Spectre of peak oil prices loom

canada.com

By Barbara Yaffe

Oil at $200 a barrel is not far off and with it a new world order that will see the demise of globalization.

That prediction is put forward in a new book by well-known Canadian economist Jeff Rubin: Why Your World Is About To Get A Whole Lot Smaller.

Money, of course, makes the world go round and when transportation costs become punishing people start looking to buy local.

The author reasons that the price advantage currently held by low-wage countries will simply disappear.

And Rubin cites a second factor that substantiates his theory -- the introduction of carbon pricing.

The U.S. -- and Canada and presumably other developed countries -- soon will mandate a cap-and-trade scheme that would impose tariffs on goods deriving from nations that don't similarly restrict carbon emissions.

What this would mean is extra duties, or a pollution tax, on imports coming from places like China. Such tariffs again would negate the cost advantage of imports from low-wage countries.

All of which explains why North American labour unions are starting to find common cause with environmentalists, one example being the Blue Green Alliance, bringing together the Sierra Club and the United Steelworkers of America.

Here's the sort of calculation that's not lost on the three-year-old alliance: Higher transport costs flowing from $200-a-barrel oil would impose the equivalent of a 25 per cent tariff on Chinese imports, while a carbon tariff would be about 17 per cent. Presto -- a 42 per cent duty on Chinese goods.

The result? The potential revitalization of industrial sectors in Western countries that in recent years have bled jobs to foreign lands. Don't write off the American Rust Belt quite yet.

"At the same time as North American and European markets return to local sourcing," writes Rubin, "they will sever their trade links with the developing world and force that world to find another way to grow.

"As our world becomes smaller, their world becomes poorer."

This will cause economic havoc in the developing world, a situation that, predicts Rubin, will be further aggravated by the shutting off of a critical safety valve, migration.

Higher oil prices, after all, will mean more unemployment and fewer job openings in the developed world.

These predictions may seem a bit fanciful with oil at $60 a barrel, as it is now.

But Rubin, and most others, believe recent low oil prices are directly related to the ongoing recession and will surge again once economies start bouncing back.

The book, besides predicting a return of robust manufacturing and agricultural sectors in the developed world, is not a bearer of much good news.

The economist believes we are in for an era of repeated recessions, caused by ballooning oil prices that are inevitable given that oil reserves are in decline.

The only way to avoid such a fate is to wean ourselves off our debilitating addiction to petroleum.

Rubin's is one of a raft of books published in recent years warning of crisis and devastation if we fail to adapt to the fact that the aggressive burning of fossil fuels no longer is viable.

In view of all these dire warnings, citizens would be correct to wonder what exactly is on the reading lists of their politicians, who in their legislative priorities seem all but oblivious to the pending doom.

byaffe@vancouversun.com

Spectre of peak oil prices loom

canada.com

By Barbara Yaffe

Oil at $200 a barrel is not far off and with it a new world order that will see the demise of globalization.

That prediction is put forward in a new book by well-known Canadian economist Jeff Rubin: Why Your World Is About To Get A Whole Lot Smaller.

Money, of course, makes the world go round and when transportation costs become punishing people start looking to buy local.

The author reasons that the price advantage currently held by low-wage countries will simply disappear.

And Rubin cites a second factor that substantiates his theory -- the introduction of carbon pricing.

The U.S. -- and Canada and presumably other developed countries -- soon will mandate a cap-and-trade scheme that would impose tariffs on goods deriving from nations that don't similarly restrict carbon emissions.

What this would mean is extra duties, or a pollution tax, on imports coming from places like China. Such tariffs again would negate the cost advantage of imports from low-wage countries.

All of which explains why North American labour unions are starting to find common cause with environmentalists, one example being the Blue Green Alliance, bringing together the Sierra Club and the United Steelworkers of America.

Here's the sort of calculation that's not lost on the three-year-old alliance: Higher transport costs flowing from $200-a-barrel oil would impose the equivalent of a 25 per cent tariff on Chinese imports, while a carbon tariff would be about 17 per cent. Presto -- a 42 per cent duty on Chinese goods.

The result? The potential revitalization of industrial sectors in Western countries that in recent years have bled jobs to foreign lands. Don't write off the American Rust Belt quite yet.

"At the same time as North American and European markets return to local sourcing," writes Rubin, "they will sever their trade links with the developing world and force that world to find another way to grow.

"As our world becomes smaller, their world becomes poorer."

This will cause economic havoc in the developing world, a situation that, predicts Rubin, will be further aggravated by the shutting off of a critical safety valve, migration.

Higher oil prices, after all, will mean more unemployment and fewer job openings in the developed world.

These predictions may seem a bit fanciful with oil at $60 a barrel, as it is now.

But Rubin, and most others, believe recent low oil prices are directly related to the ongoing recession and will surge again once economies start bouncing back.

The book, besides predicting a return of robust manufacturing and agricultural sectors in the developed world, is not a bearer of much good news.

The economist believes we are in for an era of repeated recessions, caused by ballooning oil prices that are inevitable given that oil reserves are in decline.

The only way to avoid such a fate is to wean ourselves off our debilitating addiction to petroleum.

Rubin's is one of a raft of books published in recent years warning of crisis and devastation if we fail to adapt to the fact that the aggressive burning of fossil fuels no longer is viable.

In view of all these dire warnings, citizens would be correct to wonder what exactly is on the reading lists of their politicians, who in their legislative priorities seem all but oblivious to the pending doom.

byaffe@vancouversun.com

Book Review: Blackout

Domestic Fuel

By Joanna Schroeder

Under the surface we seem to have a lot of it. It’s fairly inexpensive but this is changing as demand rises to meet increased energy needs especially in countries like China. So we have a lot, its cheap, let’s use it, what’s the problem? Right? Wrong!

Author Richard Heinberg writes in Blackout: Coal, Climate and the Last Energy Crisis, “In short: two of the defining trends of the emerging century–the development of the Asian economies and climate change–both center on coal. But coal is finite non-renewable resource. Thus, a discussion of the future of coal must also intersect with a third great trend of the new century: resource depletion.”

In the first part of the book, Heinberg takes the reader through a deep analysis of just how much coal is available throughout the world. Keep in mind, forecasts assume that current energy use stays the same, but it is increasing each year, making coal available for a shorter amount of time. Best estimates are that the world will see Peak Coal by 2025 and many believe that the world has already witnessed Peak Oil.

Now, you’re just waiting for me to say there is no such thing as clean coal. So there, it’s out in the open. In the second section of the book, Heinberg talks about the link between coal and greenhouse gas emissions and discusses the technologies to create “clean coal”. They are all challenged to say the least.

At the end of Blackout, Heinberg details three scenarios that involve coal, climate and energy. They are all very disturbing, but Heinberg has a way of tackling issues head on.

“For strategic purposes, it is important to understand our human tendency to discount future problems. We must assess which threats will come soonest, and make sure that out sometimes frantic efforts to respond to these immediate necessities do not exacerbate problems that will show up later. Peak Oil is clearly the most immediate energy and resource supply threat the policy makers must deal with….”

He continues, “If energy scarcity forces policy changes before climate fears can do so, then perhaps world leaders will find that it makes more sense to ration fuel themselves, rather than the emissions they produce.”

rhshovelHeinberg continues by warning if we don’t get a grip on the real amount of fossil fuels supplies we have left as well as a deeper understanding of the environmental and economic consequences of burning fossil fuels..hello Blackout.

Wow, conservation…what a novel concept…good thing the fuel economy standards (aka CAFE standards) were finally improved.

“…Otherwise, the policies pursued are likely to be ineffective, counterproductive, and inconsistent.” Can you say proposed Climate Bill?

I’m a huge fan of Heinberg and he doesn’t disappoint with Blackout. You can buy this book or any book I review by clicking here.

BTW - Richard Heinberg is going to be a guest on the premier of national radio program Pure Energy, hosted by Sean O’Hanlon. The show debuts on July 13, 2009 at 6:00 p.m. EST on 880 The Biz and can also be heard live on www.PureEnergyShow.com.