Overview

So, with it being NFL time and all that, we here at Extemp HOTtopics decided to revisit the topic of oil.  Now I’m sure you are all saying: “We’ve already talked about OPEC and how monetary policy affects oil prices.”  While that is true, this briefing is going to be a little different.  Specifically, since it is so late in the season, this briefing is going to focus a little less on facts and a little more on strategy.  Thus, while we will cover some new issues regarding oil (mainly the windfall profits tax) this briefing is more about explaining how oil as an issue can be the save all “I need another point” saving grace of extempers.  Therefore, this brief will go over some basic oil things that everyone should know, then examine how you can use oil to add a new level of analysis to all your rounds (including domestic social), and finial pose some non oil questions and give you an idea of how oil can be used to make your analysis more slick… Get it? Get it?

Key Terms and Figures

OPEC:  Organization of Petroleum Exporting Countries.  The largest cartel of oil producing nations has a lot of say on oil prices. For more information see earlier briefs.

Oil Prices:  Now I know this number will be obsolete about ten minutes after I write this on the page, but currently oil prices are 134.45 a barrel.  However, that number is less important than the movement of oil prices relative to what they have been.  After all it was not that long ago that the BBC was OUTRAGED that oil hit a whopping $30 a barrel.  Basically you should keep abreast of where oil prices have moved and how those little movements increases or lessen the fears of politicians and consumers.

Windfall Profits Tax: This Tuesday, Republicans used filibuster threats to, at least, temporarily kill a bill that would place a windfall profits tax on oil companies. The basic provisions of the bill were three fold: 1) a 25% tax on oil companies that don’t invest in alternative fuels (arguing that the tax would either decrees prices to lower profits or increase alternatives), 2) the removal of $17 billion dollars of subsidies to an industry that saw record profits last year (Exxon made $41 billion last year) and 3) allow lawsuits to be filed against OPEC.  Republicans filibustered the bill arguing that it would decrease domestic production making us more dependent on foreign oil, and that we need to focus on domestic oil sources rather than industrial regulation.

Consumption Trends: A larger part of the huge drive in oil prices is the increased consumption of oil by the developing world.  Basically, with China and India needing a lot more oil, the demand is going up – without a discernable change in supply; therefore, prices go up.  This supply crunch has made finding oil a new priority.  In the US, that has meant renewed calls for drilling offshore and in Alaska National Wildlife Refuge. Globally, this had meant a renewed interest in Africa and a neo colonial push by the industrialized world to exploit yet another resource on the continent.  Generally this points to the balance of exploration for new oil versus alternative sources, and exploring the cost of new development.

Coercion: Finally, in this tight oil market, holding oil allows for coercive policies.  While this generally cannot be applied to African oil nations (foreign oil companies tend to dominate there and little of the profit goes to African nations), countries such as Russia and Venezuela have used their oil and gas reserves to push around their neighbors.  For example: Russia routinely threatens to cut off heating oil to Ukraine, which would cause untold harms during the frigid winters.   All told the ability of those countries that hold oil gives them extreme political leeway – after all, no one really questions Saudi Arabia’s human rights issues because they hold so much oil.

Major Issues
How to Use Oil in Different-Themed Rounds

Oil in Econ:  This one is fairly straight forward.  The rising oil prices affect most goods because it increases transportation, production and packaging costs of most goods – raising product prices (inflation).  But beyond that, the money that people are spending on oil has to come from somewhere; therefore, it can always be argued that any other sector of the economy is going to lose out to the need to fuel our cars or will be placed in an awkward balance with it.   The basic rundown: companies have to spend more money on oil, consumers have to spend more on oil and all other products, and all of this changes trade and buying patterns and specifically causing inflation.  So in the short term especially any economic speech can argue that rising oil prices are effecting whatever economic trend you are talking about

Oil in Politics: First and foremost, the windfall profits issue ensures that all senators have recently voted on an oil issue.  When this is combined with the ability of spin it means that oil affects all of their political decisions.  Not only does a popular decision on oil help candidates (or parties) win votes in an election – and unpopular decisions will hurt them – but it will also give the politician increased political capital to use on other measures.  A popular politician has more clout and therefore can pass other legislation that they wish. An unpopular candidate has to support publicly popular programs to restore their image. And Republicans may trade support for the profits tax to get other elements of their agenda passed.  In sum, oil – and its omnipresence in the America psyche – means that politicians will be rise or fall with their oil votes, and this popularity will directly affect their ability to do all other things.  So if a politician is unpopular for filibustering the windfall profits tax, you can argue not only that they are less electable, so they will be less able to push their controversial spending bill and also may have to support a popular environmental regulation they previously opposed.

Oil in Social: It gets a little bit tricky here. Generally, these questions have an underlying political or economic undercurrent – if you can get to this the oil connection is easy. If that isn’t available the changes in behavior forced by oil may link to the way that people act in other social situations.  Basically, oil prices affect everyday behavior so if you are really stuck on a topic you should be able to think of a way that oil changes link in.

Oil in Foreign Policy: This is another easy one.   If the other nation has oil then oil will inevitably be part of the negations.  If they do not have oil then the rising cost of oil may offset traditional trade or create competition between otherwise friendly nations.

Sample Questions (and a brief explanation of how oil could be used to further them)

Domestic Econ
Are interest rates the way to fix the staling economy?
1. Oil costs would overwhelm advantage gained by changing rates.
2. Oil is driving inflations so rate changes are a must

Will housing continue to decline?
1. Production costs are up so new houses will be more expensive, families have more oil costs therefore cannot afford new houses.

Domestic Politics
Can Obama win in November?
1. How his oil policy plays to voters.
2. How oil prices change perceptions of his economic platform.
3. How oil prices make Americans pay more attention to his foreign policy experience.

Was the farm bill the right choice?
1. Oil costs make things more expensive therefore the bill didn’t do enough to help either farmers or consumers.

Domestic Social
What reforms need to be made to Medicare?
1. Oil prices hurt consumers therefore they need more help with medical costs.

Will the Celtics-Lakers rivalry help the NBA?
1. High oil costs make us less likely to travel and spend on luxuries so the NBA needs more incentive.

Foreign Policy
Anything with China
1. Oil rivalry

Should the US increase its ties with Australia?
1.  Will this offset oil loses.
2.  Can they work to gain advantage in markets. Etc…