Econ Backstopping 1NC
A. Decreased demand for oil causes cartel members to flood the market
Robert B. Barsky and Lutz Kilian 2004 [Professor of Economics, University of Michigan, Ann Arbor, Michigan, and Research Associate, National Bureau of Economic Research, Cambridge, Massachusetts; Associate Professor of Economics, University of Michigan, Ann Arbor, Michigan, and Research Fellow, Centre for Economic Policy Research, London, United Kingdom, Journal of Economic Perspectives—Volume 18, Number 4—Fall 2004—Pages 115–134, http://www.rau.ro/intranet/JEP/2004/1804/18040115.pdf]
The view that worldwide demand for oil is essential in understanding oil prices does not imply that OPEC was inconsequential. A key channel that links the stability of oil cartels to macroeconomic forces is described in standard theoretical models of cartels such as Rotemberg and Saloner (1986) and Green and Porter (1984). Producers trade off the immediate gains from abandoning the cartel against the present value of the future cartel rents foregone. This logic suggests that, all else equal, unusually low real interest rates as in the 1970s should be conducive to the formation of cartels and that high real interest rates should be detrimental. Furthermore, the work of Green and Porter implies that the ability of cartels to keep prices high will be procyclical if producers are unable to tell whether other cartel members are cheating by exceeding their production quota. More specifically, in times of unexpectedly low demand, when prices fall below a trigger point, cartel members will choose to flood the market with their output. The assumption of imperfectly observable output is particularly appealing for crude oil producers. The actual production level of crude oil can only be estimated in many cases, and reliable output statistics become available at best after a long lag. Thus, strong economic expansions, all else equal, should strengthen oil cartels and major recessions weaken them.3
B. Flooding the market kills the global economy
Danny Fortson, Business Correspondent, The Independent, 4-23-08, http://www.independent.co.uk/news/business/news/surge-in-oil-prices-prompts-warnings-of-global-.htmlssion-814116.html
Opec, the cartel of oil producing nations that pumps about a third of the world's oil, has tried to deflect calls from big consuming nations such as America and in Western Europe by saying the price run-up can be blamed on traders and speculators. This is partly true. The falling value of the dollar has led investors to look for a hedge against the falling greenback. Commodities in high demand and valued in dollars, have proved an enticing investment. It is this argument that Opec has relied on to keep production steady. Abdullah al-Badri, the cartel's secretary-general, confirmed this week that it has no intention of ramping up production. The most recent run of rising prices was in fact set off by Saudi Arabia cutting its production. It is now the only country that can realistically boost production, as the rest of Opec members are operating at capacity. "What they are worried about is that demand is going to decline in the coming months and they don't want to flood the market and see the price go south," said Muhammad-Ali Zainy, a senior energy economist at the Centre for Global Energy Studies. According to its research, Saudi Arabia has no incentive to provide relief as the government needs the oil price to remain at at least $70 per barrel in order to meet its own budget requirements. Mr Zainy predicted that the oil price will average about $99 per barrel this year. The major oil companies, meanwhile, are having to do everything in their power just to replace fields that are running dry, let alone make new discoveries to boost production. Royal Dutch Shell, Europe's biggest oil company, is ploughing $25bn (£12.5bn) into exploration and production annually but expects output to fall over the next several years. An oil-induced recession would of course lead to a relaxation of its price. Given the rising pressure it is putting on consumers, a slowdown could very well happen.
C. Economic decline causes a nuclear war
Mead, 1992( Walter Russell, NPQ’S Board of advisors, New perspectives quarterly, summer 1992, page 30 )
Hundreds of millions - billions - of people have pinned their hopes on the international market economy. They and their leaders have
embraced market principles -- and drawn closer to the west – because they believe that our system can work for them. But what if it can't? What if the global economy stagnates - or even shrinks? In that case, we will face a new period of international conflict: South against North, rich against poor. Russia, China, India - These countries with their billions of people and their nuclear weapons will pose a much greater danger to world order than Germany and Japan did in the 30s.
D. Cheap oil means no incentive to continue using renewables, turning case
Peter Coy, Business Week, 11-3-97, http://www.businessweek.com/1997/44/b3551008.htm
The expensive oil of the 1970s and early 1980s had one virtue: By discouraging consumption, it lessened the pollution caused by the burning of gasoline, diesel, and other petroleum products. Environmentalists hoped rising oil prices would promote a switch to cleaner energy sources, such as solar power.
If oil instead remains cheap for decades to come, the harm to the environment from sulfur dioxide, carbon monoxide, particulates, and other poisons could be enormous. Combustion of oil, coal, and other carbon-based fuels may also overheat the planet by creating an insulating layer of carbon dioxide. Indeed, cheap oil is bound to complicate efforts to achieve a treaty on global warming in Kyoto, Japan, this December (page 158).
Saudi Prolif 1NC
A. Resentment is growing between the US and Saudi Arabia
Paul Richter, LA Times, 6-8-08, “New forces fraying the U.S.-Saudi oil ties,” http://articles.latimes.com/2008/jun/08/world/fg-ussaudi8
By the end of 2007, it was also apparent that the Saudis no longer believed they could substantially affect prices by increasing production. Now, Saudi oil experts believe that the price run-up is due to such factors as investor speculation, the weak dollar and limited output from such key producers as Iraq, Iran and Venezuela. “They see themselves as having lost control of the market,” Priddy said. The weakening of the economic ties between the United States and Saudi Arabia comes when the Saudi government has increasingly sought to distance itself politically from Washington. Even as the United States has tried to forge a coalition of Persian Gulf states to counter Iran, Saudi officials have grown skeptical about a security alliance with Washington.
B. Incentives for alternative energy cause Saudi backlash
Peter Maass, 8-21-05, New York Times Staff Writer, http://www.easternct.edu/personal/faculty/loxsomf/EES%20305/Fossil/The%20Breaking%20Point.pdf
High prices can have another unfortunate effect for producers. When crude costs $10 a barrel or even $30 a barrel, alternative fuels are prohibitively expensive. For example, Canada has vast amounts of tar sands that can be rendered into heavy oil, but the cost of doing so is quite high. Yet those tar sands and other alternatives, like bioethanol, hydrogen fuel cells and liquid fuel from natural gas or coal, become economically viable as the going rate for a barrel rises past, say, $40 or more, especially if consuming governments choose to offer their own incentives or subsidies. So even if high prices don't cause a recession, the Saudis risk losing market share to rivals into whose nonfundamentalist hands Americans would much prefer to channel their energy dollars. A concerted push for greater energy conservation in the United States, which consumes one-quarter of the world's oil (mostly to fuel our cars, as gasoline), would hurt producing nations, too. Basically, any significant reduction in the demand for oil would be ruinous for OPEC members, who have little to offer the world but oil; if a substitute can be found, their future is bleak. Another Western diplomat explained the problem facing the Saudis: ''You want to have the price as high as possible without sending the consuming nations into a recession and at the same time not have the price so high that it encourages alternative technologies.'' From the American standpoint, one argument in favor of conservation and a switch to alternative fuels is that by limiting oil imports, the United States and its Western allies would reduce their dependence on a potentially unstable region. (In fact, in an effort to offset the risks of relying on the Saudis, America's top oil suppliers are Canada and Mexico.) In addition, sending less money to Saudi Arabia would mean less money in the hands of a regime that has spent the past few decades doling out huge amounts of its oil revenue to mosques, madrassas and other institutions that have fanned the fires of Islamic radicalism. The oil money has been dispensed not just by the Saudi royal family but by private individuals who benefited from the oil boom -- like Osama bin Laden, whose ample funds, probably eroded now, came from his father, a construction magnate. Without its oil windfall, Saudi Arabia would have had a hard time financing radical Islamists across the globe. For the Saudis, the political ramifications of reduced demand for its oil would not be negligible. The royal family has amassed vast personal wealth from the country's oil revenues. If, suddenly, Saudis became aware that the royal family had also failed to protect the value of the country's treasured resource, the response could be severe. The mere admission that Saudi reserves are not as impressively inexhaustible as the royal family has claimed could lead to hard questions about why the country, and the world, had been misled. With the death earlier this month of the long-ailing King Fahd, the royal family is undergoing another period of scrutiny; the new king, Abdullah, is in his 80's, and the crown prince, his half-brother Sultan, is in his 70's, so the issue of generational change remains to be settled. As long as the country is swimming in petro-dollars -- even as it is paying off debt accrued during its lean years -- everyone is relatively happy, but that can change. One diplomat I spoke to recalled a comment from Sheik Ahmed Zaki Yamani, the larger-than-life Saudi oil minister during the 1970's: ''The Stone Age didn't end for lack of stone, and the oil age will end long before the world runs out of oil.''
C. A decline in relations causes proliferation –Saudi Arabia has all the resources necessary
[Michael A. Levi, Science and Technology Fellow, Foreign Policy Studies, The New Republic, 6-2-2003, http://www.geocities.com/munichseptember1972/would_the_saudis_go_nuclear.htm]
Realists counter that the United States needs Saudi oil and Saudi military bases. But there's a less obvious argument for making sure the long-standing Washington-Riyadh partnership doesn't fracture: If it does, the Saudis might well go nuclear. Saudi Arabia could develop a nuclear arsenal relatively quickly. In the late '80s, Riyadh secretly purchased between 50 and 60 CSS-2 missiles from China. The missiles were advanced, each with a range of up to 3,500 kilometers and a payload capacity of up to 2,500 kilograms. What concerned observers, though, was not so much these impressive capabilities but rather the missiles' dismal accuracy. Mated to a conventional warhead, with a destructive radius of at most tens of meters, these CSS-2 missiles would be useless—their explosives would miss the target. But the CSS-2 is perfect for delivering a nuclear weapon. The missile itself may miss by a couple of kilometers, but, if the bomb's destructive radius is roughly as large, it will still destroy the target. The CSS-2 purchase, analysts reasoned, was an indication that the Saudis were at least hedging in the nuclear direction. July 1994 brought more news of Saudi interest in nuclear weapons when defector Mohammed Al Khilewi, a former diplomat in the Saudi U.N. mission, told London's Sunday Times that, between 1985 and 1990, Saudi Arabia had actively aided Iraq's nuclear weapons program, both financially and technologically, in return for a share of the program's product. Though Khilewi produced letters supporting his claim, no one has publicly corroborated his accusations. Still, the episode was unsettling. Then, in July 1999, The New York Times reported that Saudi Defense Minister Prince Sultan bin Abdulaziz Al Saud had recently visited sensitive Pakistani nuclear weapons sites. Prince Sultan toured the Kahuta facility where Pakistan produced enriched uranium for nuclear bombs—and which, at the same time, was allegedly supplying materiel and expertise to the North Korean nuclear program. The Saudis refused to explain the prince's visit. If Saudi Arabia chose the nuclear path, it would most likely exploit this Pakistani connection. Alternatively, it could go to North Korea or even to China, which has sold the Saudis missiles in the past. Most likely, as Richard L. Russell, a Saudi specialist at National Defense University, argued two years ago in the journal Survival, the Saudis would attempt to purchase complete warheads rather than build an extensive weapons-production infrastructure. Saudi Arabia saw Israel destroy Iraq's Osirak reactor in 1981, and it is familiar with America's 1994 threat to bomb North Korea's reactor and reprocessing facility at Yongbyon. As a result, it would probably conclude that any large nuclear infrastructure might be preemptively destroyed. At the same time, Riyadh probably realizes that America's current hesitation to attack North Korea stems at least in part from the fact that North Korea likely already has one or two complete warheads, which American forces would have no hope of destroying in a precision strike. By buying ready-made warheads, Riyadh would make a preemptive attack less likely. And, unlike recent proliferators such as North Korea, the Saudis have the money to do so. Some analysts would argue that Saudi Arabia could enhance its security by undertaking a conventional, rather than a nuclear, buildup. But, as Middle East expert F. Gregory Gause III argues in a new Brookings Institution paper, Saudi Arabia's military is "weak in part by design, to prevent the internal threat of a military coup." Until the Saudi government is widely legitimate in the eyes of its own people—and that day seems a long way off—it is unlikely to build a large conventional military. By contrast, Saudi leaders might favor a nuclear arsenal, believing it enhances their security against external threats while being fairly useless to coup-plotters. Why would Riyadh want nukes now? Because of a potentially dangerous confluence of events. The rapidly progressing nuclear program of traditional rival Iran has no doubt spooked the Saudi leadership. Last fall, dissidents revealed the existence of a covert Iranian uranium-enrichment program, forcing analysts to drastically revise down their estimates of how long it might take Iran to obtain nuclear weapons. Reacting to that development, Patrick Clawson, deputy director of the Washington Institute for Near East Policy, recently wrote that "Saudi Arabia is the state most likely to proliferate in response to an Iranian nuclear threat" because, he argued, the Saudis fear a nuclear-armed Iran could have designs on Saudi Arabia, a Sunni monarchy that is home to a large number of oppressed Shia. After all, Tehran has for years allegedly supported Shia terrorist groups operating in Saudi Arabia and was blamed by many analysts for the 1996 Khobar Towers bombing. Holding back the Saudi nuclear program, of course, has been the kingdom's relationship with the United States. Though America has never signed a formal treaty with Riyadh, since World War II the United States has made clear by its actions—most notably, by protecting Saudi Arabia during the 1991 Gulf war—and by informal guarantees given to Saudi leaders by American officials that it will protect the monarchy from outside threats. Since the September 11 attacks, though, that relationship has grown increasingly frail. When a RAND analyst last summer told the Defense Policy Board, then chaired by Richard Perle, that Saudi Arabia was "the kernel of evil, the prime mover, the most dangerous opponent" in the Middle East, he not only raised hackles in Riyadh, he reflected the opinion of many close to the Bush administration. R. James Woolsey, former CIA director and White House confidant, was even more emphatic in a speech last November, referring to "the barbarics [sic], the Saudi royal family." The recent decision by Washington to pull most of its forces out of Saudi Arabia, reducing its deployment from 5,000 to 400 personnel and moving its operations to Qatar, has added facts on the ground to the rhetorical barrage. This recent decline in U.S.-Saudi relations can hardly make the Saudi royal family feel secure. Suddenly removing the U.S. security blanket just as regional rivalries are intensifying could push the Saudis into the nuclear club. That's a scary prospect, particularly when you consider the possibility of Islamists overthrowing the monarchy. Instead, the United States should be careful to maintain Saudi Arabia's confidence even as the two nations inevitably drift apart. The United States might even extend an explicit security guarantee to the Saudis, the kind of formal treaty it gave Europe to keep it non-nuclear during the cold war-and the kind of formal arrangement Washington and Riyadh have never signed before. Such a formal deal could raise anti-American sentiment in the desert kingdom. But the alternative might be worse.
D) Proliferation Causes extinction
Utgoff 2002 (Victor, Deputy Director for Strategy, Forces and Resources at the Institute for Defense Analyses, Survival, “Proliferation, Missile Defense and American Ambitions”, Volume 44, Number 2, Summer, p. 87-90
In sum, widespread proliferation is likely to lead to an occasional shoot-out with nuclear weapons, and that such shoot-outs will have a substantial probability of escalating to the maximum destruction possible with the weapons at hand. Unless nuclear proliferation is stopped, we are headed toward a world that will mirror the American Wild West of the late 1800s. With most, if not all, nations wearing nuclear 'six-shooters' on their hips, the world may even be a more polite place than it is today, but every once in a while we will all gather on a hill to bury the bodies of dead cities or even whole nations.
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