You can always tell when the media has a new flavour of the month. Today, Jeff Rubin is it, thanks to the release of his new book, not to mention his recent departure as CIBC World Markets’ chief economist and chief strategist.
The high-profile oil bull, who holds a PhD in economics from Harvard University, joined the bank as a senior economist decades ago and has been named top Canadian economist something like ten times. Nevertheless, Rubin’s book, which describes how peak oil is about to kill globalization, was apparently not something he could promote as an investment-banking employee in good standing. After all, it is considered pure entertainment by major oil industry players like Suncor’s Rick George. (Is Rubin “an economist or an entertainer?” the oil sands CEO recently wondered in the Toronto Star.)
That makes Rubin a good feature story (see latest edition of Canadian Business magazine). But his book should still be taken with a grain of salt, one that is the size of, well, something really, really biglike the number of things that will prevent his vision of the future from coming true.
I have never met a peak oil theorist who didnt come across like a religious fanatic. In my opinion, they don’t typically use terms like “in my opinion” because they tend to wear a very crude sense of blinders. I can agree that the price of oil will rise if supply does not keep up with demand. It is all the other stuff that peakers like to preach about that I dont typically buy.
Rubin, of course, has been widely celebrated for predicting in 2000 that a barrel of crude would reach US$50 a barrel within five years. But so what? When the self-proclaimed maverick economist and other peak theorists were hyping US$200-plus oil last year, I was betting co-workers that a crash in demand would bring it back to US$30. To me, it was obvious that American housing prices and credit markets were in for a tough time. It was also obvious that speculators had helped push oil up above US$100.
In other words, I got lucky. And that happens to people who make economic predictions all the time, just not as often as they miss the mark.
Anyway, according to Rubins book, Why Your World Is About to Get a Whole Lot Smaller, oil scarcity and emissions standards will profoundly change where we live, work, vacation and eat. Simply put, he predicts that sky-high oil prices will make imports and travel too expensive, which will put an end to the auto sector and globalization. But this, he says, will actually be pretty good news for Canada, a trading nation that exports cars and trucks.
That, at least, is the message publisher RandomHouse is selling hard to sell Rubins back-to-the-future call for Canadians, who will return to simpler times, eating local food at the family table that was built in a local factory thanks to high oil prices.
The global economy has suffered oil crises in the past, but this time around the rules have changed, says the marketing blurb. And that means the future is not going to be a continuation of the past. For generations we have built wealth by burning more and more oil. Our cars, our homes, our whole world has been getting bigger in the cheap-oil era. Now it is about to get smaller.
There will be winners as well as losers as the age of globalization comes to an end. The auto industry will never recover from this oil-induced recession, but other manufacturers will be opening up mothballed factories. Distance will soon cost money, and so will burning carbon both will bring long-lost jobs back home. We may not see the kind of economic growth that globalization has brought, but local economies will be revitalized, as will our cities and neighborhoods.
Sounds nice. In fact, the books family-friendly thesis almost makes you forget the financial crisis that brought oil down from its record high is already threatening global trade. It also seems to ignore history, which says globalization probably cant just stop without a return of not-so-fun world wars. There are many other things that could get in the way of Rubins vision of a never-ending oil supply crisis, such as a full-blown flu pandemic or new energy technologies or some major new oil finds or an alien invasion or even an anti-green movement (I put this behind alien invasion, so please accept it as a possibility, even if you considerate it unlikely).
These are all good things to ask Rubin about while he is still a hot headline maker. But do it quick, because the economists big day in the sun was overshadowed by Conrad Black, a more established headline hunter who cant be beat when it comes to being the medias flavour of the month.
_____________________________________ DOUBLE TAKE: Aside from trying to promote myself while generating Web traffic that helps put bread and butter on my table, this blog aims to stir debate by taking a harder look at current news and events. I obviously enjoy voicing my own opinions, but I am a big boy and I welcome all comments that dont require R ratings. So let me have it via this blog or send me an email at email@example.com. I reserve the right to post email comments without disclosing the senders name. If you dont think I am a total twit, follow my DOUBLE TAKE posts via my NotSOCRATES Twitter site at http://twitter.com/NotSocrates. THOMAS WATSONis a Senior Writer and editorial board member at Canadian Business magazine. Since winning a community journalism award as a cub reporter with the Hamilton Spectator in the early 90s, he has covered business, finance, politics and technology for various news outlets. Prior to joining CB in 2001, he reported on the steel and automotive sectors for the Financial Post. Watson received his first magazine award nomination for exposing a stock manipulation plot aimed at Waterloo, Ont.-based Open Text in 2000, when he was head of investor relations for an international venture capital outfit in the City of London. Watson holds graduate degrees in journalism, international relations and public finance and undergraduate degrees in history and politics.