauseoftheiroilwealth,theseandotherproducercountries are free to ignore U.S.
policies and to pursue interests inimical to our national security.
Iran prolif causes terrorism and nuclear war

Orde F. Kittrie, Associate Professor of Law, Sandra Day O'Connor College of Law, Arizona State
University, Winter, 2007. “AVERTING CATASTROPHE: WHY THE NUCLEAR
NONPROLIFERATION TREATY IS LOSING ITS DETERRENCE CAPACITY AND HOW TO
RESTORE IT,” 28 Mich. J. Int'l L. 337
Iran's pursuit of nuclear weapons also raises several concerns. A nuclear umbrella might embolden Iran to
step up its already aggressive support for terrorism, and an Iranian nuclear arsenal seems likely to spur
proliferation by its neighbors. In addition, some have raised concerns that Iran's leadership, or rogue
elements able to transfer nuclear arms to Iran's terrorist allies, might welcome a nuclear war as a means of
achieving their goal of wiping the United States and Israel off the map. 40 While mutual deterrence kept
the United States and the Soviet Union from attacking each other during the Cold War, 41 some in Iran
might be [*345] undeterrable. 42 Despite these concerns, the international community continues to
respond with remarkable passivity as the North Korean and Iranian nuclear weapons programs proceed
and the nuclear nonproliferation regime nears collapse. 43
84
Oil
Iran Prolif Link Ext
Dependency distracts fighting Iran’s nuclear program

DoD's dependency on oil as a primary motor fuel makes military operations much more costly than if it had alternative fuels. Oil
dependency also requires that we dedicate military forces to the Persian Gulf area, reducing our ability to use those forces in
other places. Furthermore, the U.S. military presence in the Middle East raises the potential for military conflicts with other
importing nations as world demand increases and supplies decrease. Our oil dependency also strains military alliances, such as
NATO, as members compete for oil. Witness the French and Germans working with the Iranians to increase oil
production and Pakistan building a port to import Iranian natural gas while we are trying to stop the
Iranian nuclear program. Their need for oil and gas trumps our need to stop Iran from obtaining nuclear
weapons. The last and perhaps most serious impact on national security of our oil dependency is that the chronic weakening of
the U.S. economic base will inevitably weaken our military; we cannot sustain a strong military with a weak economy.
85

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UMKC SDI 2008 Mapes/Petite

Central Asia Mod..........................................................................................................................................................57

Development of alternative energy causes prices to drop

Drop in prices crushes the Russian economy

Uniqueness- Prices high

Prices still skyrocketing

The end of the week marked a jump in prices

Prices high now

Uniqueness- Prices High

Prices will increase- prefer this evidence because it’s predictive

Uniqueness- Russian Economy OK

Russia’s Economy is currently high and is constantly growing

Link- Alt Energy Kills Russia

Links- Decreased Demand Lowers Prices

Drop in demand causes prices to plummet- Russia is affected

Demand key to sustain high oil prices-

Links- Shifts Disrupt Prices

Internal Links- Oil Key to Russia

Oil fuels the Russian economy

Oil stabilizes the Russian economy

High prices key to U.S.-Russian relations

Cooperation is critical to prevent the spread of infectious disease

Infections disease spread risks global extinction

Prices dropping now

Prices down due to drop in demand

Prices falling now- the trend will continue

Lowest prices since 2007

Uniqueness- Prices dropping now

Average gallon price decreasing

Uniqueness- Russian Economy Low

Russian economy in a downward spiral

Alt energy doesn’t impact prices

Impact- High Prices Kill Russian Econ

High prices collapses the US economy

Majority of experts concede peak oil is false

Tons of oil exist- disproves the theory

Hubbert’s model is wrong

Theory False- Recoverable Oil

Recoverable oil solves the peak- oil’s not finite

Theory False- Tech

new technology has increased reserves

Theory False- Africa

Peak will happen in less than 4 years

Studies prove peak is coming

oil peaking will be

No arguments against the theory- multiple scenerios prove it’s happening

Headed towards a crisis

Peak True- A2 New Reserves

No new reserves will be found

Peak True- A2 Technology

Technology can only go so far- can’t make up for the peak

No new reliable technology

Peak True- No Fill in

Unconventional oil won’t fill in

**High Prices Bad**

Surge in prices kills the economy

Oil prices are key to the economy

High oil devastates the global economy

A2 High prices key to economy

Price spikes limit economic recovery

A2 High prices key to investments

A2 High prices good for poor countries

High oil bad for poor countries

High Prices Bad

High Prices Good