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Why Your World Is about to Get a Whole Lot Smaller : Oil and the End of Globalization

by: Rubin, Jeff

Why Your World Is about to Get a Whole Lot Smaller : Oil and the End of Globalization

by: Rubin, Jeff

ISBN 13:
9781400068500
ISBN 10:
1400068509
Format: Hardcover
Copyright: 05/19/2009
Publisher: Random House

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Why Your World Is about to Get a Whole Lot Smaller : Oil and the End of Globalization > ISBN13: 9781400068500

Summary

In today's globalized market, cheap energy has been taken for granted--but that world is quickly coming to an end. Rubin delivers a groundbreaking assessment of the future of the global economy in a world where cheap energy has become a thing of the past.

Author Biography

Jeff Rubin was the Chief Economist at CIBC World Markets for almost twenty years. He was one of the first economists to accurately predict soaring oil prices back in 2000 and is now one of the world’s most sought-after energy experts. He lives in Toronto.

Introduction: Redefining Recovery	p. 1

Supply Shift	p. 27
Demand Shift	p. 57
Head Fakes	p. 84

Heading for the Exit Lane	p. 111
Coming Home	p. 141
The Other Problem with Fossil Fuels	p. 154
Just How Big is Cleveland?	p. 180
Going Local	p. 209
Conclusion: Chasing the Inconnu	p. 254
Acknowledgments	p. 266
Source Notes	p. 267
Index	p. 279
Table of Contents provided by Ingram. All Rights Reserved.

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Excerpts

REDEFINING RECOVERY
BEING AN ECONOMIST CAN RUIN YOUR APPETITE

It is probably not the only job that has that effect. I’ve never worked as a taxidermist, but I can see that it might turn me off fish. My job, though, gets me worried about fish in a whole different way.

I like salmon–who doesn’t? Salmon consumption has risen about 23 percent each year for the last decade or so. There are a number of good reasons to eat more fish: we all want food high in omega-3s, we want to eat less saturated fat, we want healthy protein for our low- carb diets. But here’s the key reason for the amount of salmon on your dinner table: cheap oil has been subsidizing the cost of fish. Just like Wal- Mart and Tesco and big- box retailers around the world have been able to cut prices on almost everything by taking advantage of cheap shipping and cheap Asian labor, salmon went from being delicious local seafood to being another global commodity. Cheap oil gives us access to a pretty big world.

In the global economy, no one thinks about distance in miles– they think in dollars. If oil is cheap, it really doesn’t matter how far a factory is from a showroom or a farmer’s field from a supermarket. It’s the cost of other things, like labor or tax, that determines what happens where. An Atlantic salmon caught off the coast of Norway is destined to be moved around the world just like a ball bearing or a microprocessor.

First the fish is taken to port in Norway, where it is frozen and transferred to another vessel, which will take it to a larger port, probably Hamburg or Rotterdam, where it will be transferred toanothership and schlepped to China– most likely Qingdao, on the Shandong Peninsula, China’s fish- processing capital. There the whole salmon will be thawed and processed on a sprawling, neonlit factory floor where squads of young women with nimble fingers skin, debone and fillet the fish. It will then be refrozen, packaged, stowed on another container ship and sent to a supermarket in Europe or North America. Two months after it was caught, the salmon will be thawed, displayed on crushed ice under gleaming halogen lamps and sold as “fresh.”

Still, if I’m sitting in a nice restaurant and I’m enjoying a good conversation over a glass of wine, that is not what I am thinking about. And anyway, the shipping news doesn’t normally appear next to a menu item. But if that conversation turns to energy and oil prices (and I confess it does fairly regularly), then when I glance at that fish I know I am looking at the past. In the near future there is going to be less salmon on our tables– and probably fewer restaurants to eat in, too. Because the cheap- oil subsidy that makes Norwegian salmon affordable is about to disappear.

And as it does, your world is about to get smaller–much, much smaller.

To get that salmon from the ocean to your plate takes a ridiculous amount of energy. Think of the fuel for the fishing boats, container ships and just- in- time delivery trucks; the energy to freeze and process the fish, to sell it in a supermarket (retail stores use almost as much energy per square foot as factories do, just on heating, cooling and lighting). We invest a lot more energy to get that salmon than we get out of it when we eat it, which in itself makes the fish a bad energy deal. Economics calls it a “diminishing rate of return.”

But it gets worse. A lot worse. All of that energy costs money, and energy gets more expensive just about every day. Not quiteeveryday, of course– the recession that seemed to catch everyone by surprise in 2008 brought oil prices down in spectacular fashion. But even the deepest recessions last barely over a year. Those prices will be on their way back up soon enough. And however you want to measure the energy in that fish– calori

Excerpted from Why Your World Is about to Get a Whole Lot Smaller by Jeff Rubin
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