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October 01, 2004 - Image 4

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The Michigan Daily, 2004-10-01

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4 - The Michigan Daily - Friday, October 1, 2004

OPINION

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420 MAYNARD STREET
ANN ARBOR, MI 48109
tothedaily@michigandaily.comr

EDITED AND MANAGED BY
STUDENTS AT THE
UNIVERSITY OF MICHIGAN
SINCE 1890

JORDAN SCHRADER
Editor in Chief
JASON Z. PESICK
Editorial Page Editor

Unless otherwise noted, unsigned editorials reflect the opinion of the majority of
the Daily's editorial board. All other pieces do not
necessarily reflect the opinion of The Michigan Daily.

NOTABLE
QUOTABLE
' Well, actually,
you forgot Poland."
- President Bush, during last night's
presidential debate, in response to Kerry's
assertion that the United States went to war
with only two major allies: Australia and
Great Britain.

SAM BUTLER T S. s;x
-

Hazardous driving
SAM SINGER SAM'S CLUB

here's good news
and bad news.
The good news,
which really isn't news at
all, is the global economy.
Fueled by unprecedent-
ed growth in South and
East Asia and skillfully
maneuvered by collab-
orative macroeconomic
policy, the international
market system has been hugging corners like a
new sports car. Having outperformed even the
most optimistic of forecasts, it seems to have
finished its ascent from the red ink and shak-
en off what was left of its post-Sept. 11 slug-
gishness. The bad news, according to a recent
Centre for Global Energy Studies analysis, is it
may be driving without an airbag.
In its precisely timed press release, the Lon-
don-based energy consultancy firm argues
that the Organization of Petroleum Export-
ing Countries, a multinational cartel that for
decades has served the international economy
as a paramedic squad during energy supply
crises, is losing its market clout. Arriving just
days after the trading community had flouted
an OPEC effort to relax supply markets with
higher export ceilings - a snubbing that
amounted to public emasculation for the petro
alliance - the market-sobering report landed
on trading floors with instant validation. Pre-
suming the study's chief assumption holds
water, that OPEC, arguably the world's most
powerful multinational institution, has lost
its price-swinging savvy, the global economy
may be approaching the coldest winter it's
seen in years.
To say that the growth trajectories of inter-
national markets rest beneath the spigot of
OPEC's vast oil reserves would only be tell-

ing half the story. For the past two decades,
the cartel has used its immense stockpile
capacity to shelter world energy markets
from what would have otherwise been some
of history's most crippling price shocks. In
the early 1980s, when production compli-
cations stemming from the Iran-Iraq war
shrank OPEC's market share by 7 million
barrels per day, Saudi Arabia (OPEC's king-
pin and most well-endowed affiliate) opened
the flood gates - a move that almost imme-
diately stabilized prices and soothed infla-
tion pains.
Less than a decade later, in an effort to
hush war-time energy anxieties, OPEC (with
obvious dissension from Iraq) agreed to hoist
export quotas throughout the duration of
Operation Desert Storm to fill the gap left
by a projected production dearth. And more
recently, when Venezuela's energy sector
was debilitated by wide-scale labor unrest,
instead of basking in the higher energy pre-
miums that accompanied the supply disrup-
tion, cartel members voted to turn on the
faucet once more. Though these policy deci-
sions were far from gestures of benevolence
(the organization has long-term financial
incentives in keeping petroleum affordable),
they were nonetheless reminiscent of a pro-
tracted period of time when the cartel had
the reserve flexibility to blunt the impact of
global price tremors.
So does OPEC still have the goods to glut
the markets? The CGES study indicates that,
despite numerous attempts over the past year,
the cartel has failed to lay the price of crude to
rest in between its target margins of $22 and
$28 a barrel. And if you're half as shocked as
I was to learn that OPEC, once considered the
global economy's security blanket, could let
current prices (now teetering around the $50

mark) reach twice their sustainable target lev-
els, then consider this: With the U.S. economy
surging, and double-digit growth in China
and India a monthly phenomenon, the CGES
anticipates that added global demand will
boost consumption levels by two million bar-
rels per day over the next fiscal year. Now here
comes the scary part: The firm estimates that
in 2005, tightened energy markets will plunge
OPEC's spare exporting capacity to a thin 1.5
million barrels per day - a figure that falls
markedly short of accommodating projected
demand intensity. You do the math, folks. If
the numbers are right, this is no longer about
wiggle room or reserve space - it's about an
actual supply deficit.
So assuming OPEC's price-swinging hands
are sufficiently tied, is the international econ-
omy capable of self-stabilizing while still trav-
eling at its current speed? If there is in fact
no cushion from the brunt of a major supply
disruption, should monetary officials continue
forward with their feet off the brakes? Let's
consider the circumstances of our key energy
suppliers: There's Saudi Arabia, embroiled in
an internal holy war, where policy analysts
have given the embattled monarchy 18 months
before it crumbles from within, or Nigeria,
where separatist rebels are threatening to siege
the country's multinational oil installations if
political autonomy demands aren't met. What
about Russia, a nation whose largest oil pro-
ducer has been effectively dismembered by a
central government tax audit? And we can't
forget Iraq, a country where pipeline sabotage
attacks have grown as common as Al-Jazeera
broadcasts. Personally, I'd like the airbag
back.

Singer can be reached at
singers@umich.edu.

*1

You'd better earn my vote!
JASMINE CLAIR THE MEANING OF PROGRESS
s I sat humor- blacks' rights that were long owed to us, it was most prized anti-affirmative action spokes-
lessly watching fearless individuals such as Fannie Lou Hamer person across my chest as a silent protest to
Michael Moore, who were "sick and tired of being sick and tired." Moore and all of his lies.
the college dropout, boast Hamer was in fact a Democrat, but what Sharp- I started to think about the message that I
that most Americans were ton's speech completely ignored was the fact that was sending to others by wearing that Bush
"C" students and below she was a member of the dissident Democratic shirt. Did it represent an anti-affirmative
and that's why they side group that she had formed after being denied action stance that the YAFers so proudly take
with Bush, I started to real- access to the segregationist Democratic party in on? Was it anti-black to wear this shirt, in
ize just how difficult liberal her town, the same party that adamantly fought to light of the likelihood of over 90 percent of
spin is going to make this keep Hamer from speaking at the 1964 Democrat- the vote probably being stacked up against
year's election for me. So ic Convention because of the color of her skin. I Bush once more? Or even worse, was it just
you don't like George Bush or his policies? Fine, I found it ironic that Sharpton credited the segrega- anti-Me?
don't like some of them either, but if the Democrats tionists whom had discriminated against Hamer, Well, all I know is that this year Bush's
want my vote, they'd better earn it because I'm not with the gains that so many black non-Democrats administration is more than 200 percent
buying that "anybody but Bush" rhetoric that I was had lost their lives fighting for. In a silent protest, more diverse than this year's freshman class.
drowned in at Moore's Dem. rally. I threw on my Bush tee. Ironic, seeing as how this university is the
Many would agree that the president has made Once again, sporting my white Bush-Cheney supposed bastion of diversity. Further, I
some questionable decisions concerning this T-shirt, I crashed Michael Moore's liberal propa- remember watching "Fahrenheit 9/11" and
alleged "war on terror," healthcare, the economy, ganda festival in Hill Auditorium the other night. seeing each member of the Congressional
education, the environment, outsourcing ... I'm "Fahrenheit 9/11" was absolutely hysterical, with Black Caucus have his proposal to have an
running out of paper here. Bush must be held all the liberal juice that a girl could ever ask for. It investigative hearing concerning the Florida
accountable for his failures while in office, but I undeniably reassured all that Bush was a racist bas- elections denied because no member could
have to keep in mind that once President Bush is tard with an insatiable thirst for power, money, oil garner a single signature from any one of the
out of office, there will still be four more years of and revenge - nothing shocking there. However, 100 senators. Hopefully this part of Moore's
administration that will require strong and effec- the surprise came once I realized that this movie film was propaganda as well, because I don't
tive leadership. And for that reason, I have my is blatant propaganda. Masquerading liberal spin want to believe that both John Kerry and John
Bush-Cheney T-shirt. I wear it whenever some as fact, "Fahrenheit 9/11" was a Kerry ad at best, Edwards, who will undeniably get the black
liberal says something that upsets me. lacking the integrity and unbiased perspective of a voting block, sat there and did nothing while
Prior to last night, I wore the shirt to protest a true documentary. hundreds of black voices went unheard.
particular speech that deeply offended me at the Feeling betrayed, but hoping to see him give I know many do not appreciate me wearing
Democratic National Convention. Given by Al some sort of explanation for his deceitfulness, I my Bush shirt. But this is my way of saying to
Sharpton in a response to Bush's accusation that reluctantly threw on my Bush tee and headed over my people that we have become complacent
the black vote was being taken for granted by the to Hill. Upon arriving, I gave dap to the members within the Democratic Party. Just as blacks
Democratic Party, it effectually sold out progres- of Young Americans for Freedom outside protest- will hold the Republicans accountable at elec-
sive black grassroots movements for a party and ing the event with their "No Moore Lies" signs. tion time, this same accountability needs to
political influence. By giving almost complete Yes, it did feel awkward agreeing with the be applied toward liberals. It's just too bad
credit for the black voting and civil rights to the same group that I had been flipping the bird to that this election really doesn't hold any other
Democratic Party, Sharpton completely under- over the past years for their arrogant and ill- viable options ... except for that one guy.
mined the hard work and dedication of all of the informed stances on affirmative action. Yet,
grassroots activists that fought to have their voices upset that I actually believed this "documen- Clair can be reached at
heard. It was not the Democratic Party who won tary" to be nonfictional, I proudly wore their jclair@umich.edu.
LETTER TO THE EDITOR

Proposal 2 will not pass,
..w *W2,.

country - are uncomfortable with the idea of
marri,e for aa v nd 1pehin lC4nHwever nolls

should Proposal 2 pass. As people are learning
how far-reachinQ this amendment is the sunnort i

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