B. ECONOMIC DECLINE CAUSES GLOBAL NUCLEAR WAR
Walter Russell, Mead, Senior Fellow – Council on Foreign Relations, New Perspectives Quarterly, Summer, 1992, p. 30
The failure to develop an international system to hedge against the possibility of worldwide depression- will open their eyes to their folly. Hundreds of millions-billions-of people around the world have pinned their hopes on the international market economy. They and their leaders have embraced market principles-and drawn closer to the West-because they believe that our system can work for them. But what if it can't? What if the global economy stagnates, or even shrinks? In that case, we will face a new period of international conflict: South against North, rich against poor. Russia. China. India-these countries with their billions of people and their nuclear weapons will pose a much greater danger to world order than Germany and Japan did in the 1930's.
Extension: Peak OilEconomic Collapse
Peak oil will collapse entire economies-the 2000 recession proves.
Richard Heinberg, Senior Fellow at the Post Carbon Institute, ‘5
(The Party's Over : Oil, War and the Fate of Industrial Societies, p. 93-94) [Bozman]
The dramatic price hikes of 2000 soon triggered a global economic recession. The link between energy prices and the economy was intuitively obvious and had been amply demonstrated by the oil crises and accompanying recessions of the 1970s. Yet, as late as mid-2000, many pundits were insisting that the new ?information economy? of the 1990s was impervious to energy-price shocks. This trend of thought was typified in a comment by British Prime Minister Tony Blair, who in January 2000 stated that ?[t] wenty years on from the oil shock of the ?70s, most economists would agree that oil is no longer the most important commodity in the world economy. Now, that commodity is information.? 6 Yet when fuel prices soared in Britain during the last quarter of the year, truckers went on strike, bringing commerce within that nation to a virtual standstill. Though energy resources now directly accounted for only a small portion of economic activity in industrialized countries ? 1.2 percent to 2 percent in the US ? all manufacturing and transportation still required fuel. In fact, the entire economy in every industrial nation was completely dependent on the continuing availability of energy resources at low and stable prices.
A decline in oil production will cause a severe recession-only our evidence cites models.
Robert L. Hirsch, Analyst at Management Information Services, February, ‘8
(Energy Policy, Volume 36, Issue 2, p. 881-889, p. Science Direct) [Bozman]
One of the few recent studies of the potential economic impacts of a severe, long-term decrease in world oil supplies was the Oil Shockwave simulation, which involved a number of retired senior government executives, assisted by Sanford Bernstein & Co. LLC. (Gates et al., 2005). The focus of their effort was the potential impacts of a severe oil shortage caused by massive terrorist attacks on world oil infrastructure, leading to significant, multi-year world oil shortages. Among their conclusions was a forecast that a roughly 4% global shortfall in daily supply would result in an oil price increase of nearly a factor of three and a severe recession.
Peak oil will wreck havoc on global economies.
Richard Heinberg, Senior Fellow at the Post Carbon Institute, ‘5
(The Party's Over : Oil, War and the Fate of Industrial Societies, p. 189-190) [Bozman]
As Hubbert pointed out, the linkage between the money system (the financial economy) and the human matter-energy system (the physical economy) is imperfect. It is possible for a crisis to occur in the financial system even when energy, raw materials, and labor remain abundant, as happened in the 1930s. But is it also possible for the financial system to remain healthy through an energy-led decline in the physical economy? That, unfortunately, is highly unlikely, due to the dependence of the former on continued borrowing to finance activity in the latter. Rather, it is highly likely that the net-energy decline will sooner or later trigger a financial crisis through a reduction in demand for goods and semn, and hence for money (via loans) with which to pay for the machinery to produce those goods and services. Thus even if human labor is sufficiently abundant to make up for some of the reduction of work performed by fuel-burning machines, the financial system may not be able to adapt quickly enough to provide employment for potential laborers. Therefore extreme dislocations in both the financial system and the human matter-energy economy are likely during the energy transition. The exact form these dislocations will take is difficult to foresee. Efforts could be made to artificially pump up the financial system through government borrowing ? perhaps to finance military adventures. Such massive, inflationary borrowing might flood markets with money that would be losing its value so quickly as to become nearly worthless. On the other hand, if inflationary efforts are not undertaken quickly or strenuously enough when needed, then the flagging rate of loans might cause money to disappear from the economy; in that case, catastrophic deflation would result. As was true in the Great Depression, what little money was available would have high purchasing power, but there would simply be too little of it to go around. Unemployment, resource and product shortages, bankruptcies, bank failures, and mortgage foreclosures would proliferate. It is entirely possible that, over a period of decades, both inflationary and deflationary episodes may occur; however, due to the lack of a stable linkage between money and energy, periods of financial stability will likely be rare and brief. Continued population growth, even at reduced rates, will put added strain on support systems and exacerbate the existing inherent requirement for economic growth. Who will feel the pain? Most likely, the poor will feel it first and hardest. This will probably be true both nationally and internationally, as rich nations will likely seek to obtain energy resources from the poorer nations that have them by financial chicanery or outright military seizure. Eventually, however, everyone will be affected.
Extension: Peak OilEconomic Collapse
Oil is key to literally every sector of the economy.
Robert L. Hirsch, Senior Energy Advisor at Management Information Solutions, February, ‘5
(Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, p. Google) [Bozman]
Use of petroleum is pervasive throughout the U.S. economy. It is directly linked to all market sectors because all depend on oil-consuming capital stock. Oil price shocks and supply constraints can often be mitigated by temporary decreases in consumption; however, long term price increases resulting from oil peaking will cause more serious impacts. Here we examine historical oil usage patterns by market sector, provide a summary of current consumption patterns, identify the most important markets, examine the relationship between oil and capital stock, and provide estimates of the time and costs required to transition to more energy efficient technologies that can play a role in mitigating the adverse effects of world oil peaking.
Peak oil will collapse the global economy-inflation, unemployment and standard of living.
Robert L. Hirsch, Senior Energy Advisor at Management Information Solutions, February, ‘5
(Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, p. Google) [Bozman]
A shortfall of oil supplies caused by world conventional oil production peaking will sharply increase oil prices and oil price volatility. As oil peaking is approached, relatively minor events will likely have more pronounced impacts on oil price sand futures markets. Oil prices remain a key determinant of global economic performance, and worldeconomic growth over the past 50 years has been negatively impacted in thewake of increased oil prices. The greater the supply shortfall, the higher theprice increases; the longer the shortfall, the greater will be the adverse economicaffects.The long-run impact of sustained, significantly increased oil prices associated with oil peaking will be severe. Virtually certain are increases in inflation and unemployment, declines in the output of goods and services, and a degradationof living standards. Without timely mitigation, the long-run impact on the developed economies will almost certainly be extremely damaging, while many developing nations will likely be even worse off.44The impact of oil price changes will likely be asymmetric. The negative economiceffects of oil price increases are usually not offset by the economic stimulusresulting from a fall in oil prices. The increase in economic growth in oil exportingcountries provided by higher oil prices has been less than the loss of economicgrowth in importing countries, and these effects will likely continue in the future.45
Oil shocks will collapse the economy-empirics prove.
Robert L. Hirsch, Senior Energy Advisor at Management Information Solutions, February, ‘5
(Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, p. Google) [Bozman]
Estimates of the damage caused by past oil price disruptions vary substantially, but without a doubt, the effects were significant. Economic growth decreased in most oil importing countries following the disruptions of 1973-74 and 1979-80, and the impact of the first oil shock was accentuated by inappropriate policy responses.39 Despite a decline in the ratio of oil consumption to GDP over the past three decades, oil remains vital, and there is considerable empirical evidence regarding the effects of oil price shocks The loss suffered by the OECD countries in the 1974/-75 recession amounted to $350 billion (current dollars) / $1.1 trillion 2003 dollars, although part of this loss was related to factors other than oil price.41 • The loss resulting from the 1979 oil disruption was about three percent of GDP ($350 billion in current dollars) in 1980 rising to 4.25 percent ($570 billion) in 1981, and accounted for much of the decline in economic growth and the increase in inflation and unemployment in the OECD in 1981-82. The effect of the 1990-91 oil price upsurge was more modest, because price increases were smaller; they did not persist; and oil intensity in OECD countries had declined. • Although oil intensity and the share of oil in total imports have declined in recent years, OECD economies remain vulnerable to higher oil prices, because of the “life blood” nature of liquid fuel use.
Peak oil will cause a recession with no end.
Richard Heinberg, Senior Fellow at the Post Carbon Institute, ‘4
(Powerdown: Options and Actions for a Post-Carbon World, p. 21) [Bozman]
The likely economic consequences of the coming energy transition will be enormous. All human activities require energy ? which physicists define as ?the capacity to do work.? With less energy available, less work can be done ? unless the efficiency of the process of converting energy to work is raised at the same rate as energy availability declines. It will therefore be essential, over the next few decades, for all economic processes to be made more energy-efficient. However, efforts to improve efficiency are subject to diminishing returns, and so eventually a point will be reached where reduced energy availability will translate to reduced economic activity. Given the fact that our national economy is based on the assumption that economic activity must grow perpetually, the result is likely to be a recession with no bottom and no end.
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