SDI 2010 Gjerpen/Magariel Lab
Oil Core
**OIL CORE**
**Oil Core** 2
Oil Prices 1NC Shell 2
Oil Prices 1NC Shell 3
Oil Prices 1NC Shell 4
**Uniqueness** 5
Uniqueness – Oil Prices Low Now 5
Uniqueness – Economy Good Now 6
**Links** 7
Links – Withdrawal increases oil prices 7
Links – Withdrawal increases oil prices 8
Links – Oil investment stability 9
**Impacts** 10
High Prices gut the dollar 2NC Impact 10
High Oil Prices bad – economy 11
High Oil Prices kill the economy 12
2NC Impacts – Airline Industry 13
Famine Impact 2NC 14
A: OPEC Checks the impact 15
**Russia Oil Disad** 16
Russia 1NC Shell 16
Russia 1NC Shell 17
Russia 1NC Shell 18
Uniqueness – Russia Econ 19
Russia Econ Impact – Loose Nuks 21
Russia Economy Impacts 22
**Aff Answers** 23
Aff – Oil Prices high now 23
Aff – US Economy Bad Now 24
Aff - Low Oil Prices Bad 25
Aff – Iraq war would cause oil spike 26
Aff – Turn withdrawal increases investment 28
Aff - Russia Answers 29
**Oil Core**
Oil Prices 1NC Shell
A. Uniqueness – Oil Prices are low now – no massive shifts coming in the squo
Wall Street Journal 7/14/10
http://online.wsj.com/article/BT-CO-20100714-706655.html
Crude futures fell Wednesday as an industry report raised concerns about rising U.S. oil stockpiles ahead of inventory data from the Department of Energy.
Light, sweet crude for August delivery recently traded 69 cents, or 0.9%, lower at $76.46 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 49 cents lower at $76.16 a barrel.
Late Tuesday, the American Petroleum Industry reported a 1.7-million-barrel increase in oil inventories in the week ended July 9, ahead of the more influential inventory data from the Energy Information Administration, due at 10:30 a.m. Wednesday. Stockpiles were expected to fall by 1.2 million barrels, according to a survey conducted by Dow Jones Newswires.
The EIA data in recent weeks has provided few indications of major shifts in supply or demand, leaving traders searching for insights from the equities markets about where the economy, and therefore future oil demand, are headed.
B. Link - US troop withdraw from Iraq causes an increase in oil prices
Eisman (Former reporter for the Virginian-Pilot) 2008
Dale, Virginian-Pilot, April 9
http://hamptonroads.com/2008/04/petraeus-says-withdrawal-iraq-would-drive-gas-prices DA: 7/14/10
The war in Iraq and a potential American withdrawal from that country have “ripple effects that certainly will ripple all the way into the U.S.” America’s top military commander in Iraq told lawmakers today.
Under questioning by Rep. Randy Forbes, R-4th District, Gen. David Petraeus suggested that an early exit by American troops could disrupt the flow of oil from Iraq and push today’s record-high U.S. gasoline prices even higher.
U.S. withdrawal also could help Al-Qaida establish a base in Iraq for terrorist attacks in the U.S., Petraeus said. “We have an enormous interest in getting this right,” the general added.
Oil Prices 1NC Shell
2. Increase in oil prices would end the current economic recovery and cause a global financial crisis
Marconi ‘09
“Did High Oil Prices cause the Financial Crash?” By GIUSEPPE MARCONI for OIL-PRICE.NET, 2009/11/18; http://www.oil-price.net/en/articles/did-high-oil-prices-cause-financial-crash.php
Date Accessed: July 14, 2010
This year, Professor James Hamilton of the University of California presented an economic model to the Brookings Institute in which he asserted by using this model, that it was high oil prices and the oil shock which were the catalyst for the recent financial crisis. In order to back up his theory Hamilton begun his economic model in 2003. At this time crude oil was about $30 a barrel. Using the 2003 price as a ball point figure he showed what an oil shock would do,(such as the one experienced in 2007-8) to GDP. The graph that he presented showed that high oil prices would directly bring GDP to what it was in 2008. In view of his findings, he put forward the theory that it was in fact high oil prices which caused the housing sector to crash and in turn the financial market. He turned current theories on their head. According to Professor Hamilton it was in fact high oil prices which caused the financial crisis we have experienced in the past two years. In fact Professor Hamilton model echoes the work of Dr Nouriel Roubini who is a Professor of Economics and International Business at the Stern School of Business at NYU. Dr Nouriel evangelizes that it is high oil prices which caused the recent financial crisis. In fact he is now predicting that although the global economy is presently in recovery, if the price of oil exceeds $100 a barrel, this will have a disastrous negative effect on the world economy. He states that it will have the same effect on the economy as oil did when it was at $145 a barrel last year. In a recent interview Dr Roubini explained that he was of the opinion that an increase in the price of oil over $100 would have a negative real trade effect and disposable income effect on countries such as the US, Europe and Japan. Dr Nouriel Roubini also went further and said that he would not be against regulatory intervention to prevent swings in the value of oil. According to Dr Nouriel Roubini, the high price of oil at $145 per barrel was the primary reason for the financial crisis and not the crash of the world banking market. Of course time will tell whether Dr Roubini's thesis is correct and whether an extreme increase in oil prices will halt global recovery. Our own study of the market and global economy shows that the price of oil is going to have a direct effect on real trade, disposable income and hence the state of the economy. Oil prices have nearly doubled this year and are reaching $80 per barrel. Interest rates at close to zero and a weak dollar are encouraging price rises in all markets including the oil market. The financial health of world economies is in fact more dependant on oil prices, than the financial services market and the housing market. If we look closely we see that the economic state of major world economies is often a reflection of fluctuations in oil prices. This is why if the price of oil exceeds $100 per barrel this year then it is very likely that the global economic recovery will be stopped in its tracks. Further more, it may be the catalyst for a bigger financial crash than the one we have recently experienced, and world economies are currently trying to recover from.
Oil Prices 1NC Shell
C. Impact – Economic Decline causes nuclear war – China and India are the internal links
Mead, ’09 [Walter Russell, Senior Fellow in U.S. Foreign Policy at the Council on Foreign Relations, New Republic, February 4, http://www.tnr.com/politics/story.ht...83915f5f8&p=2] DA: 7/15/10
A deceleration in China's long-term growth rate would postpone indefinitely the date when China could emerge as a peer competitor to the United States. The present global distribution of power could be changing slowly, if at all. The greatest danger both to U.S.-China relations and to American power itself is probably not that China will rise too far, too fast; it is that the current crisis might end China's growth miracle. In the worst-case scenario, the turmoil in the international economy will plunge China into a major economic downturn. The Chinese financial system will implode as loans to both state and private enterprises go bad. Millions or even tens of millions of Chinese will be unemployed in a country without an effective social safety net. The collapse of asset bubbles in the stock and property markets will wipe out the savings of a generation of the Chinese middle class. The political consequences could include dangerous unrest--and a bitter climate of anti- foreign feeling that blames others for China's woes. (Think of Weimar Germany, when both Nazi and communist politicians blamed the West for Germany's economic travails.) Worse, instability could lead to a vicious cycle, as nervous investors moved their money out of the country, further slowing growth and, in turn, fomenting ever-greater bitterness. Thanks to a generation of rapid economic growth, China has so far been able to manage the stresses and conflicts of modernization and change; nobody knows what will happen if the growth stops. India's future is also a question. Support for global integration is a fairly recent development in India, and many serious Indians remain skeptical of it. While India's 60-year-old democratic system has resisted many shocks, a deep economic recession in a country where mass poverty and even hunger are still major concerns could undermine political order, long-term growth, and India's attitude toward the United States and global economic integration. The violent Naxalite insurrection plaguing a significant swath of the country could get worse; religious extremism among both Hindus and Muslims could further polarize Indian politics; and India's economic miracle could be nipped in the bud. If current market turmoil seriously damaged the performance and prospects of India and China, the current crisis could join the Great Depression in the list of economic events that changed history, even if the recessions in the West are relatively short and mild. The United States should stand ready to assist Chinese and Indian financial authorities on an emergency basis--and work very hard to help both countries escape or at least weather any economic downturn. It may test the political will of the Obama administration, but the United States must avoid a protectionist response to the economic slowdown. U.S. moves to limit market access for Chinese and Indian producers could poison relations for years. For billions of people in nuclear-armed countries to emerge from this crisis believing either that the United States was indifferent to their well-being or that it had profited from their distress could damage U.S. foreign policy far more severely than any mistake made by George W. Bush. It's not just the great powers whose trajectories have been affected by the crash.
**Uniqueness**
Uniqueness – Oil Prices Low Now
Oil Prices down but stable now
AFP 7/14/10, Association of Professionals. Oil Prices Stable Before US Energy Report. DA: 7/15/10 http://www.zawya.com/story.cfm/sidANA20100714T082210ZHEK53
World oil prices steadied on Wednesday as traders awaited a crucial weekly snapshot of crude stockpiles in top energy consumer the United States.
New York's main contract, light sweet crude for delivery in August, was unchanged at 77.15 dollars a barrel. London Brent North Sea crude for August firmed three cents to 76.68 dollars in morning trade. Later on Wednesday, the US government's Department of Energy (DoE) will release its report on American crude inventories for the week ending July 9. Crude reserves are forecast to drop by 1.2 million barrels, according to analysts polled by Dow Jones Newswires. Gasoline or petrol stockpiles are expected to be flat. Prices had drifted lower in earlier Asian trading on Wednesday as some traders took profits after big gains the previous day. "The pullback is not really very significant," said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore. "I would attribute this (earlier) fall to some profit-taking, while the equities markets continue to provide strong support for oil," he added. Asian stock markets surged on Wednesday, pulling Europe higher, as investors applauded record results from US hi-tech giant Intel, which is the world's biggest chipmaker.
Oil prices are down but sustainable now
Gibbons 7/15/10, Sloan Distinguished Professor of Management, Sloan School of Management and Professor of Organizational Economics, Department of Economic. Crude Down as Economic Growth Concerns Weigh. DA: 7/15/10. http://www.reuters.com/article/idUSN1524843120100715
The August NYMEX crude options expire on Thursday, as does the August Brent crude contract. On the New York Mercantile Exchange, August crude CLQ0 fell $1.23, or 1.6 percent, to $75.81 a barrel by 10:28 a.m. EDT (1428 GMT), trading from $75.33 to $77.66. Crude oil futures' $64.24 intraday low on May 20 was the weakest front-month price since $62.76 was struck on July 30,2009. The 2010 peak of $87.15 was struck on May 3. In London on the Intercontinental Exchange, August Brent crude LCOQ0 fell $1.32, or 1.72 percent, to $75.45 a barrel, trading from $75.28 to $77.40. NYMEX August RBOB RBQ0 fell 3.20 cents, or 1.55 percent, to $2.0345 a gallon, trading from $2.0273 to $2.0870. NYMEX August heating oil HOQ0 fell 3.54 cents, or 1.74 percent to $2.0007 a gallon, trading from $1.9923 to $2.0515. The August/August heating oil crack spread was at $8.39 a barrel. The spread ended Wednesday at $8.47. The August/August RBOB crack spread was at $9.80. The spread ended Wednesday at $9.75. The spread between the current front month and the five-year forward crude contract CLc61 was at $10.24, based on the August 2015 contract Wednesday settlement at $86.05. The spread ended on Wednesday at $9.01. U.S. industrial production posted a small gain in June, beating expectations for a slim decline, as hot weather drove up demand on utilities. Initial U.S. jobless claims dropped 29,000 to a seasonally adjusted 429,000 last week, the lowest since late August 2008, the Labor Department said. OPEC left its 2010 oil demand growth forecast steady at 950,000 barrels per day in its monthly outlook report. OPEC cut its expectations for the call on OPEC oil, citing rising output from non-OPEC sources.
Uniqueness – Economy Good Now
US economy is solid now but still at risk– steady growth proves recovery
Reuters 7/15/10
http://www.reuters.com/article/idUSN1525323520100716 DA: 7/16/10
The U.S. economy is experiencing a moderate recovery that is unlikely to be derailed by weak housing and persistent unemployment, Richmond Federal Reserve Bank President Jeffrey Lacker said on Thursday.
Speaking to a group of business executives, Lacker said U.S. monetary policy was still at "emergency levels," with interest rates effectively at zero and central bank credit to the banking system near its highest levels ever.
"Recognizing the right time to begin normalizing our monetary policy settings is going to be hard, and reasonable people can differ about this," Lacker said in prepared remarks.
"For my part, I will be looking for the time at which economic growth is strong enough and well enough established to warrant raising our policy rate."
In response to the worst financial crisis in generations, the Fed cut interest rates to the bone and undertook a host of emergency measures, including more than $1.5 trillion in direct purchases of Treasury and mortgage-related bonds.