Oil 1 Peak Oil 21

Link—State Collapse

These economic concerns feed directly into a second problem; a sudden depletion in state revenues has the potential to weaken the Aliyev administration and encourage a surge in nationalistic tendencies, sparking a renewal of violence over the Nagorno-Karabakh. Azerbaijan is a rentier state. That is hydrocarbon resources provide a substitute for tax revenues and government legitimacy thus derives from the distribution of rents arising from hydrocarbon exports. This has produced a self-perpetuating cycle in which political considerations dictate commercial actions, thereby inhibiting organic, non-state economic activity and ensuring that rent is further restricted to certain key institutions and patronage networks.In line with this is the problem of corruption. The allocation of resources to a given patronage network by the holder of any government position now provides the fundamental basis under which Azerbaijan is governed. Thus a position in government is not treated as a job or an opportunity for public service but as a way of taking part in the distribution of rents. Most of these come from SOCAR. Should the availability of rent suddenly decrease, the fundamental premise of the state's existence will be undermined. This situation is exacerbated by the state's weak, quasi-monopoly of force over population; militias and foreign mercenaries continue to thrive, especially in the west.

Uniqueness—Econ High

Azerbaijan’s economy is booming due to high oil production and prices

Veeramalla Anjaiah, The Jakart Post, 6-14-07, http://209.85.215.104/search?q=cache:Sh6x4l2XyS4J:www.gab-ibn.com/IMG/pdf/Az2-_Azerbaijan_a_United_Nations_of_the_oil_industry.pdf+Azerbaijan+economy+oil+prices&hl=en&ct=clnk&cd=13&gl=us&client=firefox-a]

With its abundant natural resources, strong exports and stable government, Indonesia has been struggling to achieve 6 percent economic growth since the devastating Asian financial crisis in 1997. Four successive presidents, from B. J. Habibie to President Susilo Bambang Yudhoyono, have appointed the country's top technocrats and economists to put Indonesia on track to achieve high economic growth. So far, none of these governments have succeeded in their mission. However, as far as economic growth is concerned, an interesting story comes out of Azerbaijan, the cradle of the world's oil industry. During the past few years, something extraordinary has been occurring in Azerbaijan. The country's economy has grown significantly, with a 40 percent rise during the first three months of this year alone. Is this a joke, or perhaps a mark up? "No, not at all.true," Azerbaijan President Ilham Aliyev said, who turns 46 in December. "The Azerbaijani economy grew at an unprecedented rate, by 26 percent in 2005 and 35 percent in 2006. Gross domestic product (GDP) in Azerbaijan rose by 40 percent in the first three months of 2007. It shows that economic reforms currently underway in Azerbaijan are proving to be productive and the programs we have prepared are being implemented," Aliyev announced at a Cabinet meeting in Baku last month. The announcement was published in the Baku Sun newspaper on April 20, 2007. This is a remarkable achievement for the country, which just 15 years ago was on the verge of econo-mic collapse. "The inflation rate was 1,200 percent in 1993 (and rose to 1,664 percent in 1994). During the period between 1990 and 1995, the economy was contracted by almost 60 percent due to problems emanated from our independence from the former Soviet Union and a terrible war with Armenia," Tarana Manafova, a student who works in a Baku clothes shop, told The Jakarta Post recently. The main reason for the present economic boom in Azerbaijan is oil, the mainstay of this tiny state of 8.5 million people. The country's economy was number one in the world in 2006 in terms of economic growth. This year it is set to retain its position. Indonesia also has oil and is a member of the Organization of Petroleum Exporting Countries (OPEC). In terms of production, Indonesia produces more oil than Azerbaijan. In light of this, what are the reasons behind this unprecedented economic boom in Azerbaijan? First, Azerbaijan's oil production has almost doubled during the last five years. Last year its oil production jumped to 600,000 barrels per day (bpd) from 310,000 bpd in 2002. It has been predicted that it will reach 1.25 million bpd in 2010 and two million bpd in 2020.

Aff

Svetlana Tsalik, director, Caspian Revenue Watch, Central Eurasia Project,

Open Society Institute, 2003 “Caspian Oil Windfalls: Who will benefit?” http://archive.revenuewatch.org/reports/051203.pdf
Just as oil production has overshadowed other sectors of the economy, so it has come to dominate trade. When the Azerbaijan International Operating Company (AIOC) began to produce oil in 1997 from the Chirag oil field, one of the three ACG fields, the share of oil and oil products in Azerbaijan’s exports was 61 percent. By 2001, Azerbaijan had become a virtual “monocrop” economy, with crude oil and oil products comprising 91 percent of the value of exports.16 This rising share is explained not only by the increase in oil production, but also by domestic oil requirements holding relatively constant, by the sharp decline in other exports, and by a relatively high price for oil sold abroad. In the same period, non-oil products fell from 38.6 percent to 8.7 percent of total exports.17 Such a high volume of oil in the country’s trade makes Azerbaijan’s economy highly vulnerable to oil price shocks. In 1998 and 1999, when crude oil prices tumbled as low as $10.90 per barrel, Azerbaijan’s balance of payments deficit ballooned to 32.6 percent of GDP.18 The shortfall in revenues had an immediate toll on the budget, where revenues and expenditures both contracted sharply from the previous year. Revenues decreased by 9.3 percent and expenditures by 10.3 percent.19

Nigeria Disad

JAD MOUAWAD and DIANA B. HENRIQUES, staff writers for the New York Times, June 21, 2008. “Why is oil so high? Pick a view,” http://www.nytimes.com/2008/06/21/business/21oil.html?partner=rssnyt

Published: June 21, 2008

Many economists see a straightforward explanation for rising prices: Global oil supplies remain tight and there is a deep-seated fear that demand will outpace new production growth for years to come. In that climate, they say, the price will rise until it reduces global demand. But demand is still rising, even with oil at $134.62 a barrel.

The high price “doesn’t mean we have a shortage today, but it means there is a serious worry about a shortage three to five years from now,” said Adam E. Sieminski, the chief energy economist at Deutsche Bank.

B. Link:

1) Alternative energy lowers oil prices – trades off
US Fed News, 5/6/08. “SKYROCKETING GAS PRICES HIGHLIGHT NEED TO USE AMERICAN RESOURCES” http://www.lexis.com/research/retrieve?_m=08d0fc06b2da1455085f3578e4de428d&docnum=6&_fmtstr=FULL&_startdoc=1&wchp=dGLbVtz-zSkAl&_md5=f4756b7493583c302d5375ed8a4b39a8
Despite promises of a "commonsense plan" to lower gas prices, the Democrats have failed to act on the number one issue affecting Kentuckians' pocketbooks since taking over the Majority in Congress. Our country must invest in alternative energy sources in order to reduce our energy dependence and lower fuel costs. It is time Congress works in a bipartisan manner to create a balanced energy solution that promotes conservation efforts and increases energy production on our own soil. Speaker Nancy Pelosi has rejected commonsense solutions that increase production in America and use our own resources.
The law of supply and demand is a staple of economics. It is commonsense that when we increase domestic supply, gas prices will fall. I have voted for and supported a number of proposals that would do just that. For example, the No More Excuses Energy Act (H.R. 3089) would encourage new refinery construction, allow for environmentally responsible exploration of the Arctic National Wildlife Refuge (ANWR) and the Outer Continental Shelf (OCS), and provide tax incentives to encourage the construction of new nuclear power plants.


2) Nigerian economy heavily dependent on high oil revenues

Akerele Taiwo, Banker, Policy Economist and Director at the Center for Values In Leadership based in Victoria Island, Lagos, 2008 “The Nigerian Economy: 2007 in Review and Outlook 2008”http://www.gbengasesan.com/blog/?p=212

Nigeria Oil DA

C. Impact

1) Low oil prices crash Nigerian economy and trigger vicious cycles of poverty

Biodun Adedipe, Ph.D. Chief Consultant, B. Adedipe Associates Limited, Victoria Island, Lagos, Nigeria, 2004. “THE IMPACT OF OIL ON NIGERIA’S ECONOMIC POLICY FORMULATION” http://www.odi.org.uk/events/nigeria_2004/Adedipe.pdf

As oil fortunes dwindled, the reality of unaffordable head count and a private sector that lacked capacity to absorb all the new entrants into the labour market dawned on the policy makers. The private sector had been emasculated by unfriendly (to business) Government policies and crowded out of the loans market by the public sector. It was only in the late 1990ies that the need for partnership became popular and some attention began to be paid to self-employment. As such, unemployment grew gradually, especially in the urban areas. Depreciating Naira and inflationary pressures made real incomes decline and triggered a vicious cycle of poverty.
2) Nigeria is Africa’s economic hub.

This Day (Nigeria) 5/31/08 AllAfrica, “Nigeria; Lagos Set to Raise N75bn From Capital Market” Lexis [ev]
Fashola said: "The state is set to drive commercial activities in the country, in order to place the country among the best 11 developed economies in the world as predicted by analysts. "The question is not if we can lead the emerging African capital market. With dedication, will and good attitude, we will be the financial hub of the African continent. We have the population and proximity that any discerning investor consider before investing in a country." He added that because capital movement was not a matter of sentiment, the state government was putting legislation in place that would ensure an enabling environment for investors. Fashola also said that the state government was ready to work with the private sector in order to address the infrastructural challenges of the state. However, the governor said the private sector was not doing enough to assist the state government in growing the economy. He said: "For example, the market capitalisation of the Nigerian Stock Exch-ange (NSE) is moving between N11 to N12 trillion but the real sector is not growing with the capitalisation. There is mass unemployment and infrastructural deficit. This is why we want to take advantage of the growth of the market to address our huge infrastructural deficit. Fashola praised Pres-ident Umaru Yar'Adua for his stand on the rule of law adding that it was the only way by which Nigeria could build its economy, "as no sane investor will put his money in a lawless society." The Chairman of the occasion and founding chairman of Diamond Bank Plc, Mr. Pascal Dozie, praised African governments for implementing reforms geared towards transforming their economies. Dozie said: "Following efforts of our governments, African economies are growing at the same pace as the world economy. It is also a fact that African capital markets are growing by as much as 200 per cent per annum and provides the highest in terms of return on investment." He added that the International Monetary Fund (IMF) and the World Bank's predictions and forecast clearly showed that no African economy has the potential to grow like the Nigerian economy.

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