Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization by Jeff Rubin ($29.95, Random House Canada)
It’s only nine pages in before author and former CIBC economist Jeff Rubin makes the startling admission that economics tells only half the story about resource scarcity and depletion. Fortunately, he immediately promises that the pages to follow will tell “the other half.” Unfortunately, he fails to deliver. So while still a fantastic book, Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization is simultaneously a frustrating read.
What’s the long-term impact of high-priced oil? Rubin says it will spur manufacturing to return to North America and shrink the service sector. We’re going to go back to “actually making things,” he says, but the transition won’t be easy because the infrastructure, technology, training and culture required for it will have to be massively overhauled. Food will be sourced locally — no more lamb from New Zealand and pineapples from Hawaii. Farms will make a big comeback. But it’s going to be more expensive. Additionally, the suburbs will depopulate and airlines will go bankrupt.
The book is frustrating not because it lacks data points about oil depletion and energy use. It has them, and presents them in highly accessible fashion (no charts and graphs here, though the odd footnoting style doesn’t help). For example, as per the Hubbert Curve, discovery of new oil fields peaked in 1966 and “has been falling ever since,” with 4 million barrels per day lost to depletion. Oil wells are declining at the rate of 6.7% annually, but U.S. oil consumption has risen from 15 million barrels/day in 1970 to 20 million today. Canadians can expect to pay $2/litre for oil in the near future. And so on.
It isn’t even that Rubin fails to look “behind” the raw data. He explains how the current financial crisis was caused not by the implosion of the subprime mortgage market, but by rising oil prices. He details the ongoing subsidization in the OPEC countries and developing world of their own oil consumption (which is rising at 5% annually and squeezing out the developed world) and its impact on prices. He recounts the conscious destruction by car companies of public transportation in North America. That’s all there and the details are shocking.
The problem is Rubin never quite gets around to discussing how $150/barrel oil will affect us except to say that we will all have to consume less and in reduced variety. And there are a lot of people who won’t stand for that. What happens then? It’s the thorny question that can’t help but creep into the reader’s mind when faced with the starkness of Rubin’s analysis.
Without this level of analysis, the book never rises much past the level of highly competent pop culture screed, probably destined to compete ably against similar doomsday books. And there’s nothing wrong with that, but given the gravity of the consequences both mentioned and unmentioned, Your World needs to be so much more.
That’s not to say he completely ignores solutions. In fact, it’s a doomsday book with a heart of gold; even the bad news is delivered in a breezy, upbeat style that manages to be as reassuring as an empathetic doctor. But the solutions are themselves contentious and necessarily radical, and Rubin again fails to explore their subtext.
For example, at the economic centre of his proposed strategy for creating a cleaner, smaller world that can still grow its GDP, is the carbon tax. The economically developed countries would apply a tax to products coming from countries (typically the developing world) where carbon emissions remain high, thereby leveling the playing field and removing the current competitive advantage enjoyed by countries like China and India.
This is veritable heresy coming from the former chief economist at CIBC World Markets. But that such a mainstream, pro-market figure is willing to advocate this approach is perhaps the greatest evidence the world is in genuine trouble. However, Rubin neglects to mention that it’s unlikely the developing world and its business allies in the West will accept this direction — and this is on top of the additional, significant lifestyle sacrifices Westerners will have to make.
On this looming struggle and related socio-economic upheaval Rubin is largely silent except for a few passages late in the book in a chapter called “Going Local.” Here he hints at the possible rise in the West of reactionary, isolationist forces hostile to immigrants. The recent gains of right-wing and far-right parties in the EU on the backs of economic recession may be a prelude of what’s to come.
Nothing but political
It’s obvious that Rubin is at pains to avoid being labeled “political” but when you’re persuasively predicting the wholesale dismantling of suburbs, the en masse grounding of airlines and the removal from America’s roads of 10 million cars within the next several years, just to start, the coming of $150 or $200 oil is nothing but political.
At root he is talking about a fundamental reorganization of the way post-modern capitalism works — if it can work at all. As such, Rubin may find himself in the same outsider camp as oil peakists M. King Hubbert (of the Hubbert Curve) and Dr. Colin Campbell, to whom he devotes a few pages of interesting history.
The “other half” this otherwise thorough book is missing is input from the social sciences. Economics can only tell you so much and it shows. Seeing Rubin teamed up with a social or political scientist would have made this book the seminal work it wants to be. Nevertheless, this is a must read for anyone interested in understanding more about peak oil and the intersection between economics and politics, even if you have to read between the lines.
The essential problem society faces, Rubin says, is that “as we get richer, we slowly but inevitably make the planet less habitable.” Of course, if he’s right about oil then we’re actually about to get a lot poorer. The planet may yet thank us.