Oil 1 Peak Oil 21
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Uniqueness ExtFalling oil prices derailed pushes for oil recovery and delayed consumption Chris Flood, Writer, The Financial Times Limited 2008, 7/17/08, http://www.ft.com/cms/s/0/62f22a28-5399-11dd-8dd2-000077b07658.htmlConcerns about weaker US demand were heightened by inventories data on Wednesday that showed larger than expected rises in stocks of crude, petrol and heating oil. Thursday saw a sharp fall in US natural gas prices which derailed a recovery for oil and selling pressure was subsequently amplified by activity in the options market. August WTI options expired on Thursday and the huge number of $130 puts (rights to sell) exerted a downward pull on the WTI futures price. Nymex August West Texas Intermediate sank to a low of $129.00 a barrel on Thursday, down 12.4 per cent after reaching a record high of $147.27 last Friday. ICE September Brent hit a low of $130.73 on Thursday, down 11.4 per cent after reaching a record $147.50 last Friday. Questions as to whether crude prices had peaked for the year inevitably followed but analysts remain reluctant to call a top for the market during the Atlantic hurricane season. Germany 1NCEuropean stocks are being spurred by huge falls in oil prices Herbert Lash, Staff Writer, Thomas Reuters, 7/16/08, GLOBAL MARKETS-Fall in oil price spurs US, Europe stocks rally, http://www.reuters.com/article/bondsNews/idUSN1643518120080716?pageNumber=2&virtualBrandChannel=0&sp=trueU.S. and European stocks rose on Wednesday after oil prices fell sharply on news of an unexpected leap in U.S. crude supplies last week and a big U.S. bank posted surprisingly strong results, easing investor fears about the battered financial sector. Spot gold prices tumbled about 2 percent as crude oil slid and the dollar extended gains after Federal Reserve Chairman Ben Bernanke said that under certain conditions currency intervention may be warranted. Shares in the beaten-down financial sector surged. The S&P financial index rose 6.3 percent, while the KBW Banks index .BKX surged 9.4 percent. Not all the news was positive. Data showed U.S. consumer price inflation accelerated to an annual rate of 5 percent in June -- well above economists' forecasts -- and U.S. government debt prices fell sharply. U.S. crude oil futures fell more than 4 percent after a U.S. government agency reported a surprise uptick in import levels, causing crude prices to chalk up the biggest two-day loss in percentage terms since January 2007. While the two-day drop in the price of oil of almost $15 only brought crude to a three-week low, the fall was enough to help Wall Street rally more than 1 percent. Equity markets had slipped entirely into a bear market earlier this week. Germany 1NCRising Oil Prices and Oil Scarcity will cause German Inflation BusinessWeek, 5/30/08, ‘Germany: Soaring Oil Threatens Economy’ http://www.businessweek.com/globalbiz/content/may2008/gb20080530_827474.htm?chan=rss_topDiscussed_ssi_5The German Energy Agency recently projected the consequences of this trend and reports that Germany is not only in danger of facing a shortage in the power supply, but also that increasingly scarce capacity will force substantial price increases. Renewable energy sources, such as water, wind and solar power, will hardly be able to fill these energy gaps looming in the foreseeable future. Even the federal government's plan to secure around 30 percent of the power supply from such sources by the year 2020 is extremely ambitious—and expensive. The destructive force of hyper high inflation is the precursor for imminent economic collapse William Poole, President, Federal Reserve Bank of St. Louis, Global Interdependence Center (GIC) Abroad in Chile Conference, 5/5/07, Universidad Adolfo Ibáñez, Keynote Address, Santiago, Chile 2 Robert Barro. “Inflation and Growth.” Federal Reserve Bank of St. Louis Review 78 (3), May/June 1996, pp. 153-69. Perhaps the most obvious examples of the destructive force of inflation are hyperinflations in Germany after World War I, in various eastern European countries after World War II and in Latin America more recently. These were caused by printing money to finance massive government budget deficits. Hyperinflation was ended in those countries by reforms 11 that brought government spending under control and credibly ended the financing of deficits by printing money. Economists have debated whether the termination of hyperinflations resulted in serious declines in output. It is certain, however, that hyperinflation did not promote faster growth or financial stability. Hyperinflations went hand in hand with collapsing economies and financial markets. Germany 1NCInflation through the troubled energy sector represents a likely scenario for a malicious currency attack and armed conflict. Jodi Liss, International Affairs Professional Secretary/Executive Assistant at Liss and Lamar, P.C. and Student at Tulane University, 08, Making Monetary Mischief: Using Currency as a Weapon World Policy Journal 24 no4 29-38 Winter Third, the perceived relationship between politics and economics has become uncoupled, especially in industrialized countries, with less official oversight or control. And, fourth and finally, the rise of electronic banking and trading has increased the access and speed of transactions by millions of people, while the rise of offshore funds has put large sums of money out of sight of regulators. The increasing lack of transparency has made it difficult, if not impossible, to keep track of who is investing what or how much, or to prevent unseen actors from withdrawing at a strategic moment.(FN4) (The discovery that a rogue trader had pulled off a $7 billion fraud at Societé Generalé this past winter by hiding trades of European stock index futures shows, if nothing else, just how difficult it can be to keep tabs on financial transactions.) A currency attack could hypothetically start with a state or with a large non-state actor, such as a drug cartel or terrorist group. Its purpose could be to weaken a rival in anticipation of, or during, armed conflict; to punish another state for perceived economic, military, or political infractions; to hobble or distract a potential ally of an adversary; to cripple a potential competitor; or to attack or counterattack a stronger state that has substantial internal financial weaknesses. There are at least four scenarios in which a malicious currency attack might unfold. These include taking advantage of currency dependence; manipulation through a troubled banking sector; massive dumping of reserves of overvalued currency; and the use of rumor and innuendo to harm another state without actually doing anything. Germany Link FrontlineSoaring Oil Prices Threaten German Economy BusinessWeek, 5/30/08, ‘Germany: Soaring Oil Threatens Economy’ http://www.businessweek.com/globalbiz/content/may2008/gb20080530_827474.htm?chan=rss_topDiscussed_ssi_5What is really worrying Germans, though, is the fear that this "oil price madness," as Germany's mass-circulation daily Bild calls it, could become a permanent condition. In the past, energy prices would shoot up but then drop again, and people didn't necessarily feel poorer. Now, though, it seems that Germans' energy bills will continue to grow faster than their incomes and that the price hike for oil, natural gas, gasoline and electricity will begin threatening economic well-being. For economists and consumers alike, all previous calculations are now out the window. Whereas earlier a majority of experts predicted robust growth for 2008, they now see an economy in serious danger. High oil prices and commodity costs could cause German recession during a period of international high oil demand Renee Wagner, Write-in Writer, John Reuters News, 7/18/08, “German Family Firms Fear recession”, http://www.guardian.co.uk/business/feedarticle/7660856 "Germany risks slipping into recession," ASU President Patrick Adenauer told Reuters in an interview on Thursday, adding the rising cost of commodities, which is driving high inflation, were the main reasons the economy risked contracting. "They depress consumption, and investment with it," he said, predicting a rising number of corporate bankruptcies. German producer price inflation accelerated in June to its strongest level since March 1982, pushed by a strong rise in the cost of energy, official data showed on Friday. The global financial crisis had also raised credit costs, which would have a tangible impact on the economy sooner or later, said Adenauer, whose association represents about 5,000 family businesses. The European Central Bank has indicated it may have to repeat July's quarter-point interest rate rise if higher oil and commodity costs feed through into wage deals and the cost of other goods and services, prolonging what it hopes will be a temporary rise in inflation.
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