Adv Oil Prices 26

WNDI 2008 1
Oil Prices Adv
Oil Prices Adv

Low Prices Bad
Oil Prices Adv.............................................................................................................................................................1
Oil Prices Adv.................................................................................................................................1
Low Prices Bad – Economy........................................................................................................................................3
Low Prices Bad – Economy...........................................................................................................3
Low Prices Bad – Economy .......................................................................................................................................4
Low Prices Bad – Economy ..........................................................................................................4
Low Prices Bad – Iraq.................................................................................................................................................5
Low Prices Bad – Iraq...................................................................................................................5
Low Prices Bad – Poverty...........................................................................................................................................6
Low Prices Bad – Poverty.............................................................................................................6
Low Prices Bad – Turns Case.....................................................................................................................................7
Low Prices Bad – Turns Case.......................................................................................................7
Low Prices Bad – Turns Case...................................................................................................................................10
Low Prices Bad – Turns Case.....................................................................................................10
Low Prices Bad – Turns Case...................................................................................................................................11
Low Prices Bad – Turns Case......................................................................................................11
Low Prices Bad – A2 Asia Economy........................................................................................................................12
Low Prices Bad – A2 Asia Economy...........................................................................................12
Low Prices Bad – A2 Japan Economy......................................................................................................................13
Low Prices Bad – A2 Japan Economy........................................................................................13
Low Prices Good – China Economy.........................................................................................................................14
Low Prices Good – China Economy...........................................................................................14
Low Prices Good – Dependence ..............................................................................................................................15
Low Prices Good – Dependence .................................................................................................15
Low Prices Good – Korea Economy.........................................................................................................................16
Low Prices Good – Korea Economy...........................................................................................16
Low Prices Good – Korea Economy.........................................................................................................................17
Low Prices Good – Korea Economy...........................................................................................17
Low Prices Good – Japan Economy.........................................................................................................................18
WNDI 2008 2
Oil Prices Adv
Low Prices Good – Japan Economy...........................................................................................18

Low Prices Good – Latin American Economy.........................................................................................................19
Low Prices Good – Latin American Economy..........................................................................19
Low Prices Good – Mexico Economy......................................................................................................................20
Low Prices Good – Mexico Economy.........................................................................................20
Low Prices Good – US Dollar..................................................................................................................................21
Low Prices Good – US Dollar.....................................................................................................21
Low Prices Good – US Economy.............................................................................................................................22
Low Prices Good – US Economy................................................................................................22
Low Prices Good – US Stocks..................................................................................................................................25
Low Prices Good – US Stocks.....................................................................................................25
Low Prices Good – Trade..........................................................................................................................................26
Low Prices Good – Trade............................................................................................................26
Low Prices Good – Trade..........................................................................................................................................27
Low Prices Good – Trade............................................................................................................27
WNDI 2008 3
Oil Prices Adv
Low Prices Bad – Economy

High Oil Prices Good for Economy
Business Times ‘Since when is high oil price a bad thing?’
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T4243631811&f
ormat=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T4243631814&cisb=22_T4243631813&tr
eeMax=true&treeWidth=0&csi=151976&docNo=6 October 6, 2000
FOR the first time in ten years, the price of oil has been making headlines, hitting highs
not seen since the Gulf War of more than US$36/bbl (US$1 = RM3.80). On the pro side, the high
price has given producers the necessary economic backing to explore for more oil to
replenish rapidly depleting reserves, something that was almost uneconomic when oil
hit US$11. One would think that a high price would be a godsend for the industry,
and in many ways it has been - operators have revised their budgets based on higher
oil prices and activity is surging ahead.
WNDI 2008 4
Oil Prices Adv
Low Prices Bad – Economy

Oil subsidies kill the economies of developed nations
Ed Shann, 07/21, 2002 (Oil subsidies do no one any favours), Herald Sun, LexisNexis
THE global oil market has become distorted as oil demand grows rapidly in developing countries that
subsidise oil prices well below the free-market price. The result is rapid growth in oil demand in
China, India and the Middle East driving the free-market oil price ever higher for developed countries.
This will eventually lead to a world recession. The consumer-run International Energy Agency
recently suggested world demand was growing too rapidly and that by 2011, OPEC would have trouble
supplying oil demand. Comment focused on the plateau in non-OPEC oil supply. Peak oil analysts who fear
the world is running out of oil argued this supported their views. It does not, unless OPEC output also
plateaus. Total oil supply is still increasing, but not as rapidly as demand. The more worrying aspect of the
outlook is demand. World oil demand keeps growing despite free-market oil prices tripling. Almost all the
growth in demand has been in developing countries that subsidise petrol prices well below the free market
price. Demand in these countries has grown at 3.5 per cent per year. So when you see reports of the oil price
approaching a new peak of $US78 per barrel, expect petrol prices to rise in Australia and developed
countries. Rises in the price of crude have little effect on petrol prices in the Middle East, China or India.
Back in the late 60s, these nations consumed just 25 per cent of world oil. Now they consume over 40 per
cent. Because they have not faced sharply rising oil prices, almost all the increase in oil demand in recent
years has been due to them. Developed nations provide the oil revenue for OPEC to subsidise domestic
consumers. Rapid oil demand growth in OPEC and China will keep driving the free-world oil price
higher. Yet it is the developed countries that will face an oil price crunch if supply cannot be increased
as rapidly as demand in developing countries. The IEA assumes continued rapid world growth of 4.5 per
cent per year until 2011, or an unprecedented decade of rapid world growth. However, if oil supply cannot
keep pace with demand in developing countries, oil prices will go through the roof for developed
countries and output growth will eventually slow. While we have managed so far to deal with rising oil
prices, we face another large jump in oil prices in coming years, with a larger impact on costs and inflation.
The IEA argues that oil demand is not sensitive to oil prices. While this is true globally, in developed
countries oil demand has been flat despite strong output growth. History suggests higher oil prices in
developed countries stimulates new oil saving technologies, but with a long lag. Oil demand will remain flat
to falling in developed countries, but the drag on developed country output growth will increase as oil
prices rise further. Higher inflation will push interest rates up and eventually force a world recession.
WNDI 2008 5
Oil Prices Adv
Low Prices Bad – Iraq

High Oil Prices Increase Stability in Iraq
DAVEED GARTENSTEIN-ROSS, 7/28, 2008 (SPECIAL REPORT: What Do High Oil Prices Mean for
Iraq's Future?), Middle East Times, BBC News
There are very few silver linings to current record-high oil prices — but a more stable future for
embattled Iraq may be one of them. Many experts believe that the country's growing oil revenues will
yield three benefits: an improving economy that can diminish some support for the insurgency, more
money to develop Iraq's security forces, and a greater willingness by other countries to invest in Iraq's
future. The U.S.'s Energy Information Administration projects that crude oil prices will average about $127 a barrel in 2008 and $133
in 2009, up from the $72 average in 2007. With the world's third largest proven reserves, and production having finally returned to 2.5
million barrels per day, Iraq's revenues will surely be greater than in past years. Iraq is expected to draw $70
billion in oil revenue this year alone, and its government has announced plans to further increase oil
production. This brings us to the first benefit that analysts foresee: a growing Iraqi economy. One of the first things Iraq will need
to do is upgrade its equipment used for oil production. Much of this infrastructure is antiquated, and there have been over 450 attacks on
Iraq's pipelines, oil installations, and oil personnel since the insurgency began. Michael Makovsky, foreign policy director at the
Bipartisan Policy Center and former special assistant for Iraqi energy policy in the Office of the Secretary of Defense, told me that the
funding needs of Iraq's oil infrastructure are tremendous. "Some can come from foreign investors," he said, "but Iraq will have to put in
a lot of money." There are also multiple spending needs inside the country — including building power plants, meeting Iraqis'
healthcare needs, and undertaking a housing reconstruction project for displaced people. Iraqi government spokesman Ali al-Dabbagh
recently told Iraqi media outlet Buratha News that "next year's budget will focus on economy, investment and services [while] the focus
was security in previous phases." A large federal budget means that funds should now be available to address
Iraq's little-mentioned healthcare crisis; currently each Iraqi receives an average of only $68 a year in medical services. It
also means, as reported by Iraq's Radio Sawa, that the government-sponsored food coupon program will receive
additional support through a recent $21 billion supplementary federal budget. Iraq's federal
government will also be able to expand provincial budgets. According to Iraq's Al-Sabah newspaper, the government's
2009 budget apportions $13.6 billion to provincial ministries — which will likely increase the national government's influence at a
regional level. The combination of expanded social programs and a generally improving Iraqi economy will signal to citizens that the
country's future is not destitute. Iraqis, shaken by years of violence, may have a reason to participate in the reconstruction process;
improving conditions may diminish both direct and also "soft" support for the insurgency as citizens
economically invested in Iraq's future. Danielle Pletka, the American Enterprise Institute's vice
president of foreign and defense policy studies, said, "The problem we had in Iraq related to the space
in which a relatively few extremists could operate, tolerated by locals. They will no longer be tolerated
if the locals are employed and invested in Iraq's success." Some observers hope that a growing Iraqi
economy may even diminish Iran's influence. A senior American military intelligence officer expressed
hopes that this new oil wealth could help incumbent Shias fund their campaigns in the next round of
elections, and thus reduce Iran's financial hold over them. He argues that one reason the Islamic Supreme Council of
Iraq (formerly the Supreme Council for Islamic Revolution in Iraq) was able to break with Iran was that the group began to run a
budgetary surplus, and could thus provide for its own funding needs. The second benefit that many analysts see for Iraq
from high oil prices is the government's ability to invest in the security forces. Bill Roggio, a civilian military
affairs analyst and my colleague at the Foundation for Defense of Democracies, told me that the security forces want to upgrade. "The
Iraqi army is currently a motorized infantry force," he said. "It appears that the ministry of defense is looking to transform
several motorized divisions into mechanized and armored divisions. This can cost billions per division,
but now the Iraqi government will have the money to purchase the equipment." Michael O'Hanlon, a senior
fellow at the Brookings Institution, told me that as increased oil revenues allow Iraq's government to spend more on its military, "it
might help deflect the U.S. political pressure that Iraq isn't spending enough money on its security forces." The third benefit is
that other countries will be more likely to help ensure Iraq's continued stability. Perhaps this can be
glimpsed in Kuwait recently naming its first ambassador to Iraq since the 1991 Gulf War, and in
Norway, Bahrain, and the United Arab Emirates considering reopening their embassies in Iraq. The
intelligence source quoted above said, "This is likely due to a combination of oil prices and the improving security situation in Iraq."
Makovsky said, "In a world where more oil is needed on the market, Iraq has the potential to be one of the largest producers in the
world." As Iraq's oil production capacity increases through infrastructure investments, Iraq may earn not only a better seat in the global
oil market, but also at the diplomatic table.
WNDI 2008 6
Oil Prices Adv
Low Prices Bad – Poverty

High Oil Prices Lead to and Worsen Poverty
Africa News, 03/12, 2008 (High Oil Price May Worsen Poverty), LexisNexis
The prevalent high and volatile oil prices may have devastating consequences for oil-exporting and
importing developing countries, the World Bank has warned. Although it was silent on the countries that
may be affected, Nigeria is one of the world's largest producers of oil. In his keynote speech during a
conference entitled "Oil Price Volatility, Economic Impact, and Financial Management", co-sponsored by the
World Bank and George Washington, University in Washington, D.C., the Bank's Managing Director,
Graeme Wheeler, tried to establish a connection between high oil prices and poverty. "One of the cruel
ironies today is the connection between rising energy and food prices. This coupling can have
devastating implications for global poverty and food security. Higher energy prices have increased
fertilizer and transport costs and stimulated bio-fuel production. "Just as the poorest on this planet
are the most exposed to the effects of climate change, they are also highly vulnerable to the effects of
rising fuel and food prices. Food and energy prices usually represent over 70 per cent of the consumption
basket of the poor. The long term consequences are considerable. Poor households will cut back on food
consumption and education - and girls will invariably be the first to be withdrawn from schooling. Reliance
on traditional fuels will increase with obvious environmental consequences," he remarked. Fluctuating oil
price has become a subject of intense discussion in state capitals all over the world. A similar conference last
week drew policy makers from over 100 countries to Washington, D.C. to seek solution to the problem.
There, World Bank notes that high and volatile prices make it hard for energy importers to budget for energy
costs. It has also hurt economic growth, investment and trade, the Bank said. Oil exporters, it further argued,
faced challenges in managing revenues and planning development, adding that a booming oil sector and
rising currency might mean other sectors in the economy fail to grow, a development which could result in
countries losing ground in the fight against poverty. According to the Bank, four million people slid back
into poverty in 2006 as a result of rising oil prices and a higher cost of living in the Philippines. A
consultant with the Oil, Gas and Mining Policy Division of the World Bank and former lead energy
economist and manager of the division, Robert Bacon, added that volatile oil prices had put pressures on
developing countries to look for ways to smooth out the bumps in the market. Bacon's 2006 study, "Coping
with Higher Oil Prices," co-authored with Lead Energy Specialist, Masami Kojima, looked at the experience
of 38 developing countries that tried various ways of doing this. The study noted that "Chile, Malaysia,
Thailand, Indonesia and others used 'price-smoothing', in which a country sets a target oil price. The
government subsidises oil if the international price goes above the target, and imposes taxes if it goes below."
The downside, according to the study, is that "the policy often ends up encouraging more fuel consumption
and subsidising the rich. In Indonesia, the government reformed the fuel subsidies and compensated the poor
by paying them conditional cash transfers. Another technique is 'hedging' - using financial instruments such
as futures and options and 'collars' which could mitigate price risks at a cost. Hedging, rarely used by
governments but often by companies, requires a high amount of expertise and could backfire if the internal
control and governance structure is not in place," says Bacon. However, the head of derivatives in the World
Bank Treasury, Ivan Zelenko, contends that "derivatives are the best way to transfer oil price risk to markets,
provided they are used with a sound governance and trading platform. Derivatives are very effective to
mitigate oil price risk in the near/medium term (5 - 7 year horizon). Over the longer term, however, other
solutions (like oil wealth funds) can be used."
WNDI 2008 7
Oil Prices Adv
Low Prices Bad – Turns Case

Low oil prices turn case – increased emissions, dependence increases, and alternative
energy research ends
The Star-Ledger, 6/16/2008, “A downside to low oil prices,”
http://blog.nj.com/njv_editorial_page/2008/06/a_downside_to_low_oil_prices.html
The Saudis have indicated that they'll increase petroleum production by 200,000 barrels a day in July -- on
top of an increase of 300,000 barrels a day this month -- a move that may moderate the rising price of gas.
Mind you, no one is predicting gas prices falling back to $1 a gallon. Good thing, too. Perversely, the long-
term problems that stem from seductively low oil prices are as serious as those from freakishly high ones.
Drivers flock back to gas-guzzling big cars, trucks and SUVs. They move farther away from work, so
commutes lengthen. Businesses and ordinary citizens don't bother turning down the heat or dialing back
the AC. The impetus for more mass transit disappears. Dependence on oil from the Mideast and other
unfriendly places grows. Worst of all, research into the alternative energy that could get us out of the oil
mess evaporates. Americans proved all this and more between 1973 and the mid-1980s. Remember the vows
of energy self-sufficiency? Cars that would get 50 miles a gallon? Advanced solar technology? Major efforts
were made and significant progress was achieved (including a near-doubling of average gas mileage), but it
all stalled, even reversed, when the price of a barrel of crude fell to the teens and stayed there for a decade.
The Saudis aren't planning to increase production because they sympathize with the average American -- or
any other oil consumers around the world, for that matter. They understand that oil at current levels will fuel
an international economic slowdown. That's bad for their business. But Americans should remember that the
Saudis and other oil producers also fear that record-high prices will refocus the U.S. and other nations on the
need to cut petroleum use. That would be even worse for their business. It also would cause instability at
home, where oil is the only thing fueling the economy as a source of jobs and revenue. The Saudis would
love to bring prices down just enough to lull Americans into forgetting about gas costs again. The falling-
prices part would be a wonderful economic boost. Forgetting would not. We did that once, and it is costing us
dearly.
Low prices turn case

Daniel Akst is a journalist “The Good News about Oil Prices Is the Bad News”- Money and
Business/Financial Desk September
eeMax=true&treeWidth=0&csi=6742&docNo=117, 2006
What we need is not lower oil prices but higher ones -- significantly higher, enough to deter
consumption and make us look seriously at alternatives. The sad fact is that just as oil is the lifeblood
of Western economies, oil revenue often is the lifeblood of tyranny. Oil-rich regimes that trample the
rights of women, finance terrorism and preach intolerance are sustained by what we spend on gasoline
and heating oil. The unfortunate paradox is that moderating oil prices, while they may reduce the
earnings of despots in the short run, will only support our harmful addiction -- and the power of those
same despots -- in the long run.
WNDI 2008 8
Oil Prices Adv

Rising Oil Prices are Pushing Consumers Towards Alternative Forms of Energy
Richard Woods, 07/06, 2008 (How China's thirst for oil can save the planet), The Sunday Times, LexisNexis
The pioneers of green energy report a 'gold rush' mentality as soaring oil prices speed up the search
for alternatives. Richard Woods investigates At the Lotus engineering works in Norfolk, researchers are
working on an idea that seems almost too good to be true: a car that runs on CO2. The very gas that comes
out of exhausts and poses the threat of climate change could, they believe, be extracted from the atmosphere
and used as a source of synthetic fuel. Hey presto: a carbon-neutral car, planet saved. From theory to practice
is a bumpy road, of course, and Mike Kimberley, chief executive of Group Lotus, readily admits that some
alternative fuels "could be more easily implemented than others". He is optimistic, however, and determined
to make Lotus a "world leader in green transport engineering". These days even diehard petrolheads know
that in the long run there is no choice but to find an alternative to the black gold that has lubricated
the world for more than a century. All sorts of initiatives for clean, green and renewable energy are
being supercharged by oil prices that hit a new record last week of $146 a barrel - and may well go
higher. Among mainstream analysts, predictions of the price reaching $200 are unexceptional. Last month
Gazprom, the Russian oil giant, suggested it would hit $250 next year. The maverick energy guru Robert
Hirsch, who forecast the present oil squeeze, has suggested the price could reach $500 a barrel within three to
five years. Gas prices are also soaring and coal, though cheap and plentiful, is one of the worst sources of
CO2 emissions. What is bad news for businesses and consumers, however, is good for investors in green
energy. Vast sums of money are pouring into technologies that until relatively recently were the
preserve of niche businesses and environmental campaigners. This year should see a record £ 73 billion
or more invested in "clean technology" despite the credit crunch, according to a report published last week
by the consultants New Energy Finance for the United Nations. "The green energy gold rush is attracting
legions of modern-day prospectors in all parts of the globe," said Achim Steiner, head of the UN
environment programme. Dotcom entrepreneurs, Wall Street financiers and venture capitalists of every hue
are piling in. This 21st-century "green Klondike" stands in stark contrast to the fortunes of ageing icons of
the oil age, such as the US carmaker General Motors. Enhanced Coverage Linking General Motors. Until
recently the biggest vehicle manufacturer in the world, GM is in the middle of an enormous, possibly fatal,
slow-motion crash. It has been running low on gas for some time, losing $51 billion in just three years. Last
week one of the wheels fell off as it axed four plants that build thirsty sports utility vehicles and trucks. The
company's outlook is so poor that the investment bank Merrill Lynch has warned that bankruptcy is "not
impossible". These tectonic shifts are driven in large part by the surging development of China and its 1.3
billion people. While the demand for oil in most western countries has flatlined or even declined over the
past 12 months as economic conditions have worsened, in China it is powering away. This demand, and for
other commodities, is driving up prices - but also spurring investment in technologies that might unlock a
new era of clean, affordable energy. It prompts several questions: are consumers finally beginning to change
their habits? Will alternative energy sources become economically competitive? And could China's thirst for
oil in fact save the planet? That high oil prices are changing consumers' habits is clear. In the US the
latest figures show that American motorists drove 1.4 billion fewer miles in April than in the same
month last year. It was the sixth consecutive monthly drop. Bus and train use has jumped 10-15%. In
Britain similar concern is evident. Petrol sales are down and an AA survey shows that 48% of drivers
are considering cutting out short journeys by car and 62% would consider buying a more fuel-efficient
model. Last month Toyota sold its 25,000th Prius in the UK and the hybrid car, powered by petrol and
electricity, is in such demand that buyers sometimes face waiting lists, depending on colour and specification.
WNDI 2008 9
Oil Prices Adv

High Oil Prices Force Us to Consider Alternatives
STEVE A. YETIV “High oil prices have benefits” LOCAL; Pg. B110--
eeMax=true&treeWidth=0&csi=11811&docNo= February 10, 2006
In particular, what can high oil prices do that America’s energy policy fails to do? First, sooner or later, high
oil prices spur the development of alternative energy resources, because they make it more profitable
to produce them. The higher prices go, the more entrepreneurs and companies around the world work
to move us beyond the hazardous petroleum era. Second, the higher oil prices go, the more likely
automakers will mass-produce more efficient, less pricey vehicles. That is precisely what we need to shift the
current oil-guzzling paradigm. High oil prices are an incentive for making efficient vehicles on a mass,
affordable scale, and sooner rather than later. Third, high oil prices make consumers less likely to waste
gas and more likely to buy hybrids. In Europe, high gas prices — roughly double that in the United
States — have led to mass adoption of hybrids. Investment banking firm Goldman Sachs predicts that gas
prices would have to hit $4.30 a gallon in the United States to change the gas-guzzling culture. But it is better
to see the impact as relative to price. For that matter, vehicles that run on fuel cells emit only water and heat
as waste, and hybrids emit more limited emissions than conventional vehicles. Because carbon emissions
cause global warming, we should tip our hats to high oil prices. Fifth, high oil prices are raising
consciousness about the hazards of the oil era. Ninety-three percent of Americans believe that oil
dependence is a serious problem. Although they still act like oil is an entitlement, pricey oil may lead
them eventually to put pressure on politicians to move toward greater oil independence .
Rising Oil Prices Provide Incentives to Search for Alternative Forms of Energy
Jim Pinto, 04/26, 2006 (Why High Oil Prices are Good), InTech
For almost a century, cheap oil has undercut other fuels. Now growing demand is outrunning supplies
and increasing prices. However, there is a good side. Skyrocketing prices are an incentive for
developing other fuels. Many new technologies are beginning to tap energy supplies that have nothing
at all to do with oil. With oil prices already at $70 a barrel, new energy sources are becoming attractive.
Three billion dollars in U.S. federal research money is going into synthetic fuel programs, which aim to
turn huge U.S. coal reserves into gasoline. In addition, corn, sugar, and soybean farmers are hoping that
rising prices can make ethanol and bio-diesel cost effective, and using plant waste will prove more
economical. It is hard to see demand for oil surviving long at current costs. Technology breakthroughs
are coming fast, while alternatives like the hybrid car are emerging fast—yielding vastly improved
mileage. Have you bought your Toyota Prius yet? You will notice there is a long waiting list. The good news
is the world is not running out of hydrocarbons. The better news is many other reserves are located outside
the Mid-East and Africa, right here in the Americas. The demand for oil and energy continues to rise, as
billions of people throughout the world claim their share of global prosperity. At what price will oil hit the
energy tipping point?
WNDI 2008 10
Oil Prices Adv

As Oil Prices Go Up, Renewable Energy Prices Go Down
Associate Press, 10/21, 2004 (Rising Oil Prices Boost Renewable Energy), MSNBC
SAN FRANCISCO - With oil reaching record high prices and natural gas doubling in the last two years,
renewable energy is looking a lot better — not just on environmental merits, but on price. Wind, solar, geothermal and
other green power sources have long been championed by people worried about smog and global warming, but until recently they were
too costly to compete. But the soaring cost of fossil fuels is changing the economics of the energy market. "Rising fossil fuel
prices are making renewable energy more competitive in the power market," said Steve Taub, an alternative
energy analyst at Cambridge Energy Research Associates. Renewable energy can't offer much relief to drivers and companies seeing
their profits evaporate because of skyrocketing oil prices, because viable green alternatives to gasoline are hard to find. Biofuels such as
ethanol and biodiesel aren't widely available, and hydrogen-powered cars aren't expected to hit the market for years. But in the
electricity market, green power, especially wind, is already competing with traditional sources. At today's average wholesale prices,
wind costs 4.2 cents per kilowatt hour, compared with 4 cents for coal, 6.8 cents for natural gas, 9.1 cents for oil and 10 cents for nuclear
power, according to Kyle Datta, managing director at the Rocky Mountain Institute, a research group focused on eco-friendly business.
Experts estimate that at today's consumption rates, known global supplies of oil and natural gas would be depleted within decades. But
prices are expected to rise significantly long before supplies run out, making those fuels too expensive to use at current levels. "They're
never going to run out, but the ability to match supply to demand may already have run out, especially for oil," said Stephen Leeb,
president of Leeb Capital Management and co-author of "The Oil Factor," which predicts that oil could hit $100 a barrel by 2010. In the
short term, fossil fuel prices are being driven up by war, political instability, natural disasters and other variables. The long-term outlook
is clearer — global supplies are dwindling as demand soars, particularly in China and India, where automobiles are multiplying and
economies are growing a breakneck speed. "We should treat the prices as a warning that we need to act to promote energy efficiency
and renewable energy," said Ralph Cavanagh, an energy expert at the Natural Resources Defense Council. "They represent a terrible
threat to the vitality of the United States." Meanwhile, improving technology, tax credits, low interest rates and
government mandates are making renewables more widely available, establishing an inexhaustible
energy supply that will keep driving prices down. Renewables required in some states Sixteen states,
including California, New York and Texas, have adopted "renewable portfolio standards" that require
utilities to buy a certain share of their electricity from renewable sources. Utilities such as Pacific Gas &
Electric Co., which serves most of northern California, are increasing purchases of renewables, not only to meet state mandates but also
to diversify their energy portfolios. Spokesman Jon Tremayne said renewables make up 13 percent of PG&E's portfolio, and the utility
plans to increase that share by 1 percentage point annually until it reaches the 20 percent required by California law. Less than 3 percent
of U.S. electricity now comes from renewables such as wind, solar, geothermal, wood and waste, but that share is expected to increase as
the price of fossil fuel rises. About 50 percent of electricity comes from coal, 20 percent from nuclear power, 17 percent from natural
gas, 7 percent from hydroelectric and 3 percent from oil, according to the U.S. Energy Information Administration. Increasingly, solar
power is gaining popularity with individual homeowners and businesses that want to generate their own power, but it isn't used much by
utilities. Geothermal energy is limited by geography, and biomass is still being developed as a reliable fuel source. Fastest growth in
wind, which makes up less than 1 percent of the nation's energy supply, is the fastest growing source of renewable power. Over the past
five years, large scale wind farms have been built in Texas, California, Kansas, Wyoming and other states. Advocates point to wind's
numerous advantages: Wind is free and inexhaustible, it doesn't generate smog or greenhouse gas, and its price is more stable than its
chief competitor, natural gas. The downside is that the wind doesn't always blow, and not all regions have strong wind resources. "Wind
energy is a good investment because it can insulate utilities and consumers from volatility in the price of fuels," said Christine Real de
Azua, spokeswoman for the American Wind Energy Association. The Energy Information Administration has calculated the average
price — factoring in fuel, construction and operating costs — of various electricity sources over 20 years starting in 2010. It estimates
that wind would cost $50.54 per megawatt hour, compared with $61.32 for nuclear power, $53.42 for coal and $49.66 for natural gas.
"What's lost in the discussion of clean and dirty energies is that the clean energy might actually be cheaper," Leeb said. "Being clean is a
bonus."
WNDI 2008 11
Oil Prices Adv

Rising Prices and Falling Supply Lead to a Search for Other, More Eco-friendly, Forms of
Energy
Gulf News, 07/19, 2008 (HIGH OIL COULD BE A BLESSING IN DISGUISE), LexisNexis
The king of Saudi Arabia, the world's biggest oil exporter, has every reason to feel unhappy about the soaring
cost of oil. The price of oil has doubled in a year, hitting a record of $147.27 a barrel last week. Economies
far from the oil wells are battered, and the prospect of relief looks gloomy: oil is depleting and demand is
showing no letup. As countries in Asia expand, more oil is required to feed growing economies. We all know
what happens when supply fails to meet demand. But despair not. High oil prices might just be a blessing in
disguise. Back in the days when oil was abundant and cheap, way below $100 or $50 per barrel, the
world didn't pay much attention to calls to explore and use alternative energy sources. Times were good
then. In the United States, for instance, cheap oil led many consumers to ditch their lighter, smaller cars
for heavy sports utility vehicles or pickup trucks that were energy-intensive. As a result, they burned
up more fuel on the roads. Petroleum consumption soared by 24 per cent, from an average of 17
million barrels a day in 1990 to 21 million barrels in 2004. Besides, cheap oil made their lives more
convenient. Splurging on electricity to power their homes didn't translate to painfully expensive
monthly bills. The US was an oil exporter and used to produce half of the world's oil in the 1950s. However,
the country is now a major importer and eats up a quarter of the world's oil. End of good times. The good
times are undoubtedly over. The price of oil has surpassed the $100 mark and signs of a depleting supply are
imminent. According to the German-based Energy Watch Group, world oil production will decline
more than half by 2030. In 2006, production peaked at about 81 million barrels per day. It is expected to
slide to 58 million by 2020 and to 39 million in 2030. With oil prices shooting through the roof and
supply falling, people are forced to scramble for other options. If oil were priced at $1 per barrel today
and it flowed like water, no one would have bothered thinking about how to use energy from the sun, wind
and water to power homes, offices and industries. Conserving energy would probably not even cross their
mind. That's the fundamental anomaly of human nature. People take for granted things that cost them no
effort and value those they can't easily get. So, keeping the price of oil expensive may be a good thing after
all. It will ultimately motivate more economies to break themselves free from oil dependency and head in the
greener, more sustainable direction. If more people are interested in renewable energy, entrepreneurs will be
encouraged to pour money into research and development. Scientists and inventors, in turn, will be inspired
to sharpen their minds further to develop cheaper technologies. And as alternative energy technologies
become more affordable, investments in the sector will pick up speed. In the end, it will be the consumers
who will reap the benefits.
WNDI 2008 12
Oil Prices Adv
Low Prices Bad – A2 Asia Economy

High Oil Price’s Effects on Asia are Exaggerated
Tom Holland, 12/04, 2007 (Crudely put, $100US is nothing to fear), South China Morning Post, LexisNexis
Judging by the hysterical note to much of the commentary last month when the price of oil came within a
whisker of $100US a barrel, you could be forgiven for thinking civilisation as we know it would be in danger
of collapse if ever the crude price reaches three figures. Happily, there is no need to worry. The models used
to gauge the economic impact of a rising oil price are deeply flawed. Back in April 2005, the Asian
Development Bank forecast that every $10US increase in the price of a barrel of crude oil would knock 0.8
of a percentage point off regional economic growth. Just think about that for a moment. In making its
projection, the ADB assumed an average price of $41US per barrel for 2005. Yesterday, oil was trading at
$88US a barrel, having retreated from a record high of $98US late last month. So oil costs nearly $50US
more than the ADB assumed in 2005 and yet the bank is forecasting that emerging Asian economies will
grow at a blistering 8.3 per cent pace this year. That would mean, according to the ADB's rule of thumb, that
if the price of oil had not risen over the past 2 ½ years, Asia's economic growth rate this year would be a
shade over 12 per cent. The mainland would be growing at a 15 per cent pace. To put it another way, when
the ADB made its 2005 forecast, it expected a 6.5 per cent regional growth rate. Factoring in the oil price rise
we have seen since then, that would mean Asia should expand just 1.8 per cent this year rather than the 8.3
per cent the bank is now forecasting. To be fair to the ADB, forecasting is a notoriously tricky game and
anyone bold enough to make predictions is bound to end up with an egg on his face every so often. Even so,
models of the economic impact on Asia of rising oil prices have been proved wildly inaccurate. That is
partly because they are based largely on assessments of the oil price spikes of the 1970s. Those were the
result of sudden interruptions in supply which had a direct and immediately negative impact on
economic activity. In contrast, the run-up over the last few years is, in large part, a consequence of the
high demand generated by Asia's rapid economic development rather than a supply squeeze. As a
result, the effect on growth is far milder. In addition, it is likely the old models overstated the impact
of rising oil prices 30 years ago. As Jean-Pierre Béguelin, chief economist of Swiss private bank Pictet
points out, the spikes of the 1970s occurred during a period of financial turmoil involving sharp
interest rate increases to control inflation, following the collapse of fixed exchange rates. He argues
that much of the economic slowdown attributed to higher oil prices was, in fact, due to the overall
tightening of monetary conditions during the decade. As a result, models which claim a definite
relationship between the oil price and growth rates today should be taken with a large pinch of salt,
says Mr Béguelin. That does not mean the price of oil will not reach three-figure levels one day. Resurgent
buying by hedge funds could easily push it up again, especially if fears of an economic slowdown turn out to
be exaggerated. But it does mean that even if crude does top $100US, we do not need to worry too much,
whatever the models say.
WNDI 2008 13
Oil Prices Adv
Low Prices Bad – A2 Japan Economy

High oil prices won’t hurt the Japanese economy – fuel efficiency and stability
PON, Mriganka Jaipuriyar, 9/21/2006, “Japan ready to weather oil price spike, says S&P,” Platts Oligram News,
Lexis
Japan is better prepared than any other developed country to weather another serious spike in
petroleum prices, Standard & Poor's said in a recent report analyzing the impact of different oil price
scenarios on the economy. Japan's economy would experience a comparatively minor dip should oil prices
linger at about $100/barrel over the next two years. Even an extreme case of $250/barrel would not
seriously impair the domestic economy, S&P analyst Takahira Ogawa said in the report. According to
S&P's simulations, an oil price rise to $100/barrel in 2006 would push down real growth of the Japanese
economy by 0.64% in 2009 and a price rise to $250/barrel would lower GDP growth by 2.1% in 2009. The
impact on inflation was also forecast to be limited. Ogawa attributed the Japanese economy's
resilience to a shift away from oil and its improved fuel efficiency, which is the highest among all
developed nations. Japan's oil imports have steadily declined from a peak of 289 million kiloliters (around 5
million b/d) in 1973 and oil supplied only 50% of the nation's total energy in 2003, down from 77% in 1973,
according to the report. "In terms of GDP growth and price stability, Japan is one of the most resilient non
oil-producing sovereigns in our simulations. Nonetheless, Japan's economy will likely suffer if high oil prices
continue for a relatively long period," S&P said.
WNDI 2008 14
Oil Prices Adv
Low Prices Good – China Economy

High oil prices would devastate the Chinese economy – exports, consumer spending, and
industry
PON, Mriganka Jaipuriyar, 9/21/2006, “Japan ready to weather oil price spike, says S&P,” Platts Oligram News,
Lexis
China, on the other hand, is vulnerable to very high oil prices on account of its developing economy and
high energy needs, S&P said in a separate report. China accounts for 8% of global oil demand. The effect of
a sharp increase in oil prices on China's economy, however, would not be readily apparent due to the
country's extensive distortions and price controls, S&P said. Although these distortions limit the pass-through
effect of high oil prices, they also prevent the economy from adjusting efficiently, S&P analyst Ping Chew
said. Nevertheless, retail fuel prices would have to rise eventually, even at current world oil prices, and
the impact would be felt across the economy, S&P added. At China's per capita income of $2,000 in 2006,
the country is unlikely to be able to sustain very high oil prices. It is therefore very likely that the government
will contain price hikes in the future, although the economy could eventually be vulnerable to a sudden and
severe shock. In a $100/barrel scenario, China's domestic industries are likely to be able to absorb the price
shock, and despite higher energy costs, are expected to be able to increase production and maintain
employment growth, S&P said. Under a scenario where oil prices reach $250/barrel, however, China's
real GDP growth would decline to a level that could bring about harsh economic conditions for a
sustained period, according to the report. Global demand in this scenario would slow significantly,
posing a problem for Chinese export-oriented industries to maintain growth.
WNDI 2008 15
Oil Prices Adv
Low Prices Good – Dependence

High Oil Prices Shred US Independence on Foreign Oil
Gerald F. Seib, executive Washington editor of The Wall Street Journal, has been involved in covering every
presidential election since 1980 and writes the weekly Capital Journal column for the Journal---.
http://blogs.wsj.com/politicalperceptions/2008/07/08/pump-prices-hurt-americans-not-just-in-pocketbook/ July 8,
2008,
High oil prices are shredding America’s financial independence and producing a massive transfer of
wealth from U.S. pocketbooks into the hands of suspect actors around the world, including Iran,
Venezuela and Russia. The U.S., in other words, now has an energy problem that is not only draining
the bank accounts of its own citizens, but filling up the bank accounts of some who work against To
simplify the predicament, high energy prices hurt Americans in three ways. Only the first and most
obvious one, the effect of high gas prices on voters’ economic health, gets much attention. The second
way high oil prices hurt is by adding to the country’s lack of economic independence. In much the
same way the country has been borrowing money from China to pay for more Chinese imports, it
increasingly is borrowing money from oil producers to buy more of their oil. The outflow of
petrodollars also translates into loss of financial independence on another front. Oil-producing
countries are accumulating piles of excess cash that they can use — and are using — to buy pieces of
Western companies.
WNDI 2008 16
Oil Prices Adv
Low Prices Good – Korea Economy

Rising oil prices are bad for Korea’s economy
Lee Sun-young, 07/11, 2008, (Bracing for long, painful oil shock $150 would signal onset of third crisis), THE
KOREA HERALD, LexisNexis
As international oil prices approach $150 per barrel, some experts warn that Korea may be headed for
a new oil price shock that could be longer and more painful than those in the past. Last week, the price
of Dubai crude oil, Korea's benchmark, surpassed $140 per barrel, prompting the Korean government to
come up with a set of contingency plans. President Lee Myung-bak described the current situation as "a third
oil shock," heightening a sense of crisis among local businesses and households. "The current economic
difficulties facing the country can be referred to as a third oil shock," he said, calling for national unity to
overcome the crisis. Dubai oil slipped below $135 this week, but analysts see this as a breather in the recent
spike in global oil prices. Adding to the uncertainties regarding the future movement of oil prices is the
escalating geopolitical tensions over Iran, the world's fourth-largest oil exporter. "This is a very serious
situation for Korea, which imports almost all of the oil it consumes," said Prime Minister Han Seung-
soo, who announced a package of energy conservation plans Sunday. According to the analysis of
government officials, the current oil prices, if adjusted for inflation, have already exceeded those of the
second oil shock in 1980. In April of that year, the average price of Western Texas Intermediate stood at
$39.50 per barrel, which is equivalent to $104.10 today. This, however, excludes key factors - the
improvement of energy efficiency and the reduced dependency on oil for fuel during the past three decades.
Taking all this into account, the Korea Energy Economics Institute estimates that $150 per barrel in Dubai oil
would be the onset of the third oil shock. "On the surface, it looks like the same situation is being played out:
Oil prices are rising sharply," said institute researcher Lee Dal-seong. "But if you look at what's driving the
price increase, it is a very different story from the previous oil shocks." Oil shocks in the past were driven by
supply disruptions, such as the OPEC oil embargo in 1973 and the Iranian revolution in 1979. Such events
reduce the amount of oil available, which increases prices. Supply shocks raise the production costs of
businesses that use oil, and cause them to curtail their output, perhaps enough to cause a recession. This
time, it is high demand for oil, driven by the rapid economic growth of China, India and others, not supply
disruptions, that is driving the current price surge. In other words, the recent hike in oil prices is being driven
by the world economy's strength, which is why the situation is likely to persist for a while, Lee said. "The
past shocks had a temporary impact on the economy. Oil prices rose sharply in a short period of time
due to supply disruptions. It resulted in a drastic economic contraction, as companies were forced to
halt production," the Finance Ministry said in a report. "But prices are rising gradually over a longer
period of time and their impact on the Korean economy will be more far-reaching and lasting," it said.
A higher fuel burden may lead to worsening terms of trade for Korea in the global market, causing
national income to shrink and inflation to rise, followed by contractions in spending, investment and
production. It took about four months for oil prices to double in the first oil shock in 1974, and eight to nine
months in the second shock in 1980. This time, the prices doubled in the space of a whole year. "The
current oil price surge will have its most severe impact on consumer prices, and the longest on the
country's current account balance," said Yang Jun-mo, a professor at Seoul's Yonsei University. Korea
is the world's fifth-largest importer of oil. It is expected to spend $111.2 billion to buy oil overseas this year,
which accounted for nearly a third of the country's total exports in 2007. Its oil import bill last year stood at
$60.3 billion.
WNDI 2008 17
Oil Prices Adv
Low Prices Good – Korea Economy

Rising Oil Prices Harm Korea’s Economy
Korea Times, 10/19, 2004 (Oil Shock Hits Korea Most), LexisNexis
Korea is likely to face a bigger economic shock from surging oil prices than most other economies due
to its heavy dependence on oil imports, the Samsung Economic Research Institute (SERI) said
Monday.Other local and foreign investment banks have also raised concerns about record-high oil prices and
believe that if current price trends continue, Korea would see a prolonged economic slump and slower
economic growth. SERI said that a $10 a barrel rise in international oil prices would bring down
Korea's gross domestic product (GDP) growth by 1.34 percentage points and push consumer prices up
by 1.7 percentage points. It added that the nation's trade surplus would decline by more than $8
billion.The economic think tank said that the other members of the Organization of Economic Cooperation
and Development would see a drop of 0.4 percentage point in GDP growth and non-oil producing Asian
economies would see a 0.8 percentage point fall.''This is because of the structure of Korea's economy, which
depends heavily on oil,'' SERI said.Korea imports almost all of its oil and is the world's fourth-largest oil
importer.SERI expected high oil prices to continue for the time being due to geopolitical uncertainties and an
unstable demand and supply structure.West Texas Intermediate crude oil has jumped more than 68 percent
this year to a record $54.93 a barrel in New York, while Brent crude oil has also climbed almost 70 percent to
$51.53 a barrel. The Daishin Economic Research Institute (DERI) reported that high oil prices will lead to a
rise in raw materials prices, hurting the current account and reducing real income.It also believed that every
$1 rise in oil prices will reduce the current account by $750 million and economic growth by 0.1 of a
percentage point.''High oil prices will push producer prices, which in turn will be reflected in consumer
prices,'' said Lee Hee-na, an analyst at DERI. ''And a rise in consumer prices will lessen real income,
weaken private consumption, hurt the earning of businesses and eventually slow economic growth,''
Lee added.DERI said that Korea is exposed to high oil prices more negatively than other countries due to its
dependence on oil imports and low energy efficiency.''If current levels persist, the economy in the U.S. and
China will slow down, which will also have a negative impact on Korea as the two are the biggest export
destinations,'' the economic institute said.Global investment bank ABN AMRO said last week that the high
oil prices will be sustained for quite some time due to limited flexibility in the oil supply, lower than average
inventories in the U.S. and moves to build strategic reserves in emerging economies such as China.SERI
expected that there was an 80 percent chance of the Dubai crude oil stabilizing to between $32 and $35 a
barrel next year, but also believed it could go as high as between $40 and $45 a barrel.Dubai oil has climbed
more than 37 percent this year to $37.11 a barrel as of last Thursday.
WNDI 2008 18
Oil Prices Adv
Low Prices Good – Japan Economy

High prices devastate the Japanese economy
AP, 9/27/2005, “Japan Says Oil Prices Hurting Industry,” AP Financial Wire, Lexis
Rising oil prices are taking a toll on Japanese industry, prompting the government to convene a special
panel to come up with countermeasures, an official said Tuesday. Concern is rising that soaring oil prices
_ up 50 percent from a year ago _ will undermine Japan's economic recovery. The Cabinet warned in a
report last week that higher oil prices could interfere with production. Japan relies almost entirely on
imports for its oil supply. It is the world's top oil importer and No. 3 behind the U.S. and China in terms of
consumption. Chief Cabinet Secretary Hiroyuki Hosoda said fuel prices were causing "great damage" to
agriculture businesses, while Transport Minister Kazuo Kitagawa said trucking companies will have to
raise prices to pay for more expensive gasoline. "There have been suggestions that both ministerial and
working levels should promptly look into measures ... as soon as possible," Hosoda said, adding that the
meetings would take place late this week or next week. Hosoda did not elaborate on what steps might be
taken.
WNDI 2008 19
Oil Prices Adv
Low Prices Good – Latin American Economy

Rising Oil Prices Increase Poverty in Latin America
Marla Dickerson, 07/20, 2008 (Rapidly rising oil prices threaten Latin Americans), Los Angeles Times, Globe
Newspaper Company
SAN SALVADOR - Are exploding oil prices about to burn Latin America? With the largest petroleum
reserves outside the Middle East, the region has been on a roll in recent years. Record exports of crude oil, as
well as grains, fueled economic growth not seen since the 1970s. The region's stock markets roared. Easier
credit spawned a consumer class that snapped up homes and cars. About 26 million Latin Americans
climbed out of poverty between 2002 and 2006, according to UN data. But the same forces behind that
new prosperity are now, paradoxically, creating misery. Surging fuel prices have ignited inflation
throughout the region, driving up the cost of food, whose prices were already on the upswing thanks in part
to ravenous global demand for Latin America's farm products. In some countries, a gallon of gas costs
more than a typical day's wages. The region's food prices have escalated an average of 15 percent over
the past year, the UN Economic Commission for Latin America and the Caribbean said. Prices of many
staples have increased much more than that. The increases are leeching workers' paychecks and eroding
years of progress against hunger and indigence. In 2007, at least 500,000 people in El Salvador and
Guatemala toppled into poverty, the United Nations' World Food Program estimates. Across Latin
America, an additional 15 million people could fall back among the region's 190 million poor if prices
keep rising at their recent pace. They aren't alone. If gas and grocery prices continue their relentless
climb, at least 100 million people worldwide may be sucked into the same downward spiral, the World
Bank estimates. Food riots have erupted in Egypt, Cameroon, and Burkina Faso, once known as the
Republic of Upper Volta, in West Africa. Poor consumers have staged demonstrations in India and Indonesia
to protest cuts in fuel subsidies. "There is a whole combination of factors that are putting a tremendous
amount of pressure on the poor," said Carlo Scaramella, who heads the World Food Program in El
Salvador. "We haven't had an economic shock of this magnitude in years." Maria and Jose Lopez, who
live with their three children in a two-room cinder-block house perched on a hillside in this gritty Central
American capital, are among those feeling the strain. Earlier this year, they scraped together $148.50 for a
down payment on their own place in this hard-luck area, aptly named "Thin City." But their dream of
homeownership has vanished. The new priority is simply to eat. Like other low-income people, they spend
the largest chunk of their wages on food. Eggs, rice, and beans have all jumped by more than 30 percent in
the past few months, cutting deeply into the family's $500 monthly income. Jose, a laborer, pawned his
wedding ring to buy groceries following a short bout of unemployment. Maria, who works weekdays in the
central market downtown, cadged a loan from her employer. She took a weekend job as a domestic. They
pulled the two oldest children - Laura, 14, and Kimberly, 10 - out of Catholic school. Only Bryan, 7, is
attending classes. The family can no longer afford the $17-a-month tuition for each girl on top of their debts,
child care, and ballooning food bills. "I'm frightened," said Maria, 32, displaying the near-empty larder. "I'm
working seven days a week, and it's still not enough." While exporting nations such as Mexico, Brazil, and
Chile profit from their petroleum, soybeans, and copper, Central America has reaped few benefits from the
commodities boom. The region imports much of its grains and virtually all of its oil. Pain at the pump is
severe. Drivers in San Salvador pay about $4.76 a gallon, up more than 25 percent over the past year. Diesel,
the most heavily used vehicle fuel in the country, has jumped about 75 percent over the same period to
around $5.13. A slowing US economy has retarded growth of remittances, which are a crucial economic
lifeline to Central America. A weak US dollar means the money sent home buys less than it used to. Many
people in El Salvador, which embraced the greenback as its official currency in 2001, are longing for their
old currency, the "colon." To fight inflation, nervous central bankers in Chile, Brazil, and Mexico have lifted
interest rates. But that threatens to slow the solid growth that has produced jobs and wealth. Public
frustration is growing. In Brazil, police in Porto Alegre recently fired rubber bullets and tear gas into a crowd
that was storming a supermarket to protest high food prices. Much of Nicaragua's electricity comes from
plants that burn imported oil. Regulators have raised rates five times since November 2007.
WNDI 2008 20
Oil Prices Adv
Low Prices Good – Mexico Economy

High prices devastate the Mexican economy – links to the US and refined petroleum
importer
Newsweek, Scott Johnson, 11/8/2004, “The Mexican Paradox,” Lexis
Spirits have been high and coffers full in commodity-rich developing nations from West Africa to East Asia
recently, thanks to record-high oil prices. Countries like Nigeria, Venezuela, East Timor and, of course, the
Middle Eastern oil states are seeing record inflows as prices continue to spiral upward. Net exporter Mexico
is growing fat, too--oil has yielded an extra $12 billion in revenues so far this year. But far from being gleeful
about the boom, officials there are fretting about the impact of high oil prices on the country. The paradox is
a result of Mexico's unique place in the global economy. Unlike many oil states, Mexico has a relatively
diversified economy--only 10 percent of its exports come from oil. The problem is that the other 90
percent, including things like electronics, textiles and medical supplies, go almost wholly to the United
States. And there, high oil prices are beginning to have a dampening effect on the economy. What's
more, non-oil exports are facing increasing competition from China, which has siphoned off thousands of
Mexican manufacturing jobs. And a sclerotic state-controlled oil sector hasn't invested enough in
homegrown refineries, meaning that Mexico must buy refined petroleum from the United States, at the
going prices. The result, says Alejandro Werner, a senior adviser at the Finance Ministry, is a situation in
which "the Mexican economy may slow down, even as oil prices continue to go up." How much it
slows will depend on just how far the U.S. economy falls. According to Jonathan Heath, chief Mexico
economist for HSBC, for every $5 increase in the price of oil, U.S. growth is cut 0.4 percent. Already there
are signs that nosebleed oil prices are dampening American consumer enthusiasm. Two weeks ago Federal
Reserve chairman Alan Greenspan said that high oil prices have cut into U.S. GDP growth this year, and
warned of worse to come. If that happens, the border area Mexico shares with the United States, where
hundreds of maquiladoras churn out goods for the U.S. market, would suffer. That's a concern; after all, it
was the maquiladora sector that helped wean Mexico off its historical dependence on oil.
WNDI 2008 21
Oil Prices Adv
Low Prices Good – US Dollar

High Oil Prices Cause US Dollar to Weaken
Manuela Badawy http://www.planetark.com/dailynewsstory.cfm/newsid/24343/newsDate/19-Mar-2004/story.htm
‘High Oil Prices Threaten US Economy’ 2004
Rising crude oil prices are undermining the positive effect of a weaker dollar on the huge U.S. trade
deficit as rising demand from Asia, and OPEC moves to boost prices, ripple through the world
economy. When the dollar loses value, U.S. exports are more competitive on world markets. But while
trade data suggest U.S. exports may be benefiting from a weaker dollar, the rising price of oil is
offsetting those benefits. "Oil prices have jumped substantially, and that obviously raises the cost of
imports, which offsets the gains from increased U.S. exports in manufacturing," said Philip Verleger, a
veteran oil industry analyst and visiting fellow of international economics at the Council on Foreign
Relations.
WNDI 2008 22
Oil Prices Adv
Low Prices Good – US Economy

High oil prices collapse the economy – inflation, slowdown, and trade defecit
Business Times (South Africa), 9/24/2000, “Why this oil crisis is different,” Lexis
Economists have at least progressed since the first oil shock in 1974, when many were perplexed by the
notion of stagflation. How could a rise in oil prices be both inflationary (raising prices) and deflationary
(reducing demand)? Today, they understand better the various channels through which oil prices affect the
economy. An oil price increase delivers a negative supply-side shock to the economy. Higher prices
increase firms input costs; they produce less. If aggregate demand is unchanged, prices rise and output
falls. Higher oil prices shift income from oil-importing economies to oil exporters. This reduces
consumer spending power and growth in oil-importing economies. The global impact rests on whether
exporters save their windfall or spend it on imports. Headline inflation is boosted almost immediately. If
this pushes up wage settlements, core inflation will also rise. Some analysts argue the rise in oil prices is
good, not bad, because it will reduce consumer purchasing power and so help to slow the US economy
without the need for higher rates. This view ignores the likely increase in the US trade deficit, which rose
to record levels in July, but it also assumes that higher headline inflation will not push up wages. Yet in a
squeaky tight labour market that smacks of wishful thinking. The economic impact of higher oil prices will
almost certainly be less now than it was in the past. The rich industrial economies use only half as much
oil per dollar of GDP as they did in the early 1970s. Even after the recent increase, the real price of crude oil
is still less than half its level in 1980.
Low oil prices would jumpstart the US economy – stocks, consumer spending, inflation and
transportation industry
Jim Jubak, senior markets editor for MSN Money. Previously, he served as senior financial editor at Worth
magazine and as editor of Venture magazine, 9/12/2006
The last month has given investors a lot of evidence of how a modest pullback in oil prices can fuel a stock
market rally. For example, on Sept. 8, the $1.07 drop in the price of a barrel of oil (for October delivery) to
$66.25 was enough to reverse a two-day sell-off and push the Dow Jones Industrial Average ($INDU) up
31 points. And the decline in oil from $77 on Aug. 8 to recent levels was enough to propel the S&P 500
Stock Index ($INX) to a 3% gain for the month and to sustain the market's rally into the historically weak last
two weeks of August. The S&P 500 ($INX) climbed 1% during that period. Lower oil prices would have
domino effect Gross Domestic Product (GDP) numbers don't react that quickly to short-term changes in
energy prices, but $64 a barrel oil in June 2007 would be enough to give the economy a big boost over the
course of a year. Consumers would have more to spend -- or at least not less -- thanks to lower or steady
prices at the pump. Lower fuel prices would take the pressure off profits at companies from airlines to
truckers to railroads to retailers such as Wal-Mart Stores (WMT, news, msgs). The Federal Reserve
would breathe a sigh of relief, too, if energy costs stopped pushing prices upward, and Ben Bernanke and
company at the Fed would be more likely to keep their fingers off the rate-increase trigger. Sweet scenario,
no? Lower oil prices keep economic growth higher than expected, keep the Federal Reserve on the
sidelines, and push up stock prices in 2007.
WNDI 2008 23
Oil Prices Adv

High Oil Prices Make US Economy Weaken
Charles Biderman, Sky-High Oil Will Make U.S. Go Broke
TrimTabs 06.23.08, 7:00 PM ET
Stratospheric crude oil prices precipitated by speculation are wreaking havoc on the US economy.
Based on income tax withholdings data from the Daily Treasury Statement, the wages of all U.S. workers on
payrolls were unchanged on a year-over-year basis in the past two weeks (Friday, June 6 through Thursday,
June 19) and rose 1.1% year-over-year in the past four weeks (Friday, May 23 through Thursday, June 19).
Both of those growth rates are well below the 2.8% year-over-year in May, and they are consistent with an
economy that is contracting sharply. As long as oil prices stay high, the economy is more likely to slow
than strengthen, and companies are not likely to announce much float shrink. With real wages falling,
large numbers of jobs being shed, gas prices exceeding $4 per gallon almost everywhere and home
prices falling about 1% per month nationally, this year is going to be tough for American consumers.
High Oil Prices are Risky to the US Economy

Reuters, 2008 ---‘High Oil Prices Risky to Economy, Says US’
Oil prices that hit a record on Tuesday are clearly too high and not beneficial for the US economy. The
United States has been remarkably resilient in the face of expensive energy, but a rally on oil to more
than $118 a barrel is an economic threat, US Acting Deputy Secretary of Energy Jeffrey Kupfer told a
news briefing. "Oil prices are clearly too high. We are not happy with the prices or the direction
they're going in," Kupfer said.
High Oil Prices Hurt US Consumers and Economy

Thomson Reuters ‘Think oil prices hurt now? Just wait’
http://www.reuters.com/article/newsOne/idUSN2248967220080522?pageNumber=4&virtualBrandChannel=0 2008
DALLAS, Texas (Reuters) - Sky-high oil prices are causing pain at the pump, but bills for air
conditioning this summer and heating next winter -- combined with rising food costs -- promise to
squeeze U.S. consumers even more. With gas at $4.00 a gallon, households already have less to spend on a
new grill at Home Depot; a vacation at Walt Disney's Disney World; a new TV from Best Buy Co; or a new
"hog" from Harley-Davidson Co. And there are no signs things will get better soon for the consumer,
long the driving force of U.S. economic growth. "But they will give everything else up," he said. "That's
going to make it harder to sell the average consumer a television, a suit, or even a meal at a restaurant." For
many years, the consumer has been the engine of U.S. growth, accounting for around 70 percent of the
economy. But much recent spending has been done on credit, leaving Americans with a negative
savings rate. Now that consumers have been hit by the double-whammy of a weak economy and
higher costs, the question is how much damage the engine has sustained and how long it will take to fix
it. Edward Leamer, head of the UCLA Anderson Forecast Center, said that thanks to the combination of
high spending in recent years and rocketing fuel costs, the consumer-engine of U.S. economic growth is
close to failing. "The global markets are telling us we are not as wealthy as we think we are and that we
have spent beyond our means," he said. But Leamer said while the engine may be broken, the U.S.
economic model is not: it just needs a new engine.
WNDI 2008 24
Oil Prices Adv

Economic Toll Mounts From High Oil Prices
By GRAHAM BOWLEY and DAVID JOLLY; Published:
http://www.nytimes.com/2008/05/23/business/worldbusiness/23oilweb.html?hp May 23, 2008
The Ford Motor Company, the American auto manufacturer, said on Thursday it would cut vehicle
production for the rest of this year and fall short of reaching profitability in 2009, a long-held company
goal. In a statement, a top Ford executive said rising gasoline prices “are having a tremendous impact
on our sales, our manufacturing operations and our profitability.” Meanwhile, Europe’s biggest airline,
Air France-KLM, warned of a profound reshaping of the world airline industry caused by what it called the
“explosion” in the price of oil. And American Airlines said on Wednesday that it would slash flights and
begin charging passengers to check bags, part of a company effort to cut costs in the face of skyrocketing fuel
prices.Oil futures spent months dancing around the $100 a barrel. But in the last two months, prices
have taken off, gaining nearly $20 a barrel in May alone. A series of unsettling reports have suggested
world oil supplies may not be able to keep up with future demand, a situation that could potentially
lead to even higher prices. Some experts failed to consider that higher prices would eventually tamper
demand and attract new production from places like Brazil. The International Energy Agency warned
that if investments didn’t keep pace with the growth in consumption, the world might face a shortfall
of as much as 15 million barrels a day by 2030.
WNDI 2008 25
Oil Prices Adv
Low Prices Good – US Stocks

High Oil Prices Drive Stocks Lower
Madlen Reed, AP news writer for 8Wave, 6/27/2008, “Wave of bad news”
NEW YORK - A barrage of bad news including yet another record high for oil drove stocks sharply
lower Thursday, hurtling the Dow Jones industrials down nearly 360 points to their lowest level in almost
two years. The market also worried about fresh signs of trouble in the financial, high-tech and automotive
industries. Negative analyst comments sent shares of General Motors Corp. stock to their lowest point in
more than three decades. Oil futures shot past $140 after OPEC President Chakib Khelil predicted the
price of a barrel of crude could rise well over $150 this year and Libya said it may cut oil production. That
increases the odds that gasoline prices, which crossed a nationwide average of $4 a gallon weeks ago,
will extend their advance, and that goods and services across the economy will get ever more expensive.
The Dow dropped 358.41 points, more than 3 percent, to close at 11,453. 42 - its lowest finish since Sept. 11,
2006. Investors rushed for the safety of Treasury bonds, regarded as a haven when the stock market is in
turmoil. The blue-chip index is now 19 percent below its record close last October of 14,164.53. Oil is a
worrisome factor driving stocks lower. On Thursday, the unnerving forecast about oil prices raised the
specter of higher inflation and more damage to the economy. That and a falling dollar helped send light,
sweet crude as high as $140. 39 and to a record settlement of $139.64 on the New York Mercantile
Exchange. Rising oil has saddled nearly all parts of the economy with higher costs.
WNDI 2008 26
Oil Prices Adv
Low Prices Good – Trade

A decline in international crude oil prices lowers trade deficits.
Korea Times, 2003 (Falling Oil Prices Improve Trade Deficit) Korea Times, LexisNexis
The sharp drop in international crude oil prices due to the outbreak of the U.S.-Iraqi war has started
to lower the trade deficit, albeit slowly. According to Korea National Oil Corp. (KNOC) and the
Ministry of Commerce, Industry and Energy, the trade deficit in March, amounting to $2.36 billion as
of March 19, decreased sharply to $2.19 billion on the following day, and then fell to $1.87 billion last
Friday. The narrowed trade deficit is largely attributed to the plummeted international crude oil
prices that decreased the cost burden of importing petroleum products. ''Although the drop in
international crude oil prices affected national oil import prices after a one-month period because of the time
required to transport oil by sea, crude oil imports have sharply declined recently thanks to the psychological
effect on local businesses given by international oil price drop, a ministry official said. International crude
oil prices have continued on a downward trend, as global oil supply has remained smooth even after the
outbreak of the war in the Middle East. Last Friday, international spot price of Middle East Dubai oil hit
$23.74 per barrel, down $1.09 from the previous day. This figure is even lower than the annual average spot
price last year, which averaged at $23.81. Following the international crude oil price drop, the 10-day
moving average of Dubai oil price also fell by $0.63 to $27.92. ''International crude oil prices continued a
downturn as the allied forces of the U.S. and the U.K. have occupied oil fields in southern part of Iraq, which
enabled oil exporters to supply their products to their customers as usual, a KNOC official said. The ministry
said 33 crude oil carriers and 10 liquefied natural gas carriers containing crude oil and natural gas shipments
here are not experiencing problems, so there will not be any problems in meeting demands. Meanwhile,
local oil refineries are still reluctant to lower their petroleum product prices despite the sharp plunge in
international crude oil prices, contrary to their previous promise that they would immediately reflect a drop in
international crude oil prices in their sales prices. Although the Middle East Dubai oil price dropped by more
than $6 from its recent peak prior to the outbreak of the war, major local refineries and oil pump stations are
showing no signs of making major cuts to their petroleum products. Oil pumps only lowered their unleaded
gasoline prices by 1.96-3.89 won per liter.
WNDI 2008 27
Oil Prices Adv
Low Prices Good – Trade

High Oil Prices Cause Inflation and Trade Deficits
Korea Times, 01/03, 2008 (Rising Oil Prices), LexisNexis
The price of light sweet crude, the benchmark in New York, hit $100 per barrel for the first time Wednesday.
The skyrocketing oil price is sure to deal a fresh blow to the already staggering global economy. The
recent rise was caused by political instability in Nigeria and Algeria ¡ª both OPEC members in Africa ¡ª
coupled with cold weather. This shows every economic phenomenon has its own global implications, no
matter how trivial. So we are asked to brace for rapidly changing international economic factors. Though the
price closed at $99.62 a barrel, easing back from the intraday trade peak, it represented a twice rise from $50
a barrel in September, 2004. Furthermore, experts forecast the oil prices will continue to increase this year.
The high oil prices will provide a severe jolt to the Korean economy which has long been suffering
from rising costs for resources and fluctuation of foreign currency exchange rates. The nation
recorded a $860 million trade deficit in December last year, for the first time in 56 months since
March, 2003, mainly buffeted by the surging oil prices. The price of the nation's main contract Dubai oil
rose 52.3 percent from a year earlier, requiring 40.1 percent more in import expenses. Climbing gasoline
prices have been causing more difficulties for the public. The consumer prices rose 3.6 percent last month on
a year-to-year basis affected by the high oil prices, surpassing the level controllable by the central Bank of
Korea. Deputy Premier-Finance and Economy Minister Kwon O-kyu said the ministry has been
undergoing difficulties in operating the economy since the inflationary rate rose to 3 percent level due
to rising oil prices. The ministry lowered the economic growth rate to 4 percent from the previous target of 5
percent. The government needs to seriously consider lowering the oil tax to minimize the possible impact the
soaring oil price will have on the economy. The transition team has been pushing for curtailing the tax, but to
no particular avail in the face of opposition from the current government. There must be in-depth debate over
the issue. The economy is also likely to face growing setback, baffled by the lingering subprime mortgage
crisis in the United States and China's move to contract its economy. It is understandable in this vein that the
transition team has been moving to rearrange the annual growth target to 6 percent this year from 7 percent.
President-elect Lee Myung-bak acknowledged the nation is now facing with a challenging situation during a
meeting with heads of major economic institutes. But he also expressed confidence that the nation will be
able to overcome the difficulties. "We should not succumb to the hardship," he said. Leading conglomerates
have been submitting investment plans for the year in compliance with the President-elect's request.
Promotion of investment will help create more jobs and reinvigorate the economy. What remains is for Lee to
speed up efforts for deregulations to pave the way for investment.

Adv Oil Prices 26

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WNDI 2008 1

Oil Prices Adv

Oil Prices Adv

Low Prices Good – Japan Economy...........................................................................................18

Low Prices Bad – Economy

Low Prices Bad – Economy

Low Prices Bad – Iraq

Low Prices Bad – Poverty

Low Prices Bad – Turns Case

Low prices turn case

Low Prices Bad – Turns Case

Low Prices Bad – Turns Case

Low Prices Bad – Turns Case

Low Prices Bad – Turns Case

Low Prices Bad – A2 Asia Economy

Low Prices Bad – A2 Japan Economy

Low Prices Good – China Economy

Low Prices Good – Dependence

Low Prices Good – Korea Economy

Low Prices Good – Korea Economy

Low Prices Good – Japan Economy

Low Prices Good – Latin American Economy

Low Prices Good – Mexico Economy

Low Prices Good – US Dollar

Low Prices Good – US Economy

Low Prices Good – US Economy

High Oil Prices are Risky to the US Economy

High Oil Prices Hurt US Consumers and Economy

Low Prices Good – US Economy

Low Prices Good – US Stocks

Low Prices Good – Trade

Low Prices Good – Trade

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