Oil 1 Peak Oil 21
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- A2 World Economy Decline – Country Housing Markets
- A2 Economy – Economy Decreases Oil
- A2 Economy – Central Banks Key
- A2 Stagflation – Exogenous oil shock
- Developing Countries - Food Shortages Advantage
A2 Trade DeficitUS trade deficit is declining in spite of oil increases Washington Times, 7-12-08 http://www.washingtontimes.com/news/2008/jul/12/trade-deficit-falls-despite-climbing-prices-for-oi/, Trade deficit falls despite oil's surge Despite soaring oil prices, the nation's trade deficit unexpectedly narrowed by 1.2 percent in May when exports increased by $1.4 billion over April, which was double the rise in imports. The monthly trade deficit, which economists expected to increase to more than $62 billion, actually declined from a revised $60.5 billion in April to $59.8 billion. "The trade deficit is declining slowly, but it is declining," said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. He cited a rise in manufactured exports and a dampening in demand for imported consumer goods because of the U.S. economic slowdown. The deficit would have improved much more were it not for the soaring price of oil, Mr. Hufbauer said. A2 World Economy Decline – Country Housing MarketsFalling housing markets in other countries will cause a recession Nouriel Roubini, chairman of RGE Monitor and professor of economics at New York University, April 2008 Proquest, The Coming Financial PANDEMIC, Foreign Policy, Iss. 165; pg. 44 HOUSING BUBBLES WILL BURST WORLDWIDE: The United States isn't the only country that experienced a housing boom in recent years. Easy money and low, long-term interest rates were plentiful in other countries, too, particularly in Europe. The United States also isn't the only country that has experienced a housing bust: Britain, Ireland, and Spain lag only slightly behind the United States as the value of their flats and villas trends downward. Countries with smaller but still substantial real estate bubbles include France, Greece, Hungary, Italy, Portugal, Turkey, and the Baltic nations. In Asia, countries including Australia, China, New Zealand, and Singapore have also experienced modest housing bubbles. There's even been a housing boom in parts of India. Inevitably, such bubbles will burst, as a credit crunch and higher interest rates poke holes in them, leading to a domestic economic slowdown for some and outright recession for others. A2 Economy – Economy Decreases OilSlowing economy affects oil trading – decreasing the price Business Day, 7-16-08 http://business.smh.com.au/business/oil-tumbles-us6-on-slowing-economy-20080716-3fmq.html, Oil tumbles $US6 on slowing economy Crude oil tumbled more than $US6 a barrel in New York amid concern that a slower US economy will curtail demand for oil and gasoline. Oil dropped as Federal Reserve Chairman Ben S. Bernanke said risks to growth and inflation have risen, in testimony to the Senate Banking Committee. He abandoned a June assessment that the threat of an economic slowdown had diminished. ''We're getting to the point where the market's looking at an increasing likelihood of a deep recession,'' said James Ritterbusch, president of Ritterbusch & Associates. Crude oil for August delivery fell $US6.49, or 4.5%, to $US138.69 a barrel on the New York Mercantile Exchange. It was the biggest percentage drop since March. Oil fell as much as $US9.26 to $US135.92 today. Futures reached a record $US147.27 a barrel on July 11 and have risen 86% in the past year. ''When it traded below $US140, a big wave of selling hit,'' said Addison Armstrong, director of market research at TFS Energy. ''The market was trading a little bit above $US140, and when it traded below, it fell something like $US2 in a minute. Nothing seemed to hold it. There seems to be a bit of a panic.'' US gasoline demand fell 5.2% last week, the 12th consecutive weekly decline, a sign record pump prices are changing driving habits, a MasterCard report showed. Gasoline futures fell 18.06 cents, or 5.1%, to $US3.3771 a barrel in New York. The profit margin, or crack spread, for making three barrels of crude into one of heating oil and two of gasoline, reached its lowest since March 27, based on futures prices. The crack spread fell 32 cents to $US11.02 a barrel. A2 Economy – Central Banks KeyCentral banks are key to stopping recession – oil is not the crucial problem Nouriel Roubini, chairman of RGE Monitor and professor of economics at New York University, 2008 http://www.project-syndicate.org/commentary/roubini6/English, The Specter of Global Stagflation, Project Syndicate So the most important way to control inflation – while regaining the monetary and credit policy autonomy needed to control inflation – is to allow currencies in these economies to appreciate significantly. Unfortunately, the need for currency appreciation and monetary tightening in overheated emerging markets comes at a time when the housing bust, credit crunch, and high oil prices are leading to a sharp slowdown in advanced economies – and outright recession in some of them. The world has come full circle. Following a benign period of a positive global supply shock, a positive global demand shock has led to global overheating and rising inflationary pressures. Now the worries are about a stagflationary supply shock – say, a war with Iran – coupled with a deflationary demand shock as housing bubbles go bust. Deflationary pressure could take hold in economies that are contracting, while inflationary pressures increase in economies that are still growing fast. Thus, central banks in many advanced and emerging economies are facing a nightmare scenario, in which they simultaneously must tighten monetary policy (to fight inflation) and ease it (to reduce the downside risks to growth). As inflation and growth risks combine in varied and complex ways in different economies, it will be very difficult for central bankers to juggle these contradictory imperatives. A2 Stagflation – Exogenous oil shockIncreased demand for oil doesn’t create stagflation – only an exogenous shock will devastate the world economy Nouriel Roubini, chairman of RGE Monitor and professor of economics at New York University, 2008 http://www.project-syndicate.org/commentary/roubini6/English, The Specter of Global Stagflation, Project Syndicate Today, a stagflationary shock may result from an Israeli attack against Iran’s nuclear facilities. This geopolitical risk mounted in recent weeks as Israel has grown alarmed about Iran’s intentions. Such an attack would trigger sharp increases in oil prices – to well above $200 a barrel. The consequences of such a spike would be a major global recession, such as those of 1973, 1979, and 1990. Indeed, the most recent rise in oil prices is partly due to the increase in this fear premium. But short of such a negative supply-side shock, is global stagflation possible? Between 2004-2006 global growth was robust while inflation was low, owing to a positive global supply shock – the increase in productivity and productive capacity of China, India and emerging markets. This positive supply-side shock was followed – starting in 2006 – by a positive global demand shock: fast growth in “Chindia” and other emerging markets started to put pressure on the prices of a variety of commodities. Strong global growth in 2007 marked the beginning of a rise in global inflation, a phenomenon that, with some caveats (the sharp slowdown in the US and some advanced economies), continued into 2008. Barring a true negative supply-side shock, global stagflation is thus unlikely. Recent rises in oil, energy and other commodity prices reflect a variety of factors: . Developing Countries - Food Shortages AdvantageA. Rising oil prices massively increase poverty and food insecurity This Day (Lagos), 3-12-08 http://allafrica.com/stories/200803120506.html, Nigeria: World Bank - High Oil Price May Worsen Poverty, All-Africa News, The prevalent high and volatile oil prices may have devastating consequences for oil-exporting and importing developing countries, the World Bank has warned. Although it was silent on the countries that may be affected, Nigeria is one of the world's largest producers of oil. In his keynote speech during a conference entitled "Oil Price Volatility, Economic Impact, and Financial Management", co-sponsored by the World Bank and George Washington, University in Washington, D.C., the Bank's Managing Director, Graeme Wheeler, tried to establish a connection between high oil prices and poverty. "One of the cruel ironies today is the connection between rising energy and food prices. This coupling can have devastating implications for global poverty and food security. Higher energy prices have increased fertilizer and transport costs and stimulated bio-fuel production. "Just as the poorest on this planet are the most exposed to the effects of climate change, they are also highly vulnerable to the effects of rising fuel and food prices. Food and energy prices usually represent over 70 per cent of the consumption basket of the poor. The long term consequences are considerable. Poor households will cut back on food consumption and education - and girls will invariably be the first to be withdrawn from schooling. Reliance on traditional fuels will increase with obvious environmental consequences," he remarked. Fluctuating oil price has become a subject of intense discussion in state capitals all over the world. A similar conference last week drew policy makers from over 100 countries to Washington, D.C. to seek solution to the problem. There, World Bank notes that high and volatile prices make it hard for energy importers to budget for energy costs. It has also hurt economic growth, investment and trade, the Bank said. Oil exporters, it further argued, faced challenges in managing revenues and planning development, adding that a booming oil sector and rising currency might mean other sectors in the economy fail to grow, a development which could result in countries losing ground in the fight against poverty. According to the Bank, four million people slid back into poverty in 2006 as a result of rising oil prices and a higher cost of living in the Philippines. A consultant with the Oil, Gas and Mining Policy Division of the World Bank and former lead energy economist and manager of the division, Robert Bacon, added that volatile oil prices had put pressures on developing countries to look for ways to smooth out the bumps in the market. B. Food shortages lead to escalating conflicts over resources culminating in World War III William Calvin, Theoretical Neurophysiologist at the University of Washington, January, 1998 Atlantic Monthly, The Great Climate Flip-Flop, Pages 47-64 The population-crash scenario is surely the most appalling. Plummeting crop yields would cause some powerful countries to try to take over their neighbors or distant lands -- if only because their armies, unpaid and lacking food, would go marauding, both at home and across the borders. The better-organized countries would attempt to use their armies, before they fell apart entirely, to take over countries with significant remaining resources, driving out or starving their inhabitants if not using modern weapons to accomplish the same end: eliminating competitors for the remaining food. This would be a worldwide problem -- and could lead to a Third World War -- but Europe's vulnerability is particularly easy to analyze. The last abrupt cooling, the Younger Dryas, drastically altered Europe's climate as far east as Ukraine. Present-day Europe has more than 650 million people. It has excellent soils, and largely grows its own food. It could no longer do so if it lost the extra warming from the North Atlantic. Directory: file -> view view -> Western Europe after wwii view -> Author study: paul fleischman view -> Qpa1 7ela study Guide view -> Arctic Oil/Gas Neg view -> November 1970 Approximately 150,000-500,000 deaths Bhola Cyclone Bangladesh view -> Grade Level: 6 Unit of Study: Caribbean glce view -> Citation: Duffield, Katy view -> Table of Contents Lesson # view -> Chinese Wind Energy Disad Download 9.54 Mb. Share with your friends:
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