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Gas Prices

Gas Pries – 1NC

Gas prices low – rise in dollar value

Dyke 07/02/12, Aly Van Dyke is a Herald staff writer, “Gas prices at a six month low,” http://cjonline.com/news/2012-07-02/gas-prices-six-month-low, LFV

Prices at the gas pump have reached a six-month low in the Midwest — a happy coincidence for vacationers hoping to get out of town for the holiday. The average cost per gallon in the Midwest fell to just $3.31 Monday, according to the U.S. Energy Information Administration. Costs haven't been that low since the first of the year, when the price per gallon in the Midwest was $3.26. The average cost per gallon on Monday was 11 cents lower than last week and 55 cents lower than the year's high of $3.85, reached on April 2. The price per gallon reported in the first week of July 2011 was $3.57. Nationwide, the costs were slightly higher Monday, with the price per gallon of regular fuel averaging $3.36 — about 8 cents lower than last week. Gas prices in Topeka on Monday hovered in the $3.20 range, with the cost per gallon ranging from $3.08 to $3.39, according to Kansasgasprices.com. Those numbers reflect the significant drop seen in the price of crude oil, said Tom Palace, executive director of the Topeka-based Petroleum Marketers and Convenience Store Association of Kansas. The price of crude oil is running about $77 a barrel, he said. That price hasn’t been below $80 for at least a year, he said, adding that just last week the cost was approaching $90. “The price of crude is decreasing, so it’s nice to see the corresponding decline at the pump,” Palace said. Although the timing of the prices with the approaching Fourth of July holiday is a boon for vacationers, he said, it is just a coincidence. Palace instead pointed to the European recession — and the corresponding rise in the value of American currency — as the main factor in the falling gasoline prices. The market also isn’t reflecting the storms slamming the East Coast, he said, though as of yet there haven’t been any fuel outages to merit higher prices, either. Palace said he couldn’t predict what the price of gas would do in the coming days, though reports are indicating the price could

Keystone expands tar sand extraction which drastically harms the environment and undermines the move for clean energy. Keystone will deplete US oil supply and increase gas prices.

Swift, Anthony, 2012, National Defense Counsel, Keystone XL: A Tar Sands Pipeline to Increase Oil Prices

One of the most misunderstood issues surrounding the proposed Keystone XL tar sands pipeline is the project’s impact on U.S. gasoline prices. The Keystone XL tar sands pipeline would pump up to 830,000 barrels per day (bpd) of some of the world’s dirtiest oil, which is strip mined and drilled from under Canada’s Boreal forests, straight through the heart of America’s Keystone XL would ﬁnance further expansion of tar sands extraction, worsening climate change and undermining efforts to move to clean energy. Pipeline supporters cite high gasoline prices as a reason to build the project. The truth is that Keystone XL is likely to both decrease the amount of gasoline produced in U.S. reﬁneries for domestic markets, and increase the cost of producing it, leading to even higher prices at the pump.breadbasket to reﬁneries on the Texas Gulf Coast.

High gas prices crushes the economy- drives up prices for other items

SOMMER March 3, 2012 (JEFF SOMMER, “Numbers That Sway Markets and Voters,” March 3, http://www.nytimes.com/2012/03/04/your-money/rising-gasoline-prices-could-soon-have-economic-effects.html?pagewanted=all, Date Accessed: July 5, 2012, LG)

SOMETIMES a number is just a number. But on Tuesday, when the Dow Jones industrial average closed above 13,000, it was treated as much more than that. Many news accounts and market commentaries portrayed that clean, round string of digits as a milestone that signified the stock market had come a long way since the darkest days of the financial crisis. Oil and gas prices have also been rising, and are beginning to attract considerable attention, too. How high and how quickly those numbers climb — and whether they leap above $5 a gallon and morph into a painful symbol of inflation — could have an enormous impact on the financial markets, the economy and the presidential election. “People may not remember too many numbers about the economy, but there are certain signposts they do pay attention to,” said Ethan Harris, chief North American economist at Bank of America Merrill Lynch. “As a shorthand way to assess how the economy’s doing, everybody notices the price of gas. It can have a big symbolic impact, and in a presidential election year, when the price is rising, that can create a big headwind.” On Friday, gas prices averaged $3.74 a gallon nationwide, their highest levels in the winter months but well below the nominal record of $4.11 a gallon in July 2008. Adjusted for inflation, that would be $4.27 today. In California, the average price on Friday was already $4.34. Largely because of tensions in Iran and other countries in the region, oil prices rose more than 22 percent in the six months through Thursday, according to John LaForge, commodity strategist at Ned Davis Research. While those numbers may be disquieting, they haven’t had much of an effect on either the stock market or consumer sentiment, said Ed Yardeni, an independent economist who has analyzed the price surge. Partly because energy companies including Exxon and Chevron account for 12.3 percent of the market capitalization of the Standard & Poor’s 500-stock index, rising oil prices “may actually be good for the stock market, up to a point,” he said. Since the second half of 2008, Mr. Yardeni says, there has been a strong positive correlation between energy prices and the stock market. If prices continue to rise, though, that benign influence is unlikely to last, he says. “At some point, you’ll have a negative feedback loop. High energy prices will correct themselves, and if they go high enough, the negative effects will spill over to stocks and the economy.” Ned Davis Research has found that when oil prices climb by more than 33 percent in a six-month period, stock market performance then tends to weaken, Mr. LaForge said. Prices may not be a big problem right now, he said, but that could change quickly. How high will those prices go? Presumably, futures prices already reflect the collective intelligence of the financial markets, said Richard B. Hoey, chief economist of BNY Mellon. “Those prices already factor in the risks of a possible war with Iran or an incident in the Strait of Hormuz that disrupts oil shipping,” he said. He added that he expects that the impasse over Iran’s nuclear program will be resolved peacefully — and believes that, at the moment, the markets think likewise. Mr. Hoey said that oil prices might spike further, but that they were likely to come down without much lasting harm. “Of course, you never know,” he added. In the past, the domestic effects of rising gasoline prices have sometimes included a decline in auto sales. So far, though, the most recent energy price surge hasn’t had that effect. To the contrary, auto sales rose sharply in February, carmakers and analysts said last week, with the seasonally adjusted selling rate for new vehicles climbing to about 15.1 million, the highest level since February 2008. Rising energy prices tend to have a lagging economic impact, said James D. Hamilton, professor of economics at the University of California, San Diego. Unless income also rises — which isn’t happening for many people now — higher fuel costs will eventually displace other expenditures. And at a certain point, he said, there will be additional “nonlinear” effects if prices keep rising. It’s as though people finally sit up and really notice the price increase, and their behavior changes. “There’s no single magic moment when it happens,” he said. But the data indicates that this effect tends to kick in when the highest price level of the preceding three years is surpassed, he said. We’re not at those levels, but we could easily get there. For regular gasoline in the United States, that average price point would be $4.11 a gallon in nominal terms, and $4.27, accounting for inflation. For oil prices, it would be $145.29 a barrel for benchmark American crude, or $150.87, when inflation is factored in. Ugly-looking prices at the pump are never a good omen for incumbent politicians. Since 1976, they have generally been inversely correlated with presidential approval ratings, Ned Davis Research has found. In other words, the more expensive gasoline is, the less popular the president tends to be. The financial reason for this is obvious: with the possible exception of energy investors, few people enjoy paying more to drive. And because fuel costs affect many other items, including food, rising gasoline prices are often associated with an increase in the cost of living. ON the other hand, the behavioral changes cited by Professor Hamilton include measures to reduce energy expenditures throughout the economy. Thanks in part to the long-term impact of rising prices, the nation has become far more energy-efficient in recent decades, so high fuel prices today shouldn’t hurt as much as they once did. Figures provided by Ned Davis Research show that in December 1981, for example, energy expenditures accounted for 7.81 percent of disposable income in the United States, compared with only 5.5 percent in December 2011. Inflation-adjusted prices of gasoline were approximately the same in both periods, about $3.30 a gallon. Higher fuel efficiency may account for the relatively strong level of recent auto sales, despite higher energy prices. Consumers have been buying smaller and less gas-thirsty vehicles, auto industry executives say. What’s more, inflation in the United States is quite low at the moment — largely because of the weak economy. Yet the apparent relationship between rising gas prices and falling presidential approval ratings appears to be as strong as ever, Mr. LaForge said. “President Obama will need to be paying close attention to gasoline prices, even if they don’t have the impact they once did,” he said.

2NC UQ Wall – Prices Low

Extend the Dyke ev from the INC – prices are at a 6 month low backed by drops in crude oil prices and a rise in the relative power of US currency.

AND, prices will stay low – mirrors oil prices.

Campbell 04/12/12, Ryan Campbell is a supervisor at the UofT Early Learning Centre and he is the co-author of Building Bridges: Queer Families in Early Childhood Education; “Gas prices dip,” http://www.uniondemocrat.com/News/Local-News/Gas-prices-dip, LFV

While local motorists aren’t likely to find bargains at the pump, market experts say fuel prices have peaked and will continue a slow downward slide. The average price of regular gasoline in California reached its zenith in March at $4.26 a gallon and has fallen slowly ever since, according to AAA Insurance, which tracks fuel prices. In Tuolumne County, gas prices range from $4.11 to $4.35 a gallon according to Californiagasprices.com. In Calaveras County, prices range from $4.17 to $4.19. Crude-oil investors and global turmoil are largely driving the modest drop in prices, according to AAA spokesman Matt Skryja. The slow economy is driving down oil demand and Iran is showing signs it could be open to a compromise over its nuclear program. “Investors look for any real or perceived impacts to supply and demand,” Skryja said. Crude oil prices rose to nearly $110 a barrel in late February but have since fallen back to $101. While prices may be going down, there is no way to know how long the trend will last. Fuel prices typically rise in May as California gas stations transition summer fuel blends that contain more costly additives, Skryja said. Prices also rise in the summer due to increasing demand from vacationing motorists. “At least in the short term it seems the downward trend will continue,” he said. Gas prices averaged $4.19 in the Stockton-Lodi area and were $4.16 per gallon in Modesto, according to AAA. The highest gas prices in the state are in San Francisco at $4.41, while the lowest are in Marysville at $4.11. Nationwide gas prices are averaging $3.92.

Gas prices low now – key to investor confidence

Fahey and Wiseman 05/17/12, Jonathan Fahey is an Associate Editor at Forbes where he writes about energy for Forbes magazine and Forbes.com, Paul Wiseman is an economics writer from the Associated Press, “Lower oil prices ease load on consumers and Obama,” http://www.newstribune.com/news/2012/may/17/lower-oil-prices-ease-load-consumers-and-obama/, LFV

NEW YORK (AP) — What only weeks ago was seen as a serious threat to the economic recovery could now turn into a stimulus everyone can love. Oil and gasoline prices are sinking, giving relief to businesses and consumers who a few weeks ago seemed about to face the highest fuel prices ever. President Barack Obama's re-election prospects could also benefit, especially if prices keep falling as some analysts expect. A majority of Americans disapproved of Obama's handling of gas prices in an AP-GfK poll early this month. But that was before the full effect of the recent drop had reached drivers. The average U.S. retail gasoline price has dropped 21 cents a gallon to $3.73 since hitting a 2012 peak of $3.94 on April 6. The economy could gain, too. Consumers who spend less on fuel have more to spend on other purchases, from autos and furniture to appliances and vacations, which could help drive economic output and job growth. The price drop will likely boost consumer confidence. It also comes at a timely moment: Ahead of the Memorial Day weekend, a busy one for travel and entertainment spending. "It's extra money in the wallets of most American consumers, and that's going to help," said James Hamilton, an economist at the University of California, San Diego who studies oil prices. Lower oil prices also mean cheaper diesel and jet fuel for shippers and airlines. Crude oil, which is used to make gasoline, is at a seven-month low of $92.81 a barrel. It's down nearly 13 percent since May 1. Behind the steady drop are larger fuel stockpiles, easing fears about Iran and expectations of lower demand as the global economy slows. The average national gasoline price is expected to fall as low as $3.50 a gallon this summer. It could even dip near $3 in some states. The national average is being propped up by refinery problems in California that have lifted prices well above the national average there, according to Tom Kloza, chief oil analyst at the Oil Price Information Service. A 50-cent drop in the gasoline price would save consumers roughly $70 billion over a year. Earlier this year, oil and gasoline prices were jumping from already high levels. Global demand was rising. And production outages were reducing supplies. Tensions between Iran and the West over Iran's nuclear ambitions raised fears that output from the world's third-biggest exporter would plunge. The price of U.S. benchmark oil rose to about $110 a barrel from $96 in the first three weeks of February. The price for international oil, used to make most of the gasoline in the United States, spiked even higher: to $126 per barrel from $110 over roughly the same period. Gasoline prices in the U.S. appeared on track to soar past $4 a gallon nationwide. Confidence among U.S. consumers, already suffering from high unemployment and scant wage growth, would have likely worsened. "People were prepared emotionally for $4.50 or $5 gasoline, so there's a sense of relief," Kloza says. No one is yet overflowing with glee over current prices. So far this year, gasoline has averaged $3.67 a gallon nationwide. If sustained all year, that would be the highest annual average ever. John Heimlich, chief economist at Airlines for America, a trade group, is among those who aren't ready to cheer. Jet fuel prices dipped below $3 per gallon for the first time in months Tuesday, he said. "I need more than one day below $3," Heimlich said. "I need weeks and weeks and weeks." John Tillman, who runs Certified Carpet Care in Wesley Chapel, Fla., spends $4,000 a month on fuel for his vans that crisscross the state, visiting restaurants and other clients. He says gasoline prices are still way too high and he thinks the government should do more to protect small businesses from high fuel prices. But he'll take any drop he can get. "It's helped some," he said. Hamilton and other economists say high unemployment and a weak job market are more important to the health of the U.S. economy than gasoline prices. Still, voters tend to blame presidents for high fuel prices, even if there's little a president can do to influence them. It's less clear that voters give a president credit when gasoline prices fall. Michael Dimock, associate director at the Pew Research Center, suspects that voters won't exactly thank Obama for $3.75 a gallon gasoline. Still, it dulls a weapon that his presumptive Republican challenger, Mitt Romney, would like to use to unseat the president. And Obama can look forward to further help this fall. After Labor Day, refiners can begin using cheaper ingredients to make gasoline because wintertime clean air rules are less stringent. That should push gasoline prices lower between Labor Day and Election Day, barring hurricanes that can disrupt supplies or other global events, says Kloza. "History will be working on behalf of the Democrats," he said.

XT – Prices Will Stay Low

Prices have already begun to fall – Saudi Arabia overproducing

Reuters 07/04/12, Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. “Algeria sees oversupply driving prices down,” http://news.yahoo.com/algeria-sees-oversupply-driving-oil-prices-down-112147854--finance.html, LFV

ALGIERS (Reuters) - Global oil prices are likely to fall due to an oversupply and weak demand, OPEC member Algeria said on Wednesday, a day after backing an emergency meeting of the organization in the event of renewed declines in crude prices. "The market is unbalanced. This is due to two things: low demand compared to normal and an increase in supply since the beginning of the year," Energy and Mines Minister Youcef Yousfi told state radio. "These imbalances can cause prices to fall. We are monitoring the situation every day." Algeria urged OPEC's biggest producer Saudi Arabia to cut back on oil production at a June meeting of the Organization of the Petroleum Exporting Countries. Crude oil prices fell back on Wednesday, as investors returned their focus to the grim economic backdrop and took profits from the gains of previous sessions. Oil had risen on Tuesday, supported by expectations of more monetary stimulus, but Brent crude has since fallen 49 cents to $100.18 per barrel and U.S. crude has fallen 55 cents to $87.11 a barrel. Prices in the second quarter posted their biggest quarterly drop since the 2008 financial crisis, causing concern among some OPEC members. Yousfi said on Tuesday Algeria would seek an extraordinary OPEC meeting if prices resumed their decline. That came after Iran urged OPEC's secretary general at the weekend to convene an emergency meeting. Iraq has also called on OPEC to cut supply, while Venezuela requested an emergency meeting of the producer group in the third quarter of this year if prices do not recover.

Link Wall – 2NC

First, extend the Swift evidence form the INC – KXl decreases US production for domestic markets driving up the price of oil and gas amking the cost at the pump higher.

AND, plan can only increase gas prices –

First – diversion adds 40$ per barrel.

Swift, Anthony, 2012, National Defense Counsel, Keystone XL: A Tar Sands Pipeline to Increase Oil Prices

The Keystone XL tar sands pipeline would divert oil from the Midwest to reﬁneries on the Gulf Coast of Texas. Midwestern reﬁneries produce more gasoline per barrel than reﬁneries in any other region in the United States. That gasoline is then sold to U.S. consumers. In contrast, reﬁneries on the Gulf Coast of Texas produce as much diesel as possible, much of which is exported internationally. By taking oil from midwestern gasoline reﬁneries to Gulf Coast diesel reﬁneries, Keystone XL will decrease the amount of gasoline available to American consumers. Meanwhile the Keystone XL pipeline will increase the price that gasoline producing reﬁneries in the Midwest pay for crude oil. TransCanada, the company sponsoring the pipeline, pitched the pipeline to Canadian regulators as a way of increasing the price of crude in the United States.1 Right now, Midwestern reﬁneries are buying crude oil at a discount—a deep discount. This allows them to produce products more cheaply than they would otherwise be able to. Building Keystone XL would change that. If TransCanada’s analysis is accurate, under current market conditions Keystone XL would add $20 to $40 to the cost of a barrel of Canadian crude—increasing the cost of oil in the United States by tens of billions of dollars.

Second – global supply decrease.

Swift, Anthony, 2012, National Defense Counsel, Keystone XL: A Tar Sands Pipeline to Increase Oil Prices

Given current differences between the gasoline yields of midwestern and Texas Gulf reﬁneries, the fact that the Keystone XL pipeline will siphon up to 830,000 barrels per day of crude oil from the Midwest to the Gulf Coast would decrease U.S. gasoline supplies by 80,000 bpd, or 1.2 billion gallons a year.15 5 And this analysis does not yet account for the fact that gasoline yields in Gulf reﬁneries may continue to decline and the majority of ﬁnished gasoline produced in Texas Gulf reﬁneries is exported internationally. Even without incorporating these factors, the numbers show that by reducing available gasoline supplies in the United States, the Keystone XL pipeline will likely increase pressure on retail gasoline prices.

Third – output

Swift, Anthony, 2012, National Defense Counsel, Keystone XL: A Tar Sands Pipeline to Increase Oil Prices

The proposed Keystone XL tar sands pipeline will likely increase gasoline prices in large areas of the United States through two mechanisms:n Substantially increasing the cost of crude for reﬁneries in the Midwest and Rocky Mountain states, leading them to either increase the price of their products or reduce their output n Diverting oil from reﬁneries in the Midwest that maximize gasoline production to those on the Texas Gulf Coast that maximize diesel output, reducing gasoline production in the U.S. market

Fourth – OPEC

Swift, Anthony, 2012, National Defense Counsel, Keystone XL: A Tar Sands Pipeline to Increase Oil Prices

The international market is more than twenty times larger than the midwestern and Rocky Mountain oil markets. Keystone XL could reduce Midwest and Rocky Mountain oil supplies by more than 20 percent while adding a fraction of a percent to global oil supplies. In the highly unlikely event that additional Canadian supplies had a measurable impact on world oil prices, Organization of the Petroleum Exporting Countries (OPEC) has the power to reduce international oil supply accordingly. OPEC produces more than 30 million bpd and already keeps an additional 2.5 million bpd off the market. Were additional Canadian supplies to measurably decrease international prices, OPEC could take an additional amount off the market to compensate. n TransCanada’s economic rationale for the Keystone XL project requires the pipeline to increase U.S. oil prices without affecting international prices. Tar sands producers will have to pay larger pipeline fees to send oil from Keystone XL to the Gulf of Mexico rather than the Midwest. TransCanada has stated that Keystone XL will increase the price of Canadian crude to equal the cost of Mexican Maya. Based on 2012 prices, that is an increase of approximately $25 per barrel.

XT – International / OPEC Prices

Sending oil to be refined in the gulf coast increases international fuel prices.

Swift, Anthony, 2012, National Defense Counsel, Keystone XL: A Tar Sands Pipeline to Increase Oil Prices

Keystone XL will take oil currently reﬁned in the Midwest and Rockies and send it to the Gulf Coast where it can be sold on the international market. Oil supplies dedicated to the United States will decline while the Keystone XL pipeline provides the international market with access to that Canadian crude previously meant for the U.S. market. This will have a powerfuliImpact on oil prices in the Midwest and the Rockies—increasing the price of Canadian crude by $20 to $30 a barrel in the 2012 U.S. market, while doing nothing to decrease world oil prices.

XT – K2 Economy

High gas prices affect every economic center- transportation cost

Holt March 27 (David Holt, President of the Consumer Energy Alliance, “High Fuel Costs Not Just a Drag on Commuters,” March 27, 2012, http://www.realclearpolicy.com/articles/2012/03/27/high_fuel_costs_not_just_a_drag_on_commuters_97.html, Date Accessed: July 5, 2012, LG)

Through my work with Consumer Energy Alliance (CEA), I am constantly interacting with and getting input from both energy producers and energy consumers from across the spectrum, from individual household consumers to small businesses and larger commercial entities. Over the past few months, all of these diverse members of the CEA coalition have been echoing one central theme: concern about high energy prices, particularly the high cost of gasoline and diesel. The impact of higher fuel prices on American families and businesses is by no means limited to household purchases of gasoline. Higher fuel prices hurt just about every sector of our economy. One example: Most goods and services are transported by truck, ship, air, and/or rail. The trucking industry alone consumes more than 36 billion gallons of diesel fuel annually. This means that a one-cent increase in the average price of diesel costs this sector an additional $350 to $370 million a year in fuel expenses. The average price of diesel in February was up 13.38 percent from the previous year, and the American Trucking Associations anticipate that the trucking industry will likely spend $13.1 billion more on fuel this year than it did in 2011, when it spent $142.8 billion. Trucking is an extremely competitive industry comprising largely individual small businesses, with roughly 96 percent of all interstate motor carriers operating 20 or fewer trucks. These small businesses are not able to absorb the cost of higher energy prices, and risk going under if current price levels persist -- or rise. Moreover, some of the additional costs will inevitably be passed on to consumers in the form of higher product prices. Jet fuel prices have increased as well. February prices were up 13.02 percent over last year. According to Airlines for America, jet fuel represents the U.S. airline industry's largest and most volatile expense, averaging 35 percent of total operating expenses in 2011. Last year, U.S. passenger and cargo airlines spent $50.5 billion on fuel, 30 percent more than the $38.8 billion spent in 2010. Annually, every dollar-per-barrel increase in the cost of oil raises the industry's fuel bill by $420 million. High and volatile fuel prices have contributed to a reduction in scheduled air service, with 6,500 fewer domestic flights being offered per day in March 2012 than in March 2001. Since the 1990s, airline revenues have grown at an average rate of 4.9 percent annually, but jet fuel prices have averaged 10 percent annual growth. While U.S. passenger and cargo airlines have been working hard to offset this trend by improving efficiency and diversifying fuel sources, it is clear that fuel prices have limited the ability of airlines to remain profitable, grow their businesses, and serve more passengers. Fuel prices are also having an enormous impact on agriculture. Farmers paid almost 85 percent more last year than they did a decade ago just to put their crops in the ground, according to figures from the USDA. The fuel capacity on an average tractor is 270 gallons, which today results in a $985.00 price tag for a full tank. Many farmers and ranchers have to fill such tanks multiple times just to complete work on one field or pasture. Rural communities are especially hard-hit from the consumer standpoint as well, given the long commutes many have to make to attend school or complete off-farm employment.

High gas prices hurt the economy- consumer confidence

Emerson 3/11 (LaTina Emerson, Staff Writer @ The Augusta Chronicle, “Higher gas prices affect prices of other consumer goods, ”March 11, 2012

http://chronicle.augusta.com/news/business/2012-03-11/higher-gas-prices-affect-prices-other-consumer-goods, Date Accessed: July 5, 2012, LG)

The costs of consumer goods are paralleling the rising gas prices. With gas prices nationwide heading toward the $4 a gallon mark, analysts expect the pocketbook pain to get worse. “Fuel prices hit retail food prices in two ways, in processing and transportation,” said Ricky Volpe, a research economist with the USDA Economic Research Ser­vice. “It’s really all along the whole food supply chain, but some commodities certainly get hit harder than others.” The Consumer Price Index shows the correlation of rising gas prices to consumer goods. Food prices increased by 4.4 percent from January 2011 to January 2012, and apparel prices by 4.7 percent. In that same period, gas prices rose by 9.7 percent, reaching a high of $3.98 per gallon May 5. The average was $3.76 as of Wednesday. The recent string of gas price increases – 39 consecutive days – was the longest since prices increased for 44 days beginning March 24 of last year. “I definitely think that we’re going to see $4 a gallon this year,” said AAA spokeswoman Jessica Brady. “I think it would probably be some time in April that we’ll see that happen.” Augusta might not experience $4 gas as early as some other metro markets, but the prices could reach that mark by late April or early May, she said. Regular gas in the Augusta-Aiken area was averaging $3.63 per gallon as of Thursday. The lone bright spot for consumers is that food inflation is unlikely to approach 2007-08 levels, according to the USDA Economic Re­search Service. Food prices rose by 4 percent in 2007 and 5.5 percent in 2008. During that period, gas prices reached an all-time high at $4.14 a gallon in July 2008. For this year, the USDA research service predicts an annual change of 2.5 percent to 3.5 percent. The price of gas is built into the price of almost everything consumers purchase, said Dr. Jeff M. Humphreys, the director of the Selig Center for Economic Growth at the University of Georgia. He said high gas prices tend to hit Georgia harder than the nation as a whole because of several factors. In addition to not having any fuel production or refineries, Georgia has a large distribution industry, a gas-intensive type of economic activity. The state’s distribution industry, including trucking firms, shipping companies and logistics centers, is larger than expected for the size of the economy, Humphreys said. Higher gas prices also affect large products that need to be moved long distances. Both the buyer and seller are affected, said Bill Hauk, the assistant professor of economics at the University of South Carolina’s Moore School of Business. Businesses that operate on a small profit margin, such as grocery stores, are impacted by anything that affects costs. Delivery companies and taxi companies are also hit because they rely heavily on transportation, Hauk said. “Until a certain point, these businesses eat up their margins,” said Emin Hajiyev, the assistant director of the Economic Forecasting Center at Georgia State University. “But at some point when the price of oil or gasoline becomes exuberantly high, they will have to pass on those costs to consumers.” There are several factors contributing to the increase in gas prices, Brady said. The primary cause is escalating tension with Iran. The nation has threatened to block the Strait of Hormuz, which transports one-fifth of the world’s oil supply. This is also the time of year when refineries shut down to switch from winter to summer blend fuel and consumers “see prices increase into the summer travel season,” she said. Positive economic news in the U.S. or Europe tends to push oil prices higher. It causes speculation that de­mand will increase, she said. “At the same time, you have these increased gas prices eating into consumers’ disposable income,” she said. That will force most peo­ple to make sacrifices in their discretionary spending, Hajiyev said. When gas hits $4 a gallon, Augusta resident Jennifer Flores said she’s going to have cut back on visits to her mother’s house in Lincolnton, grocery spending and recreational activities. “I smoke cigarettes. They’re going to jack those up, so quitting will be an option,” she said. “No going out to eat or fun stuff because you’ve got to pay $10 just to get across town. That’s crazy.”

XT – Costs Obama Election

Prices hurt Obama’s re-election- public perception

Politico 2/12 (Seung Min, reporter for POLITICO, Steny Hoyer: Gas prices could hurt Obama,” February 28, 2012, Steny Hoyer: Gas prices could hurt Obama, Date Accessed: July 5, 2012, LG

House Minority Whip Steny Hoyer says he’s concerned that rising gas prices will hurt President Barack Obama and fellow Democrats politically. The House’s No. 2 Democrat said Tuesday that much like former President George W. Bush was blamed for high gas prices during the last administration, Obama could face political pain as consumers continue doling out more cash to fill up their cars. Continue Reading Text Size -+reset Listen Latest on POLITICO Obama presses middle class pitch Rep. Walsh, CNN's Banfield battle House farm bill cuts deeper Mitt sets GOP fund-raising record Swing state Dems wait on jobs report POLITICO Influence: Feinstein stash “They’re not at historic high levels at this point in time,” Hoyer, referring to current gas prices, told reporters on Tuesday. “But they are high and, yes, I’m concerned — and, yes, I’m concerned about the impact it has on the administration.” The average gas price is $3.72 per gallon, according to the AAA. Republicans have pounced, trying to pin escalating prices on the Democratic White House and its energy policies. “Make no mistake: The rising price of gasoline isn’t simply the result of forces we can’t control,” Senate Minority Leader Mitch McConnell said on the Senate floor Tuesday. “It is, to a large extent, the result of a vision that this president laid out even before he was elected to office.” Meanwhile, House Speaker John Boehner wrote a letter to Obama Tuesday, calling for an “all-of-the-above” energy policy. “Over the last three years, your administration has blocked, slowed and discouraged the production of critical American energy sources,” Boehner wrote. “These actions are bad for energy prices and bad for jobs.” Hoyer countered that speculation in the oil markets and continuing unrest in the Middle East — not a shortage of supply — are pushing gas prices upward. Earlier Tuesday, other top House Democrats echoed Hoyer’s arguments. “If [Iranian President Mahmoud] Ahmadinejad sneezes, what gives the right of speculators to continue to jack up the price of oil?” said Rep. John Larson (D-Conn.).

AFF UQ Business

Gas Prices High

Gas prices high now and killing consumer confidence – polls prove

Loris 05/24/12, Nicolas Loris is a Policy Analyst at The Heritage Foundation's Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy. “Psst! Washington! Gas prices are still high!” http://blog.heritage.org/2012/05/24/psst-washington-gas-prices-are-still-high/, LFV

As Americans across the country gear up for Memorial Day, they have welcomed the recent dip in gas prices. Although gas prices are down nearly 20 cents per gallon from one month ago, the average price in the United States remains uncomfortably high at $3.68 per gallon. AAA projects Memorial Day travel will be similar to that of 2011, slightly increasing by 1.2 percent. The news, really, is that these high gas prices aren’t news anymore. Consumers have grown accustomed to $3.50 or $4 per gallon on the signs at gas stations, as long as the prices aren’t consistently spiking upward. This becomes problematic when it allows policymakers to put gas prices on the back burner, because these currently high prices are draining the wallets of millions of Americans and are taking a toll on businesses that have to pass the costs on to consumers or absorb the costs. In a recent Small Business & Entrepreneurship Council poll, 40 percent of small businesses responding said they have had to increase their prices. Consumer demand is already down, and passing the costs of higher energy prices to consumers will suppress demand even further, causing lower output, lower income, and higher unemployment. A new study by Bankrate, Inc., found that nearly 60 percent of Americans cut back on spending in 2012 because of high gas prices.

Oil prices high now – Iran and Norway

AFP 07/03/12, Agence France-Presse (AFP) is a French news agency, the oldest one in the world, and one of the three largest with Associated Press and Reuters. It is also the largest French news agency. “Oil prices surge on iran tension, Norway strike,” http://news.yahoo.com/oil-prices-surge-iran-tensions-norway-strike-220127190.html, LFV

Oil prices shot up Tuesday on fresh tensions over Iran, where lawmakers threatened to shut the Strait of Hormuz in retaliation for oil sanctions, and after a strike shuttered production in Norway. New York's main contract, light sweet crude for August, soared $3.91 to close at $87.66 a barrel. In London trade, Brent North Sea crude for delivery in August settled at $100.68 a barrel, jumping $3.34 from Monday's closing level. "With Iran oil out and Norway on strike it is giving the oil market reason to bounce!" said Phil Flynn at Price Futures Group. Crude prices had fallen Monday in the wake of weak economic data in China, the world's biggest energy consumer; the first fall in US manufacturing in three years; and as markets assessed the impact of a European Union embargo on Iranian oil. Full implementation of an EU embargo on Iranian oil took effect on Sunday, provoking anger in Tehran, which says the measures will hurt talks with world powers over its contested nuclear activities. On Tuesday, oil prices surged higher after Iran test-fired missiles into its central desert region, drawing a US warning that the tests were in violation of UN resolutions that ban Iran from any ballistic weapons activity. Meanwhile, some 120 lawmakers in Iran's 290-seat parliament backed a draft bill calling for the strategic Strait of Hormuz to be closed to oil tankers headed to Europe in retaliation for an EU embargo on Iranian crude. Oil market observer bodies and analysts say the EU embargo, coupled with US financial sanctions ramped up on Thursday, are gutting Iran's vital oil exports, which account for half of government revenues. The International Energy Agency says Iranian crude exports in May appear to have slipped to 1.5 million barrels per day (mbpd) as the market braced for the embargo, which has been phased in since being announced January 23. Oil prices also gained support from a 10-day-old strike by more than 700 North Sea oil workers in Norway. The union action over pensions has cut about 10 percent of the total production of the world's eighth-largest oil exporter, according to the Norwegian Oil Industry Association.

Prices high now and won’t drop – China and India

Johnson 06/06/12, Stacy Johnson is an author and creator and host of Money Talks, a nationally syndicated consumer/personal finance news series, “Money Talks: Why gas prices are still high.” http://www.valleycentral.com/news/story.aspx?id=762529

We've always been told that the reason U.S. gas prices are so high is that we're not finding enough oil, and when we do, we're using too much. But we've turned that around. According to the U.S. Energy Information Administration, U.S. oil production has increased about 20% since 2008. And gasoline consumption recently dipped to levels not seen since 2001. Econ 101 - increased supply, reduced demand = falling prices, not rising prices. So what's the deal? First, let's take a look at a dollars worth of gas and see what makes up the cost. About three quarters of the cost - 72 cents - is oil. Refining costs contribute 12 cents, federal and state taxes, 11 cents, and distribution and marketing, 5 cents. So the biggest expense in gas is - no surprise - oil. But if we're finding more and using less, why aren't oil prices dropping? While it may not seem fair, the answer is simple - oil is traded in a world market, not a U.S. market. So while we may be using less, China is using more. So are other developing countries, like India. In short, it's global demand and supply that affects prices. In addition, tensions in oil-producing countries like Iran that could threaten supplies also drive prices up. But while prices are painful, at least you can take solace from the fact that today we're less dependent on foreign oil than we used to be. And before you blame other countries, something else to keep in mind: the U.S. has about 5 percent of the world's population, but consumes about 25 percent of the world's fossil fuels.

Politics

Link Module – Env. Lobby

Environmentalists key to election-large portion of Obama base

Jessica Rettig, 8/26/11 (writer for U.S. News, Keystone XL Pipeline Decision a Test on Obama, Environmentalism, http://www.usnews.com/opinion/blogs/on-energy/2011/08/26/keystone-xl-pipeline-decision-a-test-on-obama-environmentalism, S.O.)

President Obama cancelled the rest of his Martha's Vineyard vacation plans to be in Washington for the impending hurricane. But, perhaps worse than the high winds and heavy rains expected to hit the capital, he'll be coming back to a storm of criticism from environmentalists who are lashing out against the State Department's just released findings on the Keystone XL pipeline project. The State Department report, released Friday, found that the proposed pipeline project—which would bring oil from Canada's oil sands as far as Texas—would have little significant impact on the natural resources in its path. For the oil industry, and for the pipeline's sponsor Transcanada especially, the report's findings signify a major hurdle crossed in getting final approval for the project. For Transcanada to move forward with the project, the State Department still needs to decide whether the pipeline is in the "national interest," a decision which should come later this year. [Check out our gallery of editorial cartoons on gas prices.] But until that final decision, environmentalists—a significant political base for President Obama—seem poised to turn up the pressure on the administration, especially after Friday's setback. "Whether to approve this pipeline is the most important environmental decision President Obama will make before the election," said Erich Pica, president of Friends of the Earth, an environmental advocacy group, in an E-mail Friday. "If he sides with greedy oil companies instead of people and the climate, he will essentially be urging a huge part of his base to sit out the election. With this supposedly final review of the pipeline's environmental impacts, the State Department has let him down by once again trying to sweep the serious dangers posed under the rug." Other groups, like the Natural Resources Defense Council argue that the State Department's assessment didn't go far enough. According to Susan Casey-Lefkowitz, international program director at the Natural Resources Defense Council, the administration "failed to do its homework" on the pipeline's effect. "It is utterly beyond me how the administration can claim the pipeline will have 'no significant impacts' if they haven't bothered to do in-depth studies around the issues of contention," she said in a statement Friday. "The public has made their concerns clear and the administration seems to have ignored them. If permitted, the proposed Keystone XL tar sands pipeline will be a dirty legacy that will haunt President Obama and Secretary Clinton for years to come." [Read: Do Americans care about climate change anymore?] Before Friday's announcement, hundreds of environmentalists had been arrested in Washington while protesting the project. And already let down by Obama's energy and environmental policies, some environmentalist groups have said that they would sit out the 2012 election if President Obama doesn't side with them to block the pipeline. NASA scientist James Hansen, who's been on the forefront of climate change science, told Climatewire that if the administration approves the pipeline, "it will confirm that Obama was just greenwashing all along, like the other well-oiled coal-fired politicians, with no real intention of solving the addiction." [Read about the effect of the climate change debate on the 2012 presidential election.] But, even despite all the recent environmental howling, with today's announcement, it looks even more likely that the Keystone XL pipeline will get the okay. So, apart from being a test on Obama, the final decision will be a measure of just how much force the environmentalism movement still has in Washington.

XT – Env Lobby hates Plan

Keystone Pipeline unpopular with environmentalists

John M. Broder and Dan Frosch, 1/18/12 (reporters from The New York Times, Rejecting Pipeline Proposal, Obama Blames Congress, http://www.nytimes.com/2012/01/19/us/state-dept-to-put-oil-pipeline-on-hold.html, S.O.)

WASHINGTON — President Obama on Wednesday rejected, for now, the proposed Keystone XL oil pipeline, saying the $7 billion project could not be adequately reviewed within the 60-day deadline set by Congress. While the president’s action does not preclude later approval of the project, it sets up a baldly partisan fight over energy, jobs and regulation that will most likely persist through the November election. The president said his hand had been forced by Republicans in Congress, who inserted a provision in the temporary payroll tax cut bill passed in December giving the administration only until Feb. 21 to decide the fate of the 1,700-mile pipeline, which would stretch from oil sands formations in Alberta to refineries on the Gulf Coast. The State Department, which has authority over the project because it crosses an international border, said there was not enough time to draw a new route for the pipeline and assess the potential environmental harm to sensitive grasslands and aquifers along its path. The agency recommended that the permit be denied, and Mr. Obama concurred. “As the State Department made clear last month,” the president said in a statement, “the rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment.” Mr. Obama said that his action was not a final judgment on the merits of the project, which the administration had been on a slow track to approving. “I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil,” he said. He added that he would work with the oil industry to increase domestic production and perhaps build additional pipelines within the United States. The trans-border pipeline has become a political flashpoint, with proponents saying it will create thousands of jobs and help wean the nation off of Middle Eastern oil, while opponents charge that it furthers dependence on dirty fuels, contributes to global warming and threatens ecological disaster. Canada’s prime minister, Stephen Harper, who has been a strong advocate of the pipeline, told Mr. Obama in a telephone conversation on Wednesday that he was profoundly disappointed in the decision. The White House spokesman, Jay Carney, at a briefing with reporters on Wednesday before the State Department released its announcement, was sharply critical of the Republican-sponsored legislation that he said had forced a decision before the project could be fully studied and might have unwittingly delayed it. Brendan Buck, the spokesman for Speaker John A. Boehner said: “President Obama is about to destroy tens of thousands of American jobs and sell American energy security to the Chinese. The president won’t stand up to his political base even to create American jobs. This is not the end of this fight.” The Republican presidential candidates have already made clear that they intend to use the Keystone issue to portray the Obama administration as an enemy of business that is doing the bidding of extreme environmentalists. The pipeline issue has also become part of a broader narrative that the Republican candidates are trying to develop about Mr. Obama, one that argues that his administration is vastly expanding regulation in ways that prevent private industries from expanding and hiring. Mitt Romney, a former Massachusetts governor, criticized the decision in a statement. “President Obama’s decision to reject the Keystone XL crude oil pipeline is as shocking as it is revealing,” Mr. Romney said. “If Americans want to understand why unemployment in the United States has been stuck above 8 percent for the longest stretch since the Great Depression, decisions like this one are the place to begin. “By declaring that the Keystone pipeline is not in the ‘national interest,’ the president demonstrates a lack of seriousness about bringing down unemployment, restoring economic growth and achieving energy independence.” On the stump and in debates, the Republican candidates have been using the possibility that Mr. Obama would block the pipeline construction as a reliable applause line about what they view as overregulation that is strangling the economic recovery. At an event in Ottumwa, Iowa, on Dec. 31, Rick Santorum mocked the idea that the pipeline posed the threat of environmental damage, noting that there were already many other pipelines in the area it would go through. “This is just, again, pandering to radical environmentalists who don’t want energy production, who don’t want us to burn more carbon,” Mr. Santorum said. TransCanada, the company proposing to build the pipeline, said that it would quickly apply for a new permit to build along a similar route. “While we are disappointed, TransCanada remains fully committed to the construction of Keystone XL,” said Russ K. Girling, the company’s chief executive. “Plans are already under way on a number of fronts to largely maintain the construction schedule of the project. We will reapply for a presidential permit and expect a new application would be processed in an expedited manner to allow for an in-service date of late 2014.” Kerri-Ann Jones, the assistant secretary of state for oceans and international environmental and scientific affairs, said Wednesday that any new application filed by TransCanada would trigger an entirely fresh review process, no matter how similar the pipeline route, and that the process could not be “expedited” as TransCanada hoped. The American Petroleum Institute, the industry’s main lobbying group, has begun a multimillion-dollar lobbying and advertising campaign promoting the pipeline. Jack N. Gerard, the group’s president, was unusually harsh in his remarks on Mr. Obama’s decision. “How can you say you are for jobs and reject the largest shovel-ready project in America today?” Mr. Gerard said at an energy forum on Wednesday afternoon. “Mr. President, what are you thinking?” The pipeline extension was designed to increase Canadian oil exports to the United States by 700,000 barrels a day, or about 4 percent of current United States demand. By connecting the oil sands to refineries on the Gulf Coast, it would provide new supplies to big East Coast markets. The pipeline, at least theoretically, could also increase exports of refined gasoline and diesel for export, especially to Mexico. Canada has the world’s second-largest proven oil reserves after Saudi Arabia, with 170 billion out of its 174 billion barrels residing in oil sands in the West, according to the Canadian government.

Tea Partier and environmentalists don’t want Keystone

BRIAN BEUTLER, 2/27/12 (TPM's senior congressional reporter, The Keystone Fight Is Uniting Tea Partiers With Environmentalists, http://tpmdc.talkingpointsmemo.com/2012/02/keystone-opposition-creates-strange-bedfellows-in-rural-america.php, S.O.)

In Washington, DC, the fight over the proposed Keystone XL oil pipeline mostly divides common enemies: Republicans and Democrats; environmentalists and fossil fuel interests; big business and the federal bureaucracy. But though the project exists in a state of suspended animation, TransCanada — the company that wants to connect the tar sands in Alberta to the Gulf of Mexico — is preparing to build anyhow. In particular, on the portion of the pipeline that would link Nebraska to Texas, TransCanada has threatened to use disputed eminent domain powers to condemn privately held land, over the owners’ objections. And that’s creating unusual allies — Occupiers, Tea Partiers, environmentalists, individualists — united to stop TransCanada from threatening water supplies, ancient artifacts, and people’s basic property rights. In 2007 TransCanada’s agents at Universal Field Services approached Randy Thompson, 64, of Martell, NE, asking to survey his farm land. Thompson assented at first, under the assumption that he’d have final say over whether a Canadian company would be allowed to build anything on his property. “Once I found out a little bit more about what was going on, I rescinded that permission,” Thompson told TPM by phone on Sunday. “[W]e did meet with them once, maybe a couple times. We told them, you don’t have a permit yet, so we absolutely do not want this thing on our property. So until you actually get a permit we have no reason to have any further discussion about this. They continually called me, like once a month or whenever they felt like it. Kept the pressure on us. Made us an offer, $9000. Whatever the offer was, we just don’t want the damn thing on our property.” That’s when TransCanada really stepped up the pressure. “In July 2010, we got a written letter from TransCanada, they told us if you don’t accept this within 30 days, we’re going to immediately start eminent domain proceedings against you,” Thompson said. “They didn’t say anything about a permit. I tried to contact the Governor’s office. All I got back was a form letter talking about the pipeline.” It turns out TransCanada used the same approach with many other landowners — with some success. “It was pretty effective, it kinda scares the hell out of you,” Thompson said. A TransCanada letter to another owner - who requested anonymity - reads, “This letter is Keystone’s final offer, and it will remain open for one month after the date of this letter or until you reject it. We believe the amount of the offer [$5,280.00] is a premium price for your property. Keystone’s offer is high because the company prefers to acquire this property through negotiation and to avoid litigation and its associated delays and debts.” The letter goes on, “While we hope to acquire this property through negotiation, if we are unable to do so we will be forced to invoke the power of eminent domain and will initiate condemnation proceedings against this property promptly after the expiration of this one month period.” Julia Trigg Crawford, 53, of Lamar County, TX faced similar pressure. On Friday, a judge voided a temporary restraining order she’d secured against TransCanada on the grounds that the company is threatening to build the pipeline across a portion of her 600 acre property that archaeological authorities say is teeming with Caddo nation artifacts. It also threatens a creek she uses to irrigate her land and wells her family uses for drinking water. “I do not want my place to be a guinea pig on this,” she told my by telephone. Those practical concerns lay atop a more fundamental question of whether a for-profit company should be able to seize private land for profit. “I’m looking out my window every hour,” Crawford said. “While they don’t have a permit to build anything, they have the right to start construction…. A foreign for profit pipeline was allowed to condemn my land without my being allowed to talk to a judge.” Thompson described himself as a conservative guy who supported Republicans, but had never been involved in politics beyond exercising the basic right to vote. Crawford calls herself a “political agnostic” who eschewed activism until TransCanada came into her life. But they, along with others in their position, and sympathizers have come together, with the help of Bold Nebraska activist Jane Kleeb, who became involved in the Keystone fight in May 2010, after landowners raised concerns at a State Department hearing on the pipeline. “They actually don’t have eminent domain authority in Nebraska until they have their permits,” she explained in a phone interview. “It would have been fair for TransCanada to say once we have a permit we could take you to court for eminent domain. Letting landowners know that they could face eminent domain proceedings is one thing…but they were just bullying these landowners.” The result: protests in Paris, Texas against the pipeline, on Crawford’s behalf. “You could check off 20 different kinds of boxes, politically, professionally, temperamentally,” Crawford said. “We had Occupiers, Tea Partiers. This is about rights as a landowner.” Farmers on the proposed route likely wouldn’t face these threats were it not for the 2005 case Kelo v. City of New London in which the Supreme Court, divided 5-4, ruled that eminent domain powers extend to the transfer of land from one private owner to another, if that action increases economic development. The ruling outraged conservatives and libertarians. The effect of it today is to place people like Randy Thompson on an unfamiliar side of the divide between conservatives and environmentalists; and business and liberal political activists. He even testified this month against TransCanada as a witness for Henry Waxman’s minority on the House Energy and Commerce Committee. “I’m a little ashamed to say that maybe if it hadn’t come across our land, I wouldn’t have gotten involved,” he told me. “I’ve gained a great deal of respect for people who do care about our environment I’ve become much more aware of environmental issues. I have to admire them for being concerned about our environment.” “Republicans,” he said, by contrast, “could give a rats ass about the people out here.”

Environmentalists oppose the Keystone Pipeline

Ronald Bailey, 5/8/12 (member of the Society of Environmental Journalists and the American Society for Bioethics and Humanities, Obama Is Losing the Keystone Pipeline Battle, http://reason.com/archives/2012/05/08/obama-boxed-in-on-keystone-pipeline-cons, S.O.)

The Keystone XL pipeline is roiling U.S. electoral politics again. TransCanada refiled its application for a permit to build the pipeline with the State Department last week. Presumptive Republican presidential nominee Mitt Romney has vowed, “I will build that pipeline if I have to do it myself.” In April, the House of Representatives passed a transportation bill that mandates the construction of the Keystone pipeline. The vote was 293 to 127, the majority vote was minus 14 Republicans, but included 69 Democrats. President Barack Obama threatened to veto the bill if it includes the pipeline construction mandate. Today, the House and Senate are conferring on the transportation bill that would spend more than $100 billion on highway, rail, air, and mass transit projects over the next two years. It is not known if the Keystone pipeline provision will emerge in the final version. Reviewing the state of play: The crude oil pipeline would be built by TransCanada at a cost $7 billion and stretch nearly 1,700-miles from Alberta, Canada, to the Gulf Coast of the United States. The 36-inch pipeline would bring as much as 830,000 barrels of synthetic oil per day produced from Canadian oilsands to U.S. refineries. However, since it crosses an international border, President Barack Obama has the authority to refuse permission for construction to begin if he determines that the pipeline is not in the national interest. In August 2011, the Department of State issued its Final Environmental Impact Statement [PDF], which concluded that the pipeline could be built and operated safely. Once the State Department report was issued, Obama had 90 days to make his national interest determination. The Keystone pipeline became a defining issue for political environmentalists who dramatized their opposition during protests outside the White House by getting themselves arrested. The activists claimed that pipeline leaks could threaten the Ogallala aquifer in the Sand Hills region of Nebraska and would exacerbate man-made global warming by enabling consumers to burn fuel produced from Canada’s oilsands. Meanwhile the labor union wing of the Democratic Party was eagerly lobbying the Obama administration on behalf of the jobs that constructing and operating the pipeline would create. In November, Obama bravely announced that he was putting off any decision on allowing the construction of the pipeline until after the 2012 presidential election. That's real leadership! Clearly in his electoral calculations, the Green faction won out over the union vote. After the president’s decision to delay approval, Nebraska legislators, spooked by environmentalist scaremongering, voted to require that the pipeline be re-routed around the Sand Hills. Vexed Republicans on Capitol Hill tried to force the president’s hand in December by attaching a provision setting a February deadline for a decision on the pipeline to the bill that extended the payroll tax cut. In January, Obama called the Republicans’ bluff by denouncing the Republican deadline as “rushed and arbitrary” and had the State Department issue a determination that the pipeline was not in the national interest. Meanwhile TransCanada announced in late February that it would seek to begin construction of the 485-mile southern leg of the Keystone pipeline from Oklahoma to the Gulf Coast. Since this portion of the pipeline does not cross any international borders it does not require presidential approval. Nevertheless, the Obama administration hastened to issue a White House statement declaring that it was committed to taking “every step possible to expedite the necessary Federal permits.” In April, the Nebraska legislature shifted toward backing pipeline construction by passing a bill that authorizes the governor to approve a new route that avoids the Sand Hills region. On May 4, TransCanada submitted a new application [PDF] for a presidential permit for pipeline construction to the State Department. The new application was widely denounced [PDF] by environmental lobbyists. For example, Susan Casey-Lefkowitz, director Natural Resources Defense Council’s international program declared, “The company's ‘new’ application is nothing but a rehash, riddled with the same environmental risks that raise the same unanswered questions while providing no new rationale for why it should be built.” So let’s take up Casey-Lefkowitz’s invitation to rehash the chief arguments deployed by the environmentalist lobby against building the pipeline. Opponents highlight the environmental risks of increased global warming and the possibility of damage to the Ogallala aquifer.

Link Module – Labor

Labor union, environmentalist support the rejection of Keystone Pipeline

Press Associates, Inc., 1/20/12 (Unions split on Obama rejection of Keystone pipeline, http://www.workdayminnesota.org/index.php?news_6_5110, S.O.)

WASHINGTON - Union leaders split on President Barack Obama’s Jan. 18 denial of a federal permit to build the 1,700-mile Keystone XL oil pipeline from the U.S.-Canada border to the Texas Gulf Coast. Construction unions called Obama’s ruling a “job killer,” but at least five unions sided with environmental groups against Keystone. Obama said the controversial project could not be constructed as planned by its sponsor, TransCanada, because it would endanger a valuable underground aquifer in Nebraska. He said TransCanada could apply again once it worked out a new route around the aquifer. TransCanada said it would do so. Environmental groups strongly opposed the pipeline because they said it would pump bitumen-laden “dirty oil” from Albertan tar sands to the Gulf Coast, increasing the pollution that leads to global warming. The Transport Workers, Steel Workers, Communications Workers, Auto Workers and Service Employees sided with them. Construction union presidents were particularly upset as four unions signed a project labor agreement with TransCanada several years ago to use unionized labor to build Keystone. At that time, the unions calculated the pipeline’s construction would employ 20,000 workers directly and many more thousands of people indirectly. But an environmental impact statement by the State Department, which evaluated Keystone since it crossed the international border, put the construction job figure at 5,000-7,000. Still, it meant jobs, and Obama’s decision led Laborers President Terry O’Sullivan and Building Trades Department President Mark Ayers to warn the decision could cost Obama votes. “The score is Job-Killers, 2, American workers, 0,” said O’Sullivan. “We are completely and totally disappointed. This is politics at its worst. “Once again the president has sided with environmentalists instead of blue collar construction workers, even though environmental concerns were more than adequately addressed. Blue collar construction workers across the U.S. will not forget this,” he said, calling environmentalists’ links of Keystone to global warming “disingenuous.” “With a national unemployment rate in construction at 16%, it is beyond disappointing that President Obama placed a higher priority on politics rather than our nation's No. 1 challenge, jobs,” Ayers added. “Environmental activists not saddled with the economic and psychological scars that accompany long-term unemployment…successfully induced the White House to block this project. Meanwhile, thousands of proud Americans throughout the heartland will once again be faced with the terrifying prospect of losing their homes and their livelihoods as they struggle to find work.” Unions and environmental groups that praised Obama issued a joint statement lauding his decision to go slow – and blaming the House GOP for forcing the ruling by mid-February for political purposes, while ignoring or killing other pro-jobs legislation. “Keystone XL is a complex project which deserved the careful consideration regarding its environmental and economic impacts that the Obama administration planned to provide,” the five unions that praised Obama’s decision said. “In a cynical move, the House Republican leadership called for a rapid decision on the pipeline in exchange for agreeing to keep the payroll tax cut in place. The payroll tax cut enacted last year has been an important part of efforts to turn around our struggling economy. While the House Republicans wrapped job creation rhetoric around their pipeline demands, they have rejected numerous opportunities to support programs creating good U.S. jobs,” the union leaders added. “A project this far-reaching deserved better than the ‘politics as usual’ strategy of a do-nothing Republican Congress. Their job blackmail agenda is simply wedge politics. Addressing global climate change, establishing sustainable and secure energy sources, and creating and retaining safe and family-supportive jobs are keys to a positive future for our children and grandchildren. President Obama has acted wisely,” the union leaders concluded. IBEW President Ed Hill said his union is “disappointed” by Obama’s decision, but he also cited the second chance Obama gave Keystone. “We are treating today’s decision as a temporary setback,” Hill said. “We believe the decision-making process has been caught up in political gamesmanship. To Democrats who oppose the pipeline on well-meaning but misguided environmental grounds and Republicans who routinely vote against every jobs bill except Keystone, we pose this question: What are your plans to replace the 20,000 jobs that are now on hold?”

Big labor key to election.

Jeff Tyler, 1/4/12 (reporter for Marketplace’s Los Angeles bureau, Resurgent labor unions in Ohio could tip presidential race, http://www.marketplace.org/topics/elections/campaign-trail/resurgent-labor-unions-ohio-could-tip-presidential-race, S.O.)

Stacey Vanek Smith: Mitt Romney eked out a victory in the Iowa caucus last night edging out Rick Santorum by just 8 votes. Candidates now move to New Hampshire to duke it out in a primary there. President Obama is off on the campaign trail as well. He'll be speaking just outside Cleveland today. Ohio is an important swing state in the election and has also been the site of a major union law battle. Last November, unions scored a big win for collective bargaining rights. Is organized labor an election year issue? Jeff Tyler has more. Jeff Tyler: Public sector workers -- like firefighters and teachers - campaigned last November to overturn a new law limiting collective bargaining. And they succeeded. But was this really a sign of greater union influence? Greg R. Lawson is a policy analyst with the conservative Buckeye Institute. He says the influence of labor is limited to public sector unions. Greg R. Lawson: There’s not necessarily any evidence that the private sector unions are kind of having this massive renaissance. Mike Podhorzer, political director of the AFL-CIO, disagrees. Mike Podhorzer: I’ve never seen a time when there’s as much enthusiasm and unity within the labor movement to fight back on these things. Fighting back requires money for things like advertising. Roger Geiger is with the Ohio chapter of the National Federation of Independent Business. He says it’s tough for small businesses to raise funds compared to organized labor. Roger Geiger: The have a huge built-in advantage and that is that they can use union dues for political purposes. Money from outside Ohio is expected to flow to the state from both sides in this battle. Professor John Russo studies labor at Youngstown State University. He says labor unions don’t have to match their opponents fundraising efforts dollar-for-dollar. John Russo: I think that the manpower that organized labor has, together with all the community groups, make it very difficult for Republicans to win. But he says it will be close. I’m Jeff Tyler for Marketplace.

XT – Labor Hates KXL

Majority of American support labor unions-GOP unpopular

Deborah White, 3/3/11 (journalist and writer specializing in liberal politics, and progressive issues and perspectives, Top 20 Labor Union States, http://usliberals.about.com/od/theeconomyjobs/a/Top-20-Labor-Union-States.htm, S.O.)

Thirteen politically "red" and "red/blue" states may lean Democratic in 2012 elections because of the unpopular 2011 push by a handful of Republican governors to abolish collective bargaining rights for public employee labor unions. Per the New York Times on March 3, 2011, "A New York Times/CBS News poll published on Tuesday showed that Americans oppose ending bargaining rights for public unions by a majority of nearly two to one... "A Gallup poll last week showed that 61 percent of respondents nationwide reject Mr. Walker's attempt to revoke collective-bargaining rights for public unions, including 41 percent of the Republicans polled."

Elections – Obama BAD

Public likes KXL – jobs, security, and no perception of environmental damage

Mufson 6-30-12 ("Keystone XL pipeline expansion driven by oil-rich tar sands in Alberta," http://www.washingtonpost.com/business/economy/keystone-xl-pipeline-expansion-driven-by-oil-rich-tar-sands-in-alberta/2012/06/30/gJQAVe4ZEW_story.html//[07.05.12]//LL)

The pipeline has become a powerful symbol and political pawn this election year. It is also a sort of Rorschach test of how Americans view energy issues: Are we energy rich or energy poor? How do energy policies affect job creation, tax revenue and U.S. manufacturing competitiveness? How pressing are climate-change concerns, and how do we balance them with economic priorities? The American public is firmly behind the pipeline, seeing plenty of upside in potential jobs and limited environmental downside. A new Washington Post poll finds nearly six in 10 saying the U.S. government should approve the project. Its wide acceptance is rooted in the fact that 83 percent think it will create jobs. Nearly half think it will not cause significant damage to the environment. The oil industry and many national security experts think that importing more oil from Canada, a stable neighbor and ally, will make the United States more secure, and they worry that, without the Keystone XL, Canada will send that oil to China.

Gender

Gender Links

Oil production doesn’t include women- crowd out women

Ross 2006

(Prof. Michael Ross ,UCLA Department of Political Science and Director of the Center for Southeast Asian Studies, Oil and Patriarchy, page 2, http://globetrotter.berkeley.edu/bwep/greengovernance/ColloqPapers/Ross2006.pdf, 7/5/2012)

The production of oil tends to reduce the participation of women in the work force, by producing growth in economic sectors that tend to employ men (like construction, heavy industry, and retail), while crowding out sectors that tend to employ women (like exportoriented light industry and agricultural processing). Since fewer women enter the work force, women in oil-rich states tend to have less economic, social, and political influence than their counterparts in oil-poor states; as a result, oil-producing states are left with a typically strong patriarchal cultures and political institutions.

Petroleum fuels patriarchy- women are excluded from other national issues

Ross 2006

(Prof. Michael Ross ,UCLA Department of Political Science and Director of the Center for Southeast Asian Studies, Oil and Patriarchy, page 16, http://globetrotter.berkeley.edu/bwep/greengovernance/ColloqPapers/Ross2006.pdf, 7/5/2012)

Petroleum perpetuates patriarchy: oil production tends to reduce the number of women who enter the work force, and hence reduces the likelihood they will gain political influence. Without large numbers of women participating in the economic and political life of the country, traditional patriarchal institutions will go unchallenged. This dynamic can help explain the surprisingly low influence of women in mineral-rich states in the Middle East (Saudi Arabia, Kuwait, Oman, Algeria, Libya), Latin America (Chile), Africa (Botswana, Gabon, Mauritania, Nigeria), and the former Soviet Union (Azerbaijan, Russia).

Excluding women has bad social effects- reduced incentives for women

Ross 2006

(Prof. Michael Ross ,UCLA Department of Political Science and Director of the Center for Southeast Asian Studies, Oil and Patriarchy, page 16, http://globetrotter.berkeley.edu/bwep/greengovernance/ColloqPapers/Ross2006.pdf, 7/5/2012)

Skeptics may argue that oil production cannot be socially harmful if it merely causes women to stay at home and “consume more leisure.” But while an individual may prefer leisure to work, the failure of women to enter the formal labor market can have profound social costs: a reduced incentive to lower fertility rates, a reduced incentive to invest in female education, reduced opportunities for women to influence household decision making, reduced opportunities to develop new, non-familial social networks, and reduced opportunities to organize politically.

Case Debate

Economy ADVs

AT: Jobs ADV

Can’t solve – no long-term jobs

Efstathiou 12 (2-13-12, Jim, contributor @ Bloomberg, "Keystone’s Thousands Of Jobs Fall To 20 When Pipeline Opens," http://www.bloomberg.com/news/2012-02-13/keystone-s-thousands-of-jobs-fall-to-20-when-pipeline-opens-1-.html//[07.05.12]//LL)

TransCanada Corp. (TRP)’s Keystone XL oil pipeline, heralded by supporters as a major job creator, will add few permanent positions once the $7 billion project is built. The number of people needed to operate and maintain the 1,661-mile (2,673-kilometer) pipeline may be as few as 20, according to the U.S. State Department, or as many as a few hundred, according to TransCanada. “I don’t see a big jobs impact,” Stephen Fuller, director of the Center for Regional Analysis at George Mason University in Arlington, Virginia, said in an interview. “It gets the oil into refineries that already exist. It’s like replacing a bridge on the highway.” The debate in Washington has focused on short-term construction and manufacturing jobs, rather than on permanent ones. Estimates for construction and manufacturing employment range from 2,500 to 20,000, depending on assumptions of how much of the project’s budget will be spent in the U.S. The company says some of the steel will be made in Canada and India. TransCanada Vice President Robert Jones said permanent jobs would be “in the hundreds, certainly not in the thousands,” in a Nov. 11 interview on CNN.

KXL will lose jobs and cement fossil fuel dependence

Cornell GLI 11 (9-28-11, Cornell University Global Labor Institute, "Pipe dreams? Jobs Gained, Jobs Lostby the Construction of Keystone XL," http://www.ilr.cornell.edu/globallaborinstitute/research/upload/GLI_KeystoneXL_Reportpdf.pdf//[07.05.12]//LL)

The main points in this briefing paper can be summarized as follows: » The industry’s US jobs claims are linked to a $7 billion KXL project budget. However, the budget for KXL that will have a bearing on US jobs figures is dramatically lower—only around $3 to $4 billion. A lower project budget means fewer jobs. » The project will create no more than 2,500-4,650 temporary direct construction jobs for two years, according to TransCanada’s own data supplied to the State Department. » The company’s claim that KXL will create 20,000 direct construction and manufacturing jobs in the U.S is not substantiated. » There is strong evidence to suggest that a large portion of the primary material input for KXL—steel pipe—will not even be produced in the United States. A substantial amount of pipe has already been manufactured in advance of pipeline permit issuance. » The industry’s claim that KXL will create 119,000 total jobs (direct, indirect, and induced) is based on a flawed and poorly documented study commissioned by TransCanada (The Perryman Group study). Perryman wrongly includes over $1 billion in spending and over 10,000 person-years of employment for a section of the Keystone project in Kansas and Oklahoma that is not part of KXL and has already been built. » KXL will not be a major source of US jobs, nor will it play any substantial role at all in putting Americans back to work. Even if the Perryman figures were accurate, and all of the workers for the next phase of the project were hired immediately, the US seasonally adjusted unemployment rate would remain at 9.1%—exactly where it is now. » KXL will divert Tar Sands oil now supplying Midwest refineries, so it can be sold at higher prices to the Gulf Coast and export markets. As a result, consumers in the Midwest could be paying 10 to 20 cents more per gallon for gasoline and diesel fuel. These additional costs (estimated to total $2–4 billion) will suppress other spending and will therefore cost jobs. » Pipeline spills incur costs and therefore kill jobs. Clean-up operations and permanent pipeline spill damage will divert public and private funds away from productive economic activity. In 2010 US pipeline spills and explosions killed 22 people, released over 170,000 barrels of petroleum into the environment, and caused $1 billion dollars worth of damage in the United States. » Rising carbon emissions and other pollutants from the heavy crude transported by Keystone XL will also incur increased health care costs. Emissions also increase both the risk and costs of further climate instability. » By helping to lock in US dependence on fossil fuels, Keystone XL will impede progress toward green and sustainable economic renewal and will have a chilling effect on green investments and green jobs creation. The green economy has already generated 2.7 million jobs in the US and could generate many more.

AT: Deficits ADV

Trade deficit good – signals growth

Markheim 10 (Daniella, Jay Van Andel Senior Analyst in Trade Policy at The Heritage Foundation's Center for International Trade and Economics, specializes in international trade and monetary theory, comparative economic systems, and international financial management, Heritage Foundation, "Growing Trade Deficit Good News for U.S. Economy," http://blog.heritage.org/2010/01/12/growing-trade-deficit-good-news-for-u-s-economy///[07.05.12]//LL)

New U.S. Commerce Department statistics on America’s economy highlight growth in the U.S. trade deficit of $3.2 billion dollars between October and November 2009. That’s good news for Americans. The statistics also show real GDP rising 2.2 percent in the third quarter of 2009, as well as growth in personal income and consumption in November 2009. It is no surprise that rising economic activity and a growing U.S. trade deficit go hand in hand. As the economy and incomes grow, business and consumer demand for all goods, including imports, rises. Thus, a growing trade deficit is generally a sign of a healthy, expanding economy – or in this case, a welcome sign of economic recovery. Rising economic momentum hasn’t just translated into higher imports from abroad, U.S. exports are up $1.2 billion in November from October levels too – a reflection of the recovery being felt around the world. The attention and concern paid by many to the trade deficit reflects a fundamental misunderstanding of the U.S. economy. Some see a deficit as a harbinger of jobs lost. That’s just not true. Since the 1970s, America’s economic performance, including job growth, has been better in years where the trade deficit has grown than in years where the deficit shrank. Fundamentally, America runs a high trade deficit because the supply of domestic savings consistently falls short of the demand for domestic investment. Up until the recent financial crisis, America had a healthy, productive, and growing economy that demanded more investment than was supplied by domestic sources – the government and U.S. households. As long as that shortfall exists and the U.S. wishes to grow, America must import surplus savings from other countries – such as China – by running trade deficits. U.S. policymakers can best provide a long-term solution to the trade deficit not by introducing barriers to trade, but by addressing the tax and spending policies that keep savings too low.

Increased exports bad – protectionism

Markheim 10 (3-4-12, Daniella, Jay Van Andel Senior Analyst in Trade Policy at The Heritage Foundation's Center for International Trade and Economics, specializes in international trade and monetary theory, comparative economic systems, and international financial management, Heritage Foundation, "An Agenda That Fails to Promote Trade," http://www.heritage.org/research/reports/2010/03/an-agenda-that-fails-to-promote-trade//[07.05.12]//LL)

In the opening chapter of the 2010 Trade Policy Agenda and 2009 Annual Report, President Obama unveiled a trade agenda that aims to double U.S. exports within five years and create jobs.[1] Prominent on Obama’s trade to-do list is the implementation of the National Export Initiative (NEI), which will be directed by a new export promotion cabinet. This cabinet will oversee an as-yet-undefined expansion of government programs, special financing, and subsidies for U.S. firms and farmers seeking oversees market opportunities and tougher enforcement of international trade laws. Also on the agenda is a promise to continue negotiations under the Doha Round; a commitment to discussions with various stakeholders about long-pending bilateral trade agreements with Colombia, Panama, and South Korea; and an intention to strengthen trade relations with the EU, Asia, and other key partners. Beyond the promises to study, talk about, or engage in negotiations over the nation’s most pressing trade issues, the President’s agenda offers little hope for advancing the open-market policies that have historically served the U.S. so well but that this Administration has failed to champion. The Administration’s professed need for a thorough trade policy review might have been enough to stave off domestic and global demands for a detailed action plan to implement U.S. international economic priorities last year, but it is no longer acceptable today. The time for catch-up is over. At stake are America’s competitiveness, credibility, and leadership in global markets. Freer trade is the pathway to faster economic growth and rapid job creation—not just export promotion. While export promotion might be a politically acceptable item on the trade agenda, it is not a substitute for comprehensive trade liberalization. In most cases, it is just the opposite, involving a tightening of rules, greater protectionism, and subsidies for non-competitive producers.

Oil / Dependency ADV

No Escalation

No Middle East escalation – self preservation prevents.

Takeyh, Cook, and Maloney, June 28, 2007 (Ray, Susan, and Suzanne, Fellows at the Brookings Institution and Senior Fellow for Foreign Policy at the Saban Center for Middle East Policy, International Herald Tribune, http://www.brookings.edu/opinions/2007/0628iraq_maloney.aspx, I.P. [July 5, 2012])

It is abundantly clear that major outside powers like Saudi Arabia, Iran and Turkey are heavily involved in Iraq. These countries have so much at stake in the future of Iraq that it is natural they would seek to influence political developments in the country. Yet, the Saudis, Iranians, Jordanians, Syrians, and others are very unlikely to go to war either to protect their own sect or ethnic group or to prevent one country from gaining the upper hand in Iraq. The reasons are fairly straightforward. First, Middle Eastern leaders, like politicians everywhere, are primarily interested in one thing: self-preservation. Committing forces to Iraq is an inherently risky proposition, which, if the conflict went badly, could threaten domestic political stability. Moreover, most Arab armies are geared toward regime protection rather than projecting power and thus have little capability for sending troops to Iraq. Second, there is cause for concern about the so-called blowback scenario in which jihadis returning from Iraq destabilize their home countries, plunging the region into conflict.

No Middle East war—fear of neighboring countries prevent.

Seale, April 25, 2008 (Patrick, leading British writer on the Middle East with a degree specializing in the Middle East from Oxford, “Will the Mideast Go Up in Flames this Summer?” http://www.middle-east-online.com/english/?id=25553, I.P. [July 5, 2012])

These are dangerously unsettled times in the Middle East. There are so many bitter scores to settle, so much violent dissension, such implacable hatreds, that it would take only a spark to set the whole region alight. Or so it would seem. Many observers predict a hot and bloody summer. What they have in mind is not only a continuation of the calamitous wars in Iraq and Afghanistan, and the possible extension of the Afghan conflict to the tribal areas of Pakistan, but rather a major war in the Levant. The fear in the region is of another war breaking out between Israel and its neighbours, a war which would engulf Lebanon, Syria and the occupied Palestinian territories -- and even risk an intervention by Iran. In view of America’s close alliance with Israel, American interests would inevitably be affected. In a new warning this week, the US State Department urged Americans to defer traveling to Lebanon and advised those in the country to "consider carefully the risk of remaining." So how imminent is the threat of war? Could the Arabs start a war? That must be judged highly unlikely. Hizbullah in Lebanon and Hamas in Gaza have the ability to provoke Israel with pinpricks, but whatever they might manage to do -- say, in the way of Qassam rockets or hit-and-run cross-border attacks -- the initiative to escalate the conflict into a major war would always lie with Israel. Syria is the only one of Israel’s neighbours with any serious military capability. Might Syria then start a war? This, too, is highly implausible, because of the rumoured divisions within its top army cadres, but also because Israel is so much stronger. Israel has highly-developed military industries of its own and receives massive aid and advanced weaponry from the United States. Indeed, Syria’s current stance would seem to be merely defensive. It failed, or was unable, to respond when the Israeli air force, in a surprise and unprovoked attack -- no doubt intended to intimidate Damascus -- destroyed a military installation in eastern Syria last September. Far from wanting war, Syria has on the contrary sought to defuse tensions by calling repeatedly for peace talks with Israel -- most recently in the message it conveyed last week through former US President Jimmy Carter. Syria’s President Bashar al-Asad told Carter that he believed that about 85 percent of the issues between Syria and Israel had been resolved in negotiations in the 1990s, and that he was eager to conclude a deal as soon as possible. The answer, therefore, to the question of whether war will break out this summer must lie with Israel. In particular, it will depend on whether Israel continues to choose to resolve some of its strategic dilemmas by force. Three of these dilemmas seem particularly pressing. They relate to: • the unprecedented rise of the Islamic Republic of Iran as a major regional power; • the challenge posed by Hizballah and Hamas, two militant non-state actors on Israel’s borders; and, • the possible changes which a new American president might make next year to America’s Middle East policy. Iran has emerged as a regional rival, not only of Israel but also of the United States. Its influence is huge in Iraq, increasing in Syria and Lebanon, and is now reaching into the Palestinian Territories and the Gulf States. It poses a threat to the regional hegemony the United States has enjoyed since the collapse of the Soviet Union. Foolishly, the United States did not foresee that by attacking and destroying Iraq -- with Israel’s eager encouragement -- it would create the conditions for Iran’s emergence. The United States and Israel must now live with the consequences of their strategic blunder. Contrary to Israeli fears and propaganda, Iran’s nuclear programme poses no known "existential threat" to the Jewish state. But it could knock Israel off its perch as the Middle East’s most powerful nuclear and military state, thereby limiting its freedom of action against such local adversaries as Syria, Hizbullah and Hamas. Will Israel -- with or without US help -- attack Iran’s nuclear facilities? In spite of the bellicose rhetoric of some Israeli leaders, this seems highly unlikely. The predictable consequences for the region of such an act, for Israel itself and for American interests, are too horrendous to contemplate. The United States and Israel will probably have to make do with containment and deterrence, while continuing their efforts to undermine Iran’s economy and to mobilize Arab states against it -- as US Secretary of State Condoleezza Rice was attempting to do in Kuwait this week. Israel would, of course, like to destroy both Hizbullah and Hamas. But this is no easy task, since the two movements are deeply implanted in the local populations and wage a form of asymmetric guerrilla warfare, with which a conventional and increasingly disenchanted army like Israel’s is ill-equipped to deal. Israel tried -- and failed -- to smash Hizbullah in its costly Lebanon war of 2006. Only a very rash Israeli leader would try again in the present circumstances. Israel will no doubt have to live with a powerful Hizbullah, backed by Iran and Syria, dictating the political order in Lebanon. Meanwhile, Israel continues to attempt to bring down the Hamas government by besieging, starving, and bombarding the 1.5 million inhabitants of Gaza. But this brutal policy shows no sign of success. For Hamas to accept the siege would eventually mean a slow death. It is, therefore, challenging the blockade by attacking Israeli crossing points when it can, much as it did last January when it brought down the fence on the Egyptian border, leading to a mass break-out of some 700,000 hungry Palestinians. A further major worry on the Israeli horizon is that the next American president might not be as aggressively pro-Israeli as George W. Bush. The possibility of an American withdrawal from Iraq and of a US "grand bargain" with Iran must also be a source of great anxiety. It is not surprising that US-Israeli lobbyists, including the big guns of the Washington Institute, strongly support John McCain, smear Barack Obama and have mounted a venomous campaign against Jimmy Carter. Has Israel got an alternative? Yes, the alternative is a comprehensive peace. But Israel is unwilling -- indeed unable -- to pay the price of such a peace, which would require a withdrawal to the 1967 borders. No Israeli leader has the political vision or the moral authority to contemplate such a move. Too many facts have been created on the ground on Palestinian territory. The messianic Israeli dream of controlling the whole of historic Palestine remains very much alive. Nor can Israel consider accepting the terms proposed by Hamas, which are an exchange of prisoners, a lifting of the Gaza siege and a mutual ten-year truce. To accept such terms would mean accepting a form of mutual deterrence, something Israel has traditionally rejected. The truth would seem to be that Israel can neither wage a full-scale war against its opponents nor make peace with them. It is therefore condemned to continue to rely on its present policies of besieging Gaza, intimidating its opponents by long-distance air and commando strikes, and decapitating hostile resistance movements by assassination. Such skirmishes seem bound to continue, keeping the region in a high state of tension and taking a heavy toll on civilians, especially Palestinians. Barring a miscalculation by one side or another, this low-level warfare would, however, have the merit of sparing the region a major conflagration.

No Middle East escalation—historical evidence proves.

Drum, 9/9/07 (Kevin, Bachelor's degree in Journalism, Prominent writer for The Washington Monthly, “The Chaos Hawks”, I.P., [July 5, 2012])

Needless to say, this is nonsense. Israel has fought war after war in the Middle East. Result: no regional conflagration. Iran and Iraq fought one of the bloodiest wars of the second half the 20th century. Result: no regional conflagration. The Soviets fought in Afghanistan and then withdrew. No regional conflagration. The U.S. fought the Gulf War and then left. No regional conflagration. Algeria fought an internal civil war for a decade. No regional conflagration. So where does this bogeyman come from? Hard to say. Probably a deep-seated unwillingness to confront the fact that the United States can't really influence a course of events we originally set in motion. But Iraq is already fighting a civil war, and that civil war will continue whether we stay or go. If we go it will likely become more intense, but also shorter lived. The eventual result, however, will almost certainly be the same: a de facto independent Kurdistan in the north and a Shiite theocracy in the south. The rest of the Middle East will, as usual, watch events unfold without doing much of anything about them, and will accept the inevitable results. The U.S., for its part, will remain in the north to protect Kurdistan, in the east in Afghanistan, in the west in the Mediterranean, and in the south in its bases in the Gulf. We'll hardly be absent from the region.

AT: Oil Shocks

No impact to oil shocks

National Post 7 (10-17-07, staff writer @ National Post, “No need to fear oil shocks,”

http://www.canada.com/nationalpost/financialpost/comment/story.html?id=6f79f84b-df8c-47ae-a0fa-6ccb85c7eb63//[07.06.12]//RAZ)

It is time to get over our inordinate fear of oil shocks. Soaring prices aren't pretty, but they are scarcely the existential threat to our economy posited by many. Nevertheless, if we want to do something about those shocks, then we should keep government far, far way from the wage and price controls that are the true source of the macroeconomic mischief wrongly blamed on crude oil markets.

No risk of oil shocks – economic stability

Blanchard and Gali 7 (8-18-07, Olivier J. Blanchard and Jordi Gali, Ph.D in economics @ MIT, “The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s?,” http://www.crei.cat/people/gali/pdf_files/bgoil07wp.pdf//[07.06.12]//RAZ)

The events of the past decade, however, seem to call into question the relevance of oil price changes as a significant source of economic punctuations. The reason: Since the late 1990s, the global economies has experienced two oil shocks of sign and magnitude comparable to those of the 1970s but, in contrast with the latter episodes, GDP growth and inflation have remained relatively stable in much of the industrialized world.

No risk of econ collapse with oil shocks

The Economist 12 (3-10-12, staff writer @ The Economist, “Another oil shock?,” http://www.economist.com/node/21549941//[07.06.12]//RAZ)

TWICE in the past four years surges in the price of oil have walloped the world economy. In 2008 the cost of a barrel of Brent crude soared to $147, enfeebling global growth even before the financial crisis killed it. A year ago supply disruptions from Libya sent the price to $127, enough to stall America’s nascent recovery. With oil now back above $120 a barrel, and tensions with Iran running high, the worries are back. Will an oil shock, once again, upend the global economy? For now, the answer is no. The cost of crude is back where it caused trouble in the past. But global growth is affected less by the level of the oil price than the rate of its rise. And so far that rise has been more modest. A barrel of crude costs some 15% more than it did at the beginning of the year. In the first three months of 2011, the oil price surged by almost 35%. Nor is this increase entirely a result of actual or feared problems with supply. Output disruptions have indeed pushed up prices. Rich-country oil stocks are at a five-year low and Saudi Arabia, the only OPEC producer with significant spare capacity, is already pumping at a near-record rate (see article). But part of the recent rise is demand-related. The world economy looks less fragile than it did at the beginning of the year, as the odds of an imminent euro catastrophe have diminished and America’s recovery looks to be on stronger ground. The optimism about global growth that has boosted share prices has also buoyed the oil price.

Hormuz Stuff

The US will quell any threat against the Strait of Hormuz

Washington Post 11 (12-28-11, Thomas Erdbrink, “Iran unlikely to block oil shipments through Strait of Hormuz, analysts say,” http://www.washingtonpost.com/world/middle_east/despite-threats-iran-unlikely-to-block-oil-shipments-through-strait-of-hormuz/2011/12/28/gIQAVSOSMP_story.html?tid=pm_//[07.06.12]//RAZ)

In Bahrain, home of the U.S. Navy’s 5th Fleet, a spokeswoman for the fleet said no country would be allowed to block the strategically crucial strait. The Navy is “ready to counter malevolent actions,” Lt. Rebecca Rebarich added. “Anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations,” Rebarich said in a statement. “Any disruption will not be tolerated.” A State Department spokesman played down the latest warnings as “more rhetoric from the Iranians,” suggesting that the Obama administration did not perceive a serious threat to shipping in the Strait of Hormuz. “We’ve seen these kinds of comments before,” the spokesman, Mark Toner, said Wednesday.

Disruption of the Strait of Hormuz causes international backlash

Starr and Gast 11 (12-29-11, Barbara Starr and Phil Gast, “U.S. Navy won't tolerate 'disruption' through Strait of Hormuz”, http://edition.cnn.com/2011/12/28/world/meast/iran-us-hormuz/?hpt=wo_bn11//[07.06.12]//RAZ)

The U.S. Navy said Iran's threat to block the strategically and economically important Strait of Hormuz is unacceptable. "The free flow of goods and services through the Strait of Hormuz is vital to regional and global prosperity," Navy 5th Fleet in Bahrain spokeswoman Cmdr. Amy Derrick Frost told reporters on Wednesday. "Anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations; any disruption will not be tolerated." The 34-mile-wide shipping channel leads in and out of the Persian Gulf between Iran and Oman. It is strategically important because tankers carrying oil travel through it.