Oil 1 Peak Oil 21


EXT—DA turns case: Nigerian Instability triggers oil prices



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EXT—DA turns case: Nigerian Instability triggers oil prices


Nigerian instability threatens to take oil off the market



Power & National Interest Report, March 20, 2006,

[“The increasing importance of African Oil” http://www.pinr.com/report.php?ac=view_report&report_id=460&language_id=1]



In Nigeria, political corruption, criminal networks, violent Islamist groups, and domestic rebels threaten to take the world's eighth-largest oil exporter off the market. It is estimated that 70,000 to 300,000 barrels of oil are stolen daily in Nigeria. Even at the low end of this estimate, this would generate more than $1.5 billion every year -- more than enough capital to buy arms and political influence and threaten the government's survival. Another 500,000 bpd have been taken off the market by the recent kidnappings and violence perpetuated by the Movement for the Emancipation of the People of the Niger Delta. [See: "Intelligence Brief: Iran, Nigeria"]
In the midst of this instability, the world's largest and second-largest oil importers are playing an increasingly dangerous game of power politics. For both Washington and Beijing, the nightmare of rebel groups halting oil extraction in the delta -- which will dry up revenues on which the northern elites depend, potentially leading to a northern Muslim general ousting the president -- appears distinctly possible.  Nigeria represents an area in Africa from which China and the U.S. would benefit by working closely together to achieve their shared goal of stabilizing the country and expanding its hydrocarbon industry. Such cooperation, however, has not materialized, and the competing tactics of each state may be pushing Nigeria further into instability. The path toward stability advocated by the West is characterized by democratic principles, transparency, and debt reduction. Washington has hinged its assistance to Nigeria's government on the continuation of the trends begun by the return to civilian rule in 1999 after 16 years of military rule. The Paris Club of creditor nations recently dropped 60 percent of the country's $30 billion debt in exchange for Abuja paying the remaining $12 billion. Washington has also made it clear that it does not welcome President Olusegun Obasanjo's desire to change the constitution in order to allow him a third term. Director of National Intelligence John Negroponte, in his 2006 Annual Threat Assessment, warned a third term in Nigeria could lead to "major turmoil and conflict" that would lead to a "disruption of oil supply, secessionist moves by regional governments, major refugee flows, and instability elsewhere in West Africa." In order to help combat the losses to criminal networks, on December 8, 2005, Nigeria and the United States signed a security agreement to jointly patrol the delta region for security assistance. However, Washington's uncertainty about Obasanjo's grip on power and concerns about human rights abuses and corruption led to the delayed implementation of the program. After seeing an opportunity to improve its relationship with the government and fearing that, without security assistance, Nigeria's oil fields could go off-line, China stepped in while the U.S. attempted to tie the program to political change.  The Nigerian vice president told the Financial Times that U.S. cooperation was not "moving as fast as the situation is unfolding." Instead, Nigeria will obtain patrol boats from China to protect oil installations in the Niger Delta. China's main concern is to ensure the necessary political stability to keep Nigeria's oil pumping; it is not concerned what face this stability takes, whereas it is Washington's belief that democracy and transparent market economies are the best way to ensure stability. It is not clear whether the Chinese plan will help to bring the missing 500,000 bpd of oil back to the market in the Niger Delta, or if it will only ensure more violence in the chronically unstable region.
 
Nigerian instability impacts global oil prices
World Press, September 5, 2007,
[“The World’s ‘Energy Game’ Hotspots” http://www.worldpress.org/Europe/2921.cfm]

Nigeria, Africa's largest oil producer, faces large obstacles due to the conflicts in the infamous Niger Delta, widespread poverty, corruption, and public resentment of the heavy-handed political patronage. These factors together with its rising population growth and Islamic-Christian political and social fissure may lead to soon, thus affecting on global oil prices.


EXT: DISAD TURNS CASE—NIGERIA INSTABILITY TRIGGERS HIGH OIL PRICES


Uneasiness in Nigeria makes oil prices climb
Pravda, May 3, 2006,

[“Nigeria’s political mess will keep oil prices higher than ever” http://english.pravda.ru/world/africa/15-03-2006/77327-Nigeria-0]


It may seem at first sight that the reasons for the oil prices to grow on the world markets are obvious. They include the ongoing increase of demand on the part of developing countries, China and India first and foremost, the continuing war in Iraq and the Iranian nuclear crisis. However, there is another factor which makes oil prices climb higher and higher. It goes about the uneasy situation in Nigeria.




AFF OIL ISNT KEY TO NIGERIAN ECONOMY



Oil isn’t key—IMF data proves that agriculture stabilizes the economy.

This Day (Lagos) 4/10/08 “Nigeria: IMF - Non Oil Exports Boost Nigeria's Economic Growth” AllAfrica.com http://allafrica.com/stories/200804100465.html [ev]
The International Monetary Fund (IMF) yesterday said the robust non-oil sector growth in the 2007 fiscal year had offset the drag from a decline in oil production in the Niger Delta, thus boosting growth in the Nigerian economy. This was the conclusion of the Fund in its World Economic Outlook released yesterday in Washington DC at the ongoing World Bank/IMF Spring Meetings. Aggregate output growth measured by the gross domestic product (GDP), according to the Central Bank of Nigeria (CBN) economic report for third quarter of 2007, was estimated at 6.05 per cent, compared with 5.73 per cent in the second quarter. The growth was driven by the non-oil sector which was estimated at 9.47 per cent. his growth was driven by major agricultural activities such as yam, Irish and sweet potatoes, groundnuts and maize.

AFF – OIL KILLS ECONOMIC DIVERSITY


Oil kills Nigeria’s economic diversity.

BBC News Online 1/16/02 “Nigeria’s Economy Dominated by Oil” http://news.bbc.co.uk/1/hi/business/1763464.stm [ev]
Broadening out In the longer term, Nigeria must reduce its dependence on oil. Oil accounts for almost half of Nigeria's gross domestic product (GDP) and about 85% of all foreign exchange earnings. But the outlook for the international crude oil price over the next ten years is growing increasingly gloomy. Nigeria also has reserves of bitumen, tin, bauxite, iron ore and gold, as well as the potential to develop a vibrant tourism business. But it needs a substantial inflow of foreign investment in order to develop these industries. The country's record of corruption - and widespread unrest that has seen more than 10,000 people killed since 1999 - has seen foreign investment outside of the energy sector all but dry up. "Improving energy, transport and communications infrastructure and increasing private investment in the non-oil sector will remain the government's main economic challenges," says EIU in its assessment of Nigeria. After 15 years of military rule, President Obasanjo, elected in May 1999, has repeatedly expressed his determination to stamp out corruption and build a platform for sustained economic growth. But the wider world still needs some convincing.

AFF—TURN: HIGH PRICES BAD FOR NIGERIAN ECONOMY


High prices gut the Nigerian economy—even if revenues are good for the gov’t they’re bad for the country.

Leadership (Abuja) 5/25/08 AllAfrica.com “Rise in Oil Price an Economic Doom - Alh. Musa Abdu” http://allafrica.com/stories/200805270120.html [ev]
The continuous rise in the price of crude oil in the world market is likely to create an economic odium. This was the view of Alhaji M. M. Abdu, chairman of the Association for Truth and Justice (ATJ). He observed that with the escalation of crude oil price, economic planners cannot give accurate economic indices of growth while inflation on goods have become unabated. In a statement made available to LEADERSHIP Sunday, Alhaji Abdu lamented that the effects could be gloomy for a country like Nigeria. "These daily rise in prices are affecting road transport system which are adversely affecting our food, medical care, education and other economic activities," he said.

AFF—OIL DOESN’T BENEFIT ALL OF NIGERIA


Oil revenues don’t benefit the whole population.

Vanguard (Lagos) 4/11/08 AllAfrica.com “Nigeria: EFCC Probes Past Govts On $500bn Oil Revenue” http://allafrica.com/stories/200804110016.html [ev]
"Nigerian which made nearly half a trillion dollars from oil in less than five decades, a figure that dwarfs the total international aid to the whole of Africa, still has 70 per cent of citizens live in conditions of dispiriting poverty, on incomes of less than a dollar a day. We are going to take a critical look into how this problem arose over a period of the last five decades."


IRAQ OIL DA


A. Uniqueness: Oil Prices high now

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. Links

1) High oil prices are stabilizing Iraq—continued high prices are key to reconstruction.

Platts Oilgram News 5/2/08 “Oil and gas to energise Iraq's economic fortunes” Lexis [ev]
WHILE OIL MAY be one of the main causes of Iraq's ongoing troubles, the national coffers will at least be boosted by rising hydrocarbon revenues. Higher oil production and record international prices havecombined to generate increased revenues that could be used to speed up the reconstruction effort. In its latest quarterly report, the Office of the Special Inspector General for Iraq Reconstruction (SIGIR) predicts that Iraqi oil revenues in 2008 should be about $15bn higherthan those in 2007, at $48bn. Hydrocarbons make up about 85% of all government income, so the redevelopment of damaged oilfields and the $100 barrel should make a huge difference to an economy that remains highly reliant on international support. Output averaged 2.38m barrels a day (b/d) during the final quarter of 2007, the highest level for five years, although this is still substantially less than most predictions made shortly after the US-led invasion. Nevertheless, the government is confident that production will reach 2.9m b/d by the end of this year. Baghdad has based its 2008 budget on an average oil price of $57 abarrel, although the US Department of Energy predicts an average of $85 for the year, allowing room for increased spending. The US Special Inspector said the oil sector projections "created the opportunity for significant economic investment".
2) 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.



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