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Economist, environmentalist expect 'buy local' economies

Check out the non-fiction shelves at your nearest bookstore and you may notice something odd - financial experts and environmentalists in the same books and on the same page when it comes to our future. Their concensus: "buy local" will soon have its day.

Let's start with this year's winner of the $20,000 National Business Book Award: Jeff Rubin's "Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization."

The cover of Carbon Shift: How Peak Oil and the Climate Crisis will Change Canada (and Our Lives), edited by Thomas Homer-Dixon. Submitted photo

Check out the non-fiction shelves at your nearest bookstore and you may notice something odd - financial experts and environmentalists in the same books and on the same page when it comes to our future. Their concensus: "buy local" will soon have its day.

Let's start with this year's winner of the $20,000 National Business Book Award: Jeff Rubin's "Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization."

Rubin, a former chief economist of CIBC World Markets who gave a luncheon speech at the Newfoundland and Labrador Oil Industry Association (NOIA) conference June 16, has said people should expect triple-digit oil prices by the end of the year, even past the peak of $147-a-barrel oil within the next two years. After that, it is up, up, until another recession.

Essentially, as Rubin reiterated to The Telegram, oil is becoming harder to find and, more importantly, increasingly expensive (and risky) to extract and process. That will drive up prices.

If cheap energy isn't available, he said, "we're going to restructure our economy as a result of individual decisions made by consumers. It's just going to be too expensive to live 60 miles (96.56 kilometres) away from where you work. It's going to be too expensive to import lamb from New Zealand. It's going to be too expensive to rely on China for food and steel. So it's the changes that we make in our everyday lives that ultimately, if you aggregate it or add it up, is going to totally re-shape our economy."

Rubin uses the first OPEC oil shock to support a prediction of less international traffic, less international shipping, less international trade. Forget globalization.

"Because in some sense it was a period not unlike what the world of oil prices are playing today. And during that period of time, between '73 and '79, the share of trans-oceanic trade, that is trade that had to cross an ocean to the United States, fell by about six percentage points and the share of trade with the United States and the Caribbean and Latin America and Canada rose six percentage points. So there was a pretty clear example of trade diversion and that's exactly what I anticipate will happen in the future.

"It's not that countries aren't going to trade, but countries are going to be a lot more inclined to trade with their neighbours simply because transport (fuel) costs are going to become huge relative to anything they have been in the past, maybe with the exception of the OPEC oil shock."

Rubin also uses evidence from the days before the start of the most recent global economic recession to support predictions of more localized economies.

"In August 2008, when oil prices peaked, Americans drove 15 billion miles fewer than the previous August, the largest drop since the government started collecting data in 1942," Rubin stated in his book.

"I'm saying that what's going to happen is the environmental goals and the economic goals are going to converge instead of always being opposed to each other. Because we're going to find that in a world of triple-digit oil prices, the only economically sustainable model is to go to a local economy," he said.

That means expect a big boost for the "buy local" movement.

"There's a lot of people who would like to buy local and eat local for a variety of reasons, one being to reduce the carbon trail and in support of the environment. Another would be to reconnect with local tastes and local culture and local economies. But what I'm arguing is whether or not we want to go local or not, whether we're sort of philosophically inclined that way or philosophically committed to a global vision, it's not really going to matter," Rubin said.

In summary, he said, triple-digit oil prices will be an "agent of change."

While Rubin focuses on "the bigger world" of free-flowing sweet crude versus "the smaller world" of today's triple-digit oil prices, environmentalist Bill McKibben has a similar view of "then" and "now" worlds. Author of environmental titles such as "The End of Nature," McKibben's latest release is "Eaarth: Making Life on a Tough New Planet."

McKibben's focus is on the environmental reformation he states has already begun and is now unavoidable, due to emissions from the cheap oil economy. McKibben explains in the book that this reformation - with everything from severe brush fires to serious drought in now populated areas - will result in a planet so different from what we have known in the past that it should be given a new name. He has selected "Eaarth."

Yet, like Rubin, McKibben states the world of the future will not be like the world of our past when it comes to energy.

"The pattern was clear: the more you produced, the more energy you needed. And conversely, the more energy you used, the more things you produced," McKibben states. "Because there was lots of it on that old planet, energy was cheap."

And so, also like Rubin, McKibben now sees local becoming preferable to global, as a result of rising energy costs.

"Shanghai is 7,371 miles from New York. It's true that Chinese workers cost you a dollar an hour, but at some point the math shifts," he states.

McKibben also sees local coming in as a means of stability, in a world where environmental disasters will hit major economic cogs.

Together, Rubin and McKibben have several ideas on what might develop from what they see as the resulting economic reality.

The image they build includes price increases in everything from coffee to lumber, but also a world with new and larger farmers markets, rejuvenated city cores, redeveloped commuter villages with public transit connections to those city centres, a resurgence of sewing, gardening, cooking, even beekeeping and the construction of "farmscrapers" (multistory greenhouses) using recycled water to produce local produce year-round.

"I think from changing suburbs into farmland and from putting prices on carbon emissions, that peak oil is going to lead us to some surprisingly green places," Rubin said.

"I think that a lot of long-lost manufacturing jobs are probably heading back and you'll probably see a reversal of the last 30 to 40 years, which has just been the paving over of agricultural land for suburban sprawl. I think that process is going to reverse itself with the oil prices that I see in our future."

A difference between the two is that Rubin and his like-minded peers expect the world "will change" to avoid strangulation of economic growth, while McKibben and others of like mind believe the world "must change," in order to survive the impact of environmental devastation.

Either way, the consensus is change: expensive energy and local economy.

"I don't think this has to be apocalyptic. It's only apocalyptic if you know we insist on commuting 60 miles to work and driving SUVs and wanting to fly to Las Vegas for a round of golf on the weekend and wanting to eat. ... All I'm saying is, I mean, sure, it'll be apocalyptic if people don't change their behaviour and they act as they have when oil was cheap and abundant. But I'm an economist and I believe in the power of prices," Rubin said. "I believe that people will change."

afitzpatrick@thetelegram.com

WWW

Weblinks

www.jeffrubinssmallerworld.com

www.billmckibben.com

Organizations: OPEC, CIBC World Markets, Newfoundland and Labrador Oil Industry Association NOIA

Geographic location: United States, New Zealand, China Caribbean Latin America Canada Shanghai New York Las Vegas

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Recent comments

  • alex
    July 20, 2010 - 13:02

    the usa has enought oil in the ground to last 250 years enought natural gas to last well over 100 years do a little research

  • Sue
    July 20, 2010 - 13:02

    I've read Mr. Rubin's book and it is awesome. It disturbs me that some cry propaganda and don't want to deal with the reality that our world is changing because of human error. Climate change is a reality. Oil is becoming much harder to extract from Mother Earth. Just ask the animals in the Gulf of Mexico. Your reasoning is akin to those who want to defend the right to drive their gas guzzlers and indulge in massive consumer consumption. And as for the Alberta dirty oil? Just ask how miserably the Lubicon Cree are suffering - and that was their land to begin with. No one asked them for the right to use their land. Now it's an environmental mess and yet another reason why Alberta stinks.

  • anne
    July 20, 2010 - 13:02

    first off, alex from nf, you are right. there is no such thing as 'peak oil' ( i.e. google abiotic oil ) This is just one of the ruses used by the powers that be to convince us of impending needs to follow and depend on the elite controllers of the world
    Rubis theory on the end of globalization is ironically the same theory that will actually create globalization. for example in the book ;war and globalization' we are informed of how the stage is being set for global control by the US through military means , wars justified by 'ending terrorism' and 'protecting our freedoms', when the actual goal is to render other nations helpless economically and politically so that they can be 'rescued' by whom else? good ole USA, who already has major presence in the middle east, etc. to squeeze out and/or take over nations such as china, russia, india etc., eventually leading to an Anglo-American control over our planet.
    BP Amoco (a british/american conglomerate) is already the largest existing oil company. One major goal is to create middle eastern pipelines that pacify weaker nations to fall under US control, and to bypass stronger nations, i.e. russia, to pressure them into failure.
    These are facts, based on facts, that are being disguised by such things as the war on terrorism. USA actually contributes to terrorism and civil unrest (i.e. via pakistans ISI, supported by CIA for decades)
    Rubins writings are actually part of the propoganda that supports the US covert goals by tricking the world into believing that they need to go along with them, when in reality the US agenda is global economic and political control, ergo one world govt.
    Rubins writings are definitely interesting, but the info is too shallow. There is so much deeper info out there that exposes the real stories.