Tampa Prep 2009-2010 Impact Defense File
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- Ext 4 – Reserves
- AT: Oil Shocks
Ext #3 – TimeframeEven if we’ve reached peak oil, we have 40 years before we reach a crisis point The Guardian, 08 (The Guardian, Terry Macalister-industrial corespondent, June 11 2008, "World has enough oil reserves, say BP boss," http://www.guardian.co.uk/business/2008/jun/11/commodities.bp) The BP boss was talking at the launch of his company's annual statistical review of world energy which showed that world oil consumption grew by 1.1% in 2007, or 1m barrels a day, slightly below the 10-year average, while production fell by 0.2%, or 130,000 barrels a day, the first decline in five years. An increasing number of oil industry commentators have put forward the view that "peak oil" has now been reached - or shortly will be - and is responsible for a 40% rise in crude prices this year to record highs of nearly $140 a barrel. BP, though, said today that proved oil reserves at 1.24tn barrels are enough to meet current production for 41 years. Ext #4 – ReservesNo peak oil now – the theory ignores alternative energy, new oil reserves, exaggerates demand and ignores temporary political causes. Hossein-zadeh, June 25, 2008 (Ismael, Professor of Economics “Are they really oil wars?” http://www.atimes.com/atimes/Global_Economy/JF25Dj05.html, Asia Times Online) Peak Oil theory is based on a number of assumptions and omissions that make it less than reliable. To begin with, it discounts or disregards the fact that energy-saving technologies have drastically improved (and will continue to further improve) the efficiency of oil consumption. Evidence shows that, for example, "over a period of five years (1994-99), US GDP expanded over 20% while oil usage rose by only 9%. Before the 1973 oil shock, the ratio was about one to one." [4] Second, Peak Oil theory pays scant attention to the drastically enabling new technologies that have made (and will continue to make) possible discovery and extraction of oil reserves that were inaccessible only a short time ago. One of the results of the more efficient means of research and development has been a far higher success rate in finding new oil fields. The success rate has risen in 20 years from less than 70% to over 80%. Computers have helped to reduce the number of dry holes. Horizontal drilling has boosted extraction. Another important development has been deep-water offshore drilling, which the new technologies now permit. Good examples are the North Sea, the Gulf of Mexico, and more recently, the promising offshore oil fields of West Africa. [5] Third, Peak Oil theory also pays short shrift to what is sometimes called non-conventional oil. These include Canada's giant reserves of extra-heavy bitumen that can be processed to produce conventional oil. Although this was originally considered cost inefficient, experts working in this area now claim that they have brought down the cost from over US$20 a barrel to $8 per barrel. Similar developments are taking place in Venezuela. It is thanks to developments like these that since 1970, world oil reserves have more than doubled, despite the extraction of hundreds of millions of barrels. [6] Fourth, Peak Oil thesis pays insufficient attention to energy sources other than oil. These include solar, wind, non-food bio-fuel, and nuclear energies. They also include natural gas. Gas is now about 25% of energy demand worldwide. It is estimated that by 2050 it will be the main source of energy in the world. A number of American, European, and Japanese firms are investing heavily in developing fuel cells for cars and other vehicles that would significantly reduce gasoline consumption. [7] Fifth, proponents of Peak Oil tend to exaggerate the impact of the increased oil demand coming from China and India on both the amount and the price of oil in global markets. The alleged disparity between supply and demand is said to be due to the rapidly growing demand coming from China and India. But that rapid growth in demand is largely offset by a number of counterbalancing factors. These include slower growth in US demand due to its slower economic growth, efficient energy utilization in industrially advanced countries, and increases in oil production by members of the Organization of Petroleum Exporting Countries, Russia, and others. Finally, and perhaps more importantly, claims of "peaked and dwindling" oil are refuted by the available facts and figures on global oil supply. Statistical evidence shows that there is absolutely no supply-demand imbalance in global oil markets. Contrary to the claims of the proponents of Peak Oil and champions of war and militarism, the current oil price shocks are a direct consequence of the destabilizing wars and geopolitical insecurity in the Middle East, not oil shortages. AT: Oil Shocks1. Current oil shocks are more gradual and only one-third as large as that of the 70s. Nordhaus 07, William: Sterling Professor (the highest academic rank at Yale University, awarded to a tenured faculty member considered one of the best in his or her field), of Economics at Yale University, member of the National Academy of Sciences, on the Brookings Panel on Economic Activity, member of the Council of Economic Advisers during the Carter administration [“Who’s Afraid of a Big Bad Oil Shock?” September 2007, http://www.econ.yale.edu/~nordhaus/homepage/Big_Bad_Oil_Shock_Meeting.pdf] So what should we conclude? To begin with, the oil shock of 2002-2006 was different from those of earlier period. If we measure the shock as the income effect per year of the price increases, the shock was substantially smaller than the shocks of the 1970s. It occurred more gradually, and the change was much less of a surprise in the context of past experience. Roughly speaking, the shock was about one-third as large as the shocks of the 1970s. In terms of effects, the impact of the shock on inflation was qualitatively similar although quantitatively different from the earlier shocks. The rise in PCE inflation in the recent shock was consistent with less than full pass-through of the energy-price increase. Unlike the shocks of the 1970s, there appears to have been no substantial pass-through of the energy-price increases into wages or other prices. The impact of the shock on output was completely different from earlier episodes – indeed the sign was opposite. Output continued to grow relative to potential output after the shock, and unemployment continued to fall. The reason for the anomalous output impact is unclear. One possible reason is that the shock was too small to affect the overall pace of economic growth. Additionally, there is modest evidence that the transmission mechanism from energy prices to output has changed from negative to neutral over the last three decades. The reasons for the declining sensitivity are not completely understood, but two underlying causes seem plausible. First, there is evidence that the Federal Reserve reacted more sensibly to energy prices in the 2000s.. ...A second and more speculative reason for the muted macroeconomic reaction is that consumers, businesses, and workers may see oil-price increases as volatile and temporary movements rather than the earth-shaking changes of the 1970s. ...All of these factors would tend to reduce the impact of energy-price shocks on the macroeconomy. In the end, this suggests that much of what we should fear from oil-price shocks is the fearful overreactions of the monetary authority, consumers, businesses, and workers. A cautious reading today suggests that policymakers should not be afraid of a Big Bad Oil Shock. The most recent evidence suggests that the economy is robust in the face of major energy shocks. The economy weathered an increase in real oil prices of 125 percent from 2002 to 2006 without any major strain. This suggests that policymakers should focus on fundamentals such as employment, real output, and containment of inflation as well as the instabilities caused by financial innovations and risk-taking. Oil-price shocks are neither so big nor as bad as in the 1970s. 2. Strategic Petroleum Reserves solve shocks. United Press International 7-19-08 [“Murray: U.S. oil reserve should be used,” http://www.upi.com/Top_News/2008/07/19/Murray_US_oil_reserve_should_be_used/UPI-65421216484535/] WASHINGTON, July 19 (UPI) -- Congressional Democrats want the United States to tap into the Strategic Petroleum Reserve to help bring down oil prices, U.S. Sen. Patty Murray said Saturday. Murray said during the Democrats' weekly radio address that with gasoline prices reaching new highs, it is time to use the emergency reserves and urge oil companies to drill on leased federal lands. "We believe it's time for the oil companies to use that land and to make sure that it stays in America instead of shipping it to the highest bidder overseas," Murray said. "Democrats also think it is time to tap into the Strategic Petroleum Reserve. Right now we have more than 700 million barrels of oil sitting underground in Texas and Louisiana that can be used in times of emergency." Murray also called for increased regulation of energy trading, which she contends is being affected by speculators seeking to profit from rising oil prices. Democrats, she said, "believe we must rein in Wall Street and traders who are unfairly driving up oil prices." "With regard for nothing but their own profits, some traders are bidding up oil prices by buying huge quantities of oil just to resell at an even higher price," she said. 3. High oil prices don’t affect the economy CCTV International 08 (“Oil prices not to have big impact on world economy in long term,” 1/3/2008, http://www.cctv.com/program/bizchina/20080103/102837.shtml) Analysts say the high oil prices will continue, but are not likely to have a big impact on the world economy in the long run. Although the price of crude oil has been rising consistently in recent years, the world economy has maintained a growth rate of around 5 percent, and international trade has grown at a rate of between 7 to 9 percent. Analysts say, the impact of oil prices on the world economy is weakening. The main reason is energy-saving measures and new technology, which are improving the efficiency of energy consumption. The economic growth is less reliant on high consumption of oil. Secondly, the integration of global economies and technology innovation have raised production efficiency and reduced costs around the world, which has led to an increase in disposable incomes. Consumption has therefore remained strong. Another reason is that the world economy is in a phase of expansion, and macro-economic policies in many countries have been in place to withstand the impact of high oil prices. However, the International Energy Agency has estimated that until 2030, the demand for crude oil will increase by 35 percent to 116 million barrels per day and crude oil prices will remain high for the longer term. 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