Oil 1 Peak Oil 21


Uniqueness-Oil Prices High Now



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Uniqueness-Oil Prices High Now



High increase in oil dependence decreases economic competitiveness

Dr. John Scire-2006

Dr. John Scire is an Adjunct Professor of Political Science at UNR, where he has taught an energy policy course for the last 10 years. Ricardo Lopez a UNR journalism student who acts as a research assistant for Dr. Scire.
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.
Oil dependency is at an all time high VOA Oct. 16 2003

Michael Bowman http://www.iwar.org.uk/news-archive/2003/10-16-3.htm



Thirty years ago, the United States faced an energy crisis as mostly-Muslim, oil-producing nations imposed an oil embargo, hoping to force a halt of U.S. support for Israel. Today, U.S. dependence on foreign oil is far greater than it was in the early 1970s. Panel of experts recently gathered in Washington to examine America's energy situation and its choices for the future.
Oil dependence is increasing

Green Car Congress April 5th 2008

http://www.greencarcongress.com/2008/04/us-imports-of-o.html

US imports of OPEC crude oil jumped 12.8% between 2006 and 2007 to an average of 5.394 million barrels per day (mbd), representing 53.8% of all crude oil imports (10.017 mbd), according to figures from the US Department of Energy’s Energy Information Administration. Total US imports of crude declined slightly in 2007, down 1% from 2006.



Those figures represent the highest percentage of imported crude from OPEC since 1992, and the largest absolute amount of crude imported from OPEC since 1977—before the Iranian revolution.

The peak of US reliance on OPEC crude was in 1976, when OPEC represented 86% of all crude imported into the US, at an average 4.545 mbd, out of a total 5.287 mbd.

Finished petroleum products imported from OPEC to the US dropped 19.5% in 2007 to 590 thousand barrels per day, down from 733 thousand barrels per day in 2006. Products imported from OPEC in 2007 represented 17.2% of the total of 3.422 mbd.

Oil dependence currently increasing

ASE-3.28.03 http://www.csrwire.com/PressRelease.php?id=1702

Alliance to Save Energy is a coalition of prominent business, government, environmental, and consumer leaders who promote the efficient use of energy worldwide to benefit consumers, the environment, economy, and national security



WASHINGTON, DC, —With world oil markets increasingly in turmoil, U.S. oil imports steadily increasing, and oil and gas prices on the rise, the Alliance to Save Energy has launched the Drive for America campaign demanding that the Big Three automakers increase fuel economy as a matter of national security. In the web campaign’s first 24 hours, more than 5,000 Americans on the home front signed on to the campaign as a way of making their own contribution to national security and sending a message to U.S. automakers. With cars and light trucks accounting for more than 40 percent of U.S. oil consumption, the Big Three automakers are uniquely positioned to help break our nation’s deadly oil dependence,” said Alliance President David M. Nemtzow. “For too long, our nation has been dangerously dependent on foreign oil, leaving our economy and our national security hostage to the whims of other, often hostile, nations. The Drive for America campaign allows us to declare that we will no longer tolerate being a nation of oil junkies.”


Impact-Conflict



Oil dependence significantly is the root cause of most conflict

World Bank, Paul Collier Oxford University- 4/28/03
The association between natural resources and the risk of civil war has recently been
explored both through econometrics and case studies.
The case study evidence is more
useful to identify possible causal mechanisms, and so I will defer drawing on it for the
moment. The first econometric study to find a relationship between natural resources and
the risk of civil war was Collier and Hoeffler
(1998). In the la test version of our work
(Collier and Hoeffler 2003) we analyze 54 large scale civil wars that occurred between
1965 and 1999. We find that a higher share of primary commodity exports in GDP
significantly and substantially increases the risk of conflict
. For example, if we compare
countries with 10% and 25% of their GDP coming from natural resources, holding other
characteristics constant at the mean for low -income developing countries, the risk of a
civil war in the subsequent five years rises from 11% to 29%. We investigate whether
there are significant differences between groups of commodities and find that oil is the
only one which is distinctive. High levels of oil dependence are even more likely to be
associated with conflict than similarly high levels of dependence upon other commodity
exports. It should be stressed that natural resource dependence
– or indeed the wider
concept of primary commodity dependence – is far from being the only factor that is
statistically significant in the risk of conflict
. In particular, the level of per capita income
strongly influences the risk of conflict
. At high levels of per capita income the risk of
civil war is negligible with or without natural resources
. Hence, societies such as Norway
and Australia, which are highly dependent upon natural resource exports but are also rich,
do not face any significant risk coming from their natural resource endowments.

Oil dependence allows human violation rights from other countries

Luft ‘05

DR. GAL LUFT EXECUTIVE DIRECTOR INSTITUTE FOR THE ANALYSIS OF GLOBAL SECURITY (IAGS) CO-CHAIR SET AMERICA FREE COALITION 0ct. 20th, 2005

http://www.senate.gov/~foreign/testimony/2005/LuftTestimony051020.pdf
While in many cases the U.S. can turn a blind eye to human rights violations by major energy producers, in some cases the violations are so blunt and atrocious that a strong castigation is unavoidable. But with China joining the great oil game such incidents result in significant weakening of U.S. geopolitical posture. In the most recent incident when the U.S. had to choose between oil and its values the cost was high: the U.S. publicly expressed dismay over the killing of hundreds of demonstrators in Uzbekistan only to be asked to remove its military forces from there within 180 days. A $600 million gas deal signed between Uzbekistan and China bolstered Islam Karimov’s confidence in China’s diplomatic support to the degree that he was willing to show the U.S. the door.

Impact-Democracy Promotion



OPEC destroys US strategy towards promoting democracy

Luft ‘05

DR. GAL LUFT EXECUTIVE DIRECTOR INSTITUTE FOR THE ANALYSIS OF GLOBAL SECURITY (IAGS) CO-CHAIR SET AMERICA FREE COALITION 0ct. 20th, 2005

http://www.senate.gov/~foreign/testimony/2005/LuftTestimony051020.pdf

It is a sad fact of life that most of the world's leading oil producing countries are either politically unstable and/or at serious odds with the U.S. With the exception of Canada and Norway, all major oil-exporting countries suffer from severe social illnesses due to their failure to absorb the shock of an oil jackpot and distribute the wealth on an equitable basis. This is not an accident. Countries rich in easily extracted and highly lucrative natural resources do not have to invest in education, productivity, or economic diversification. In addition, the government does not feel obligated to be accountable or transparent to its people and it denies them representation. They also have no imperative to educate women and grant them equal rights. While their oil wealth allows them to be the strategic pivot of world politics and economy, these “trust fund states’” record on human rights, political stability and compliance with international law is abysmal. Only three of the world's ten largest oil producers are democracies and only 9 percent of the

world's proven oil reserves are in the hands of countries ranked free by Freedom House.



Impact-National Security



Oil dependence will continue to undermine US security - Luft '05

DR. GAL LUFT EXECUTIVE DIRECTOR INSTITUTE FOR THE ANALYSIS OF

GLOBAL SECURITY (IAGS) CO-CHAIR SET AMERICA FREE COALITION 0ct. 20th, 2005

Oil prices are not going down any time soon. The rise in oil prices will yield large financial
surpluses to the Middle Eastern oil producers. This petrodollar windfall will strengthen the
jihadists while undermining the strategic relationship the region’s oil producers have with
the U.S. As President Bush said last April, U.S. dependence on overseas oil is a "foreign tax on the
American people." Indeed, oil imports constitute a quarter of the U.S. trade deficit and are a
major contributor to the loss of jobs and investment opportunities
. According to a study on the
hidden cost of oil by the National Defense Council Foundation, the periodic oil shocks the U.S.
has experienced since the 1973 Arab oil embargo cost the economy almost $2.5 trillion. More
importantly, while the U.S. economy is bleeding, oil-producing nations increase their oil
revenues dramatically to the detriment of our national security
. The numbers speak for
themselves: In November 2001, a barrel of oil was selling for $18. In less than four years the
price jumped to $70. This means that Saudi Arabia, which exports about 10 mbd, receives an
extra half billion dollars every day from consuming nations and Iran, which exports 2.5 mbd, an
extra $125 million. This windfall benefits the non-democratic governments of the Middle East
and other producers and finds its way to the jihadists committed to America’s destruction as
petrodollars trickle their way through charities and government handouts to madrassas and
mosques, as well as outright support of terrorist groups.

Oil Dependence poses a major threat to the US national and economic security

NRDC March 06

http://www.nrdc.org/legislation/factsheets/leg_06031301A.pdf
Oil is the lifeblood of the American economy, providing more than 40 percent of all energy consumed in

the United States and 97 percent of the energy used for transportation.1



Increasing Reliance on the Middle East The world will increasingly depend on Middle

East OPEC nations to supply the oil needed to meet future demand—which is expected to grow to 110 million

barrels per day (mbd) by 2025.2 A National Imperative Oil dependence endangers U.S. economic and national security. In addition to hundreds of billions of dollars each year in direct costs, oil dependence feeds the growth of Islamist terrorism; provides vast amount of money to unstable, undemocratic governments; increases the likelihood of international conflict; puts American troops in harm’s way; and exposes Americans to the risk of severe economic dislocation




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