Militarists will use peak oil rhetoric as pretext for militarism, furthering new oil wars under the guise of ‘necessity.’
ISMAEL HOSSEIN-ZADEH, professor of economics at Drake University, CounterPunch, “Are There Really Oil Wars?” 7/9/08, http://www.counterpunch.org/zadeh07092008.html
Significant policy and/or political implications follow from the view that oil is running out. For one thing, this view provides fodder for the cannons of war profiteering militarists who are constantly on the look out to invent new enemies and find new pretexts for continued war and escalation of military spending. For another, it tends to disarm many antiwar forces that accept this thesis and, therefore, “internalize responsibility for U.S. foreign policy every time they fill their gas tank. Thus they own the wars.”[1]
The Peak Oil thesis serves as a powerful trap and a clever manipulation in that it lets the real forces of war and militarism (the military-industrial complex and the pro-Israel lobby) “off the hook; it is a fabulous redirection. All evils are blamed on a commodity upon which we are all utterly dependent.”[2]
Current oil prices prove nothing – short-term spikes are inevitable.
Steven Schafersman, petroleum geologist, “Be Scared; Be Very Scared,”10/10/02, www.freeinquiry.com/skeptic/badgeology/energy/commentary.htm
Next, we must make clear that the doomsayers argument rests with long-term oil depletion. Short-term upsets and restrictions in supply due to political events, which are certainly possible and even likely under some circumstances, don't count in favor of the doomsayers' arguments. If oil prices spike upward due to war in the Middle East or due to deliberate oil cutbacks by oil-rich Persian Gulf countries, of course the economic consequences to us will be severe. But this is not the alarmist scenario put forward by the doomsayers. For their forecast to be true, short-term disruptions can't be counted, since the oil supply will return to normal levels after the political event has ended. If the doomsayers point to chaotic price surges in the wake of political disruptions to oil supply as evidence that they are correct, they will be further misleading and alarming the public.
AT: Oil Prices Prove Peak Now
War and political chaos in oil producing countries is causing high oil prices, not the peak.
Ismael Hossein-zadeh, professor of economics at Drake University, Middle East Online, “Is the Global Oil Crunch a Myth?” 7/14/08, http://www.alternet.org/waroniraq/91226/?ses=90199afda271d8776163a80e42f549c0
So, if indeed there is no imbalance between production and consumption of oil in global markets, how do we then explain the skyrocketing oil prices?
The answer, in a nutshell, is: war and geopolitical instability in oil markets. Contrary to the claims of the champions of war and militarism, of the Wall Street speculators in energy markets, and of the proponents of Peak Oil, the current oil price shocks are caused largely by the destabilizing wars and political turbulences in the Middle East. These include not only the raging wars in Iraq and Afghanistan, but also the danger of a looming war against Iran that would threaten the flow of oil out of Persian Gulf through the Strait of Hormuz.
Close scrutiny of the soaring oil prices shows that anytime there is a renewed US or Israeli military threat against Iran, fuel prices move up several notches. For example, Agence France-Press (AFP) recently reported, "Crude oil prices went on a record-setting surge Friday as fears of a new Middle East conflict were fanned by comments from a top Israeli official about Iran. New York's main oil futures contract...leapt 10.75 dollars a barrel--its biggest one-day jump ever."
War and political chaos in the Middle East tend to increase energy prices in a number of ways. For one thing, as war plunges the US deep into debt, it depreciates the dollar--thereby appreciating, or inflating, the price of dollar-denominated commodities, especially oil.
Depreciated dollar tends to raise the price of oil (and other commodities) in two major ways. First, since oil is priced in US dollars, oil exporting countries would demand more of the cheaper dollars for the same barrel of oil in order to maintain the purchasing power of their oil. Second, when the dollar falls, oil prices rise because investors are more likely to use their money to buy tangible assets or commodities such as oil and gold that won't lose value.
AT: Oil Prices Prove Peak Now
Speculation is responsible for 60% of crude oil prices – the oil peak is responsible for 0%.
Ismael Hossein-zadeh, professor of economics at Drake University, Middle East Online, “Is the Global Oil Crunch a Myth?” 7/14/08, http://www.alternet.org/waroniraq/91226/?ses=90199afda271d8776163a80e42f549c0
Stronger than the impact of dollar depreciation on the price of oil has been the impact of manipulative speculation: war and political instability have served as breeding grounds for hoarding and speculation in energy futures markets. According to F. William Engdahl, a top expert on energy and financial markets, "As much as 60% of today's crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. . . . Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the tail that wags the dog."
US Representative Bart T. Stupak, Democrat - Michigan, chairman of the subcommittee investigating commodity market speculation, attributes even a higher percentage of the oil price hike to market manipulation: "Speculations now account for about 70% of all benchmark crude trading on the New York Mercantile Exchange, up from 37% in 200."
AT: Oil Prices Prove Peak Now
The tail is wagging the dog – the rise in oil prices is due mainly to price speculation.
F. Willliam Engdahl, Associate of the Centre for Research on Globalization (CRG) Global Research, ‘Perhaps 60% of today’s oil price is pure speculation,’ 5/2/08, http://www.globalresearch.ca/index.php?context=va&aid=8878, 2720 diggs
The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?
First, the crucial role of the international oil exchanges in London and New York is crucial to the game. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil—West Texas Intermediate and North Sea Brent.
A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex President, James Newsome, sitting on the board of DME and most key personnel British or American citizens. Brent is used in spot and long-term contracts to value as much of crude oil produced in global oil markets each day. The Brent price is published by a private oil industry publication, Platt’s. Major oil producers including Russia and Nigeria use Brent as a benchmark for pricing the crude they produce. Brent is a key crude blend for the European market and, to some extent, for Asia. WTI has historically been more of a US crude oil basket. Not only is it used as the basis for US-traded oil futures, but it’s also a key benchmark for US production.
‘The tail that wags the dog’
All this is well and official. But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”
With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.
Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the “tail that wags the dog.”
A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”
Rising oil prices destroys the incentive for Saudi Arabia to lie about its reserves.
Ronald Bailey, science correspondent for Reason magazine, Reason, “Peak Oil Panic,” 5/06, http://www.reason.com/news/show/36645.html
Matthew Simmons claims to have found that the Saudis are greatly exaggerating the size of their reserves. If true, this is bad news, because the Saudis have more than 30 percent of the world’s reserves and have served as the world’s supplier of last resort for a couple of decades. Simmons argues that the Saudis and others are exaggerating what they have because the supply quotas set by the Organization of Petroleum Exporting Countries (OPEC) were tied to the size of a country’s reserves—the bigger its reserves, the more oil it was permitted to sell. But the desire to boost quotas cannot account for the fact that non-OPEC reserves grew nearly three times faster than OPEC reserves between 1981 and 1996. And whatever incentive OPEC members had to lie about their reserves should have dissipated as the price of oil rose during the last couple of years. Economides notes that the Saudis are investing $100 billion in new production projects, which undercuts the notion that they know they are running out of oil.
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