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Oil prices will stay high in the future
UPI, United Press International, 7/18/11, “Report: High oil prices unlikely to budge”, http://www.upi.com/Business_News/EnergyResources/2011/07/18/Report-High-oil-prices-unlikely-to-budge/UPI-41461311031309/
LONDON, July 18 (UPI) -- Everything including the imminent start of the hurricane season in Mexico suggests the oil
price will stay up in the foreseeable future despite efforts by consumer nations' groups and OPEC to ease upward pressure
on crude market movements. More oil was released on world markets in June and July than in the recent past as part of
recent market maneuvers at the International Energy Agency, which represents consumer industrial countries, and at the
Organization of Petroleum Exporting Countries. Traders' calculations that excess oil would push prices down didn't meet
the expected with market results, however. The reason, the London Center for Global Energy Studies said in its Monthly
Oil Report, was that the release of crude oil stocks by the IEA created its own dynamic as markets noticed the lower
reserves and robust consumer demand in Asia kept the prices buoyant. The resulting scenario raised the question: What else
can the world community do to make crude oil prices friendlier to the global recovery strategists? At current prices, oil is
likely to continue inhibiting economic recovery. OPEC lead producer "Saudi Arabia has begun its unilateral output
increase, raising production by more than 500,000 barrels a day in June," CGES said, citing the first of the four factors
keeping the oil price up. IEA has also begun to implement its surprise 60 million-barrel release of strategic stocks but it
remains unclear how much of that has actually entered the market. "Despite rising supplies, stock cover is low and oil
prices are as high as they were before either announcement was made," CGES said. Crude oil prices on the New York
Mercantile Exchange settled Monday at $95.93 a barrel, the slight drop on the opening day of the week attributed mainly to
worries over the U.S. debt limit and the eurozone debt crisis. Overall, however, prices remain too strong for comfort,
analysts said. The uncertain macro‐economic outlook for the member countries of the Organization for Economic
Cooperation and Development is being more than offset by continued strength in developing‐world oil demand, CGES said.
The oil market is concerned about the adequacy of forward cover during the coming winter, since now is the time to build
stocks. However, the global oil inventory build in the second quarter of this year was tiny -- about 190,000 barrels a day -and further stock decreases are likely in the rest of this year, CGES said. "The global macroeconomic scene continues to be
fraught with perils, notably the eurozone sovereign debt crisis, which is gathering momentum like a run‐away train, and the
standoff in the U.S. Congress over raising the $14.3 trillion limit on the federal debt, which is threatening to immerse the
U.S. in its own sovereign debt maelstrom," CGES said. In the past the oil price wouldn't have been especially sensitive to
the euro-dollar rate's daily gyrations, CGES said, "but these days oil is an asset play, subject to wider influences." The
center said oil prices could remain high by a mixture of uncertainties and an unexpected spurt in demand from developing
economies, failure of OPEC members to deliver on promises of increased production and export and such diverse
uncertainties as the start of the hurricane season in Mexico
SPS reduces the use of fossil fuels and offers even more alternatives
NSSO, National Security Space Office, Space Based Solar Group, 10 October 20 07, “Space‐Based Solar Power As an Opportunity
For Strategic Security, Phase 0 Architecture Feasibility Study,” Report to the Director, National Security Space Office, Interim
Assessment, http://www.nss.org/settlement/ssp/library/final-sbsp-interim-assessment-release-01.pdf
To the extent mankind’s electricity is produced by fossil fuel sources, SBSP offers a capability over time to reduce the rate
at which humanity consumes the planet’s finite fossil hydrocarbon resources. While presently hard to store, electricity is
easy to transport, and is highly efficient in conversion to both mechanical and thermal energy. Except for the aviation
transportation infrastructure, virtually all of America’s energy could eventually be delivered and consumed as electricity.
Even in ground transportation, a movement toward plug‐in hybrids would allow a substantial amount of traditional ground
transportation to be powered by SBSP electricity. For those applications that favor or rely upon liquid hydrocarbon fuels,
America’s national labs are pursuing several promising avenues of research to manufacture carbon‐neutral synthetic fuels
(synfuels) from direct solar thermal energy or radiated/electrical SBSP. The lab initiatives are developing technologies to
efficiently split energy‐neutral feedstocks or upgrade lower‐grade fuels (such as biofuels) into higher energy density liquid
hydrocarbons. Put plainly, SBSP could be utilized to split hydrogen from water and the carbon monoxide (syngas) from
carbon dioxide which can then be combined to manufacture any desired hydrocarbon fuel, including gasoline, diesel,
kerosene and jet fuel. This technology is still in its infancy, and significant investment will be required to bring this
technology to a high level of technical readiness and meet economic and efficiency goals.
Change in demand for oil will kill prices
John Carey, senior correspondent in BusinessWeek's Washington bureau, has covered science, technology, medicine, health, and the
environment for BW since 1989. Prior to BusinessWeek, Carey was an editor of The Scientist and a writer and editor for National &
International Wildlife magazines. He spent six years at Newsweek. He has won awards from the Deadline Club, the American Institute
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of Biological Sciences, the Overseas Press Club, and the Aviation & Space Writers Assn., 2/24/ 03, “Taming the Oil Beast” Business
Week, http://www.businessweek.com/magazine/content/03_08/b3821001.htm
Yet reducing oil use has to be done judiciously. A drastic or abrupt drop in demand could even be counterproductive. Why?
Because even a very small change in capacity or demand "can bring big swings in price," explains Rajeev Dhawan, director
of the Economic Forecasting Center at Georgia State University's Robinson College of Business. For instance, the
slowdown in Asia in the mid-1990s reduced demand only by about 1.5 million bbl. a day, but it caused oil prices to plunge
to near $10 a barrel. So today, if the U.S. succeeded in abruptly curbing demand for oil, prices would plummet. Higher-cost
producers such as Russia and the U.S. would either have to sell oil at a big loss or stand on the sidelines. The effect would
be to concentrate power--you guessed it--in the hands of Middle Eastern nations, the lowest-cost producers and holders of
two-thirds of the known oil reserves. That's why flawed energy policies, such as trying to override market forces by rushing
to expand supplies or mandating big fuel efficiency gains, could do harm.
Strong oil prices key to Russian economy
Jouko Rautava (completed his master's degree in economics at the University of Turku, Finland, in 1985. Between 1985 and 1991, Mr. Rautava performed
balance of payments analyses and forecasting as a researcher for a special department of the Bank of Finland administering the bilateral trade arrangement between
Finland and the Soviet Union. He participated directly in talks on trade and finance between Finland and the Soviet Union. At the BOFIT, Mr. Rautava has focused on
Russia's and China's economies and economic policies. He has participated in various domestic and international working groups as an expert on the Russian economy)
2002,
“The
role
of
oil
prices
and
the
real
exchange
rate
in
Russia’s
economy”,
http://lnweb90.worldbank.org/caw/CAWDoclib.nsf/0/746CF4AB74ACEA6285256D2400425DE4/$file/dp0302.pdf
As mentioned above, there is a common perception that oil prices and the real exchange rate have a major impact on
Russia’s GDP dynamics. This view is based on the fact that exports in relation to GDP in 2001 totalled about one-third, and
roughly half of export revenues came from energy. Moreover, the federal budget is believed to be heavily dependent on
both output developments and energy prices. According to several sources, revenues from the energy sector account for 3040 % of central government total revenues. 1 The attached graphs (Figure 1) on the development of output, real federal
revenues, the real effective exchange rate and oil prices reinforce the view that there are strong links among the relevant
variables. In particular, fiscal revenues seem to follow closely oil prices and GDP trends. The dependence of output on oil
prices is perhaps not as obvious as in the case of fiscal revenues, although the graphs reveal co-movements of GDP and oil
prices before the August 1998 crisis and again since 1999. The real exchange rate graph indicates that since the beginning
of 1995 there has been a tendency for the real exchange rate to appreciate, except in 1998 when the rouble collapsed as a
result of the August crisis. Incidentally, real exchange rate appreciation is a common feature in most transition economies
(the Balassa-Samuelson effect). Nevertheless, the nature of the relationship between output and the real exchange rate is not
evident from the figures alone. One should also notice the dramatic impact of the August 1998 crisis on Russian data series.
The 1998 events raise questions about possible structural breaks in the series and, consequently, whether there have been
some deep changes in the working and dynamics of the Russian economy after 1998. 1 For example, OECD (2002) reports
that gas and electricity taxes alone covered some 30 % of all federal budgetary revenues in 2000. Bank of Finland, Institute
for Economies in Transition BOFIT Discussion Papers 3/2002 9 Despite a general view that oil plays an important role in
the Russian economy, there is surprisingly little research on how oil prices affect Russian macroeconomic dynamics. Most
analyses are based on rather simple and straightforward calculations as to how much a one dollar-change in the price of
crude oil will change Russia’s export or fiscal revenues. Thus, typically assessments by the Russian government,
international financial institutions or investment banks focus on Russia’s external and fiscal vulnerability, i.e., Russia’s
ability to service its debts. Given that Russia exports some 150 million tons of crude oil per year, it is easy to compute that
a dollar change in the world market price of oil per barrel would result in a USD 1.1 billion change in Russia’s annual
export revenues. Based on oil price information, one can further try to assess how other energy exports react to oil price
changes and, consequently, what the overall impact is on external and fiscal balances. Thus, for example, in autumn 2001
Russia’s prime minister Kasyanov said – presumably based on calculations by the government’s think tanks – that a one
dollar change in the price of a barrel of oil will change the total income of the Russian economy by USD 2 billion and
federal revenues by 1 billion.2
Weak Russian economy lets terrorists get nukes and nuclear shoot out
Steven David, professor of political science at Johns Hopkins, January/February 19 99, “Saving America from the Coming Civil
Wars”, Foreign Affairs, http://www.foreignaffairs.com/articles/54626/steven-r-david/saving-america-from-the-coming-civil-wars
If internal war does strike Russia, economic deterioration will be a prime cause. From 1989 to the present, the GDP has
fallen by 50 percent. In a society where, ten years ago, unemployment scarcely existed, it reached 9.5 percent in 1997 with
many economists declaring the true figure to be much higher. Twenty-two percent of Russians live below the official
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poverty line (earning less than $ 70 a month). Modern Russia can neither collect taxes (it gathers only half the revenue it is
due) nor significantly cut spending. Reformers tout privatization as the country's cure-all, but in a land without well-defined
property rights or contract law and where subsidies remain a way of life, the prospects for transition to an American-style
capitalist economy look remote at best. As the massive devaluation of the ruble and the current political crisis show,
Russia's condition is even worse than most analysts feared. If conditions get worse, even the stoic Russian people will soon
run out of patience. A future conflict would quickly draw in Russia's military. In the Soviet days civilian rule kept the
powerful armed forces in check. But with the Communist Party out of office, what little civilian control remains relies on
an exceedingly fragile foundation -- personal friendships between government leaders and military commanders.
Meanwhile, the morale of Russian soldiers has fallen to a dangerous low. Drastic cuts in spending mean inadequate pay,
housing, and medical care. A new emphasis on domestic missions has created an ideological split between the old and new
guard in the military leadership, increasing the risk that disgruntled generals may enter the political fray and feeding the
resentment of soldiers who dislike being used as a national police force. Newly enhanced ties between military units and
local authorities pose another danger. Soldiers grow ever more dependent on local governments for housing, food, and
wages. Draftees serve closer to home, and new laws have increased local control over the armed forces. Were a conflict to
emerge between a regional power and Moscow, it is not at all clear which side the military would support. Divining the
military's allegiance is crucial, however, since the structure of the Russian Federation makes it virtually certain that regional
conflicts will continue to erupt. Russia's 89 republics, krais, and oblasts grow ever more independent in a system that does
little to keep them together. As the central government finds itself unable to force its will beyond Moscow (if even that far),
power devolves to the periphery. With the economy collapsing, republics feel less and less incentive to pay taxes to
Moscow when they receive so little in return. Three-quarters of them already have their own constitutions, nearly all of
which make some claim to sovereignty. Strong ethnic bonds promoted by shortsighted Soviet policies may motivate nonRussians to secede from the Federation. Chechnya's successful revolt against Russian control inspired similar movements
for autonomy and independence throughout the country. If these rebellions spread and Moscow responds with force, civil
war is likely. Should Russia succumb to internal war, the consequences for the United States and Europe will be severe. A
major power like Russia -- even though in decline -- does not suffer civil war quietly or alone. An embattled Russian
Federation might provoke opportunistic attacks from enemies such as China. Massive flows of refugees would pour into
central and western Europe. Armed struggles in Russia could easily spill into its neighbors. Damage from the fighting,
particularly attacks on nuclear plants, would poison the environment of much of Europe and Asia. Within Russia, the
consequences would be even worse. Just as the sheer brutality of the last Russian civil war laid the basis for the privations
of Soviet communism, a second civil war might produce another horrific regime. Most alarming is the real possibility that
the violent disintegration of Russia could lead to loss of control over its nuclear arsenal. No nuclear state has ever fallen
victim to civil war, but even without a clear precedent the grim consequences can be foreseen. Russia retains some 20,000
nuclear weapons and the raw material for tens of thousands more, in scores of sites scattered throughout the country. So far,
the government has managed to prevent the loss of any weapons or much material. If war erupts, however, Moscow's
already weak grip on nuclear sites will slacken, making weapons and supplies available to a wide range of anti-American
groups and states. Such dispersal of nuclear weapons represents the greatest physical threat America now faces. And it is
hard to think of anything that would increase this threat more than the chaos that would follow a Russian civil war.
A terrorist attack escalates to a global nuclear exchange
Patrick F. Speice, Jr., JD Candidate @ College of William and Mary, February 2006, “NEGLIGENCE AND NUCLEAR
NONPROLIFERATION: ELIMINATING THE CURRENT LIABILITY BARRIER TO BILATERAL U.S.-RUSSIAN
NONPROLIFERATION ASSISTANCE PROGRAMS,” William & Mary Law Review, , 47 Wm and Mary L. Rev. 1427]edlee
Accordingly, there is a significant and ever-present risk that terrorists could acquire a nuclear device or fissile material from
Russia as a result of the confluence of Russian economic decline and the end of stringent Soviet-era nuclear security
measures. 39 Terrorist groups could acquire a nuclear weapon by a number of methods, including "steal[ing] one intact
from the stockpile of a country possessing such weapons, or ... [being] sold or given one by [*1438] such a country, or
[buying or stealing] one from another subnational group that had obtained it in one of these ways." 40 Equally threatening,
however, is the risk that terrorists will steal or purchase fissile material and construct a nuclear device on their own. Very
little material is necessary to construct a highly destructive nuclear weapon. 41 Although nuclear devices are extraordinarily
complex, the technical barriers to constructing a workable weapon are not significant. 42 Moreover, the sheer number of
methods that could be used to deliver a nuclear device into the United States makes it incredibly likely that terrorists could
successfully employ a nuclear weapon once it was built. 43 Accordingly, supply-side controls that are aimed at preventing
terrorists from acquiring nuclear material in the first place are the most effective means of countering the risk of nuclear
terrorism. 44 Moreover, the end of the Cold War eliminated the rationale for maintaining a large military-industrial
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complex in Russia, and the nuclear cities were closed. 45 This resulted in at least 35,000 nuclear scientists becoming
unemployed in an economy that was collapsing. 46 Although the economy has stabilized somewhat, there [*1439] are still
at least 20,000 former scientists who are unemployed or underpaid and who are too young to retire, 47 raising the chilling
prospect that these scientists will be tempted to sell their nuclear knowledge, or steal nuclear material to sell, to states or
terrorist organizations with nuclear ambitions. 48 The potential consequences of the unchecked spread of nuclear
knowledge and material to terrorist groups that seek to cause mass destruction in the United States are truly horrifying. A
terrorist attack with a nuclear weapon would be devastating in terms of immediate human and economic losses. 49
Moreover, there would be immense political pressure in the United States to discover the perpetrators and retaliate with
nuclear weapons, massively increasing the number of casualties and potentially triggering a full-scale nuclear conflict. 50
In addition to the threat posed by terrorists, leakage of nuclear knowledge and material from Russia will reduce the barriers
that states with nuclear ambitions face and may trigger widespread proliferation of nuclear weapons. 51 This proliferation
will increase the risk of nuclear attacks against the United States [*1440] or its allies by hostile states, 52 as well as
increase the likelihood that regional conflicts will draw in the United States and escalate to the use of nuclear
weapons. 53
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