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Wednesday, November 18, 2009 09:26 AM
We need another carbon tariff
With meetings on an international climate-change deal in Copenhagen just around the corner, it’s time to get real about carbon emissions. While it was emissions from the old carbon reprobates like North America and Europe that took us from 280 to 390 parts per million of carbon in our atmosphere, it will be the smokestacks of China and India that threaten to drive us to an environmental tipping point.
China already has more coal plants than the US, UK and Japan combined, and over the next twenty years that country and India will account for almost eighty per cent of the expected doubling in global coal consumption. If these guys aren’t playing by the same carbon rules that we are, it’s game over.
But to the ears of the energy-hungry Chinese and Indian economies, carbon rules sound a lot more like eco-imperialism than environmental sustainability. With per capita energy consumption at a tenth of Western levels, those countries aren’t about to make any voluntary concessions to the environment, and we can’t expect them to.
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Monday, November 16, 2009 12:23 PM
What do we do for the next recession?
Correctly diagnosing the nature of a disease is usually an essential first step to finding its cure. Similarly, knowing what caused this recession seems pretty pivotal to figuring out how to avoid falling into the next one.
Subprime mortgages may have blown up Wall Street, but it was triple-digit oil prices that blew up the world economy. This distinction is not just academic — it has huge implications for what steps governments should have taken and, maybe even more importantly, what steps they shouldn’t have taken.
While governments can bail out insolvent investment banks, foreclosed subprime mortgage holders and bankrupt auto producers, there can be no energy bailout.
Wednesday, November 4, 2009 06:24 AM
Why is oil already so high?
It’s always easier to blame supposed culprits than it is to face unpleasant facts. Take today’s oil prices. Consumers complain about price gouging by oil companies. Oil companies point the finger at government restrictions on drilling activity. Governments blame speculators, while the latter blame the ever-weakening US dollar.
There is certainly no shortage of blame to go around. But is there enough supply? No one seems to want to acknowledge the inconvenient truth that conventional oil supply (i.e. the type of low-cost fuel you can afford to burn) has not grown since 2005, and may never grow again.
Of course, that doesn’t mean that the world is running out of oil. Not even close. There are some 165 billion barrels of oil stuck in Canadian tar sands, and maybe even more in Venezuela’s tar sands. And when the global economy sucks the tar sands dry, there are billions of barrels more trapped in oil shale.
Friday, October 30, 2009 07:04 PM
Get ready for triple-digit oil again soon
Nothing is shrinking faster these days than global trade. For the first time in decades, world trade volume, the lifeblood of the global economy, is actually falling. And chances are that downsizing is here to stay.
One reason global trade is shrinking is that most major economies have been contracting. Recession-scarred economies will of course recover. They always do. The Chinese economy is already on the mend and in time other economies will also get back on their feet. But unfortunately for an oil-hungry global economy, so too will crude prices — which is not only the real reason the economy tanked in the first place, but also the reason the economy coming out of this recession will be very different than the one that went into it.
Jeff Rubin's Smaller World Contributors
Jeff Rubin
After nearly 20 years as the chief economist of CIBC World Markets, Jeff Rubin left the bank earlier this year to seek a larger audience for the story he wanted to tell.
His predictions of steadily rising oil prices over the last decade, including $100 (U.S.) per barrel oil by 2007, had flown in the face of conventional economic wisdom. As he said, soaring oil prices demonstrated that the traditional laws of supply and demand were no longer working for one of the global economy's most basic and essential commodities.
The consequences would be severe. He argued that it wasn't sub-prime mortgages, but record oil prices that drove the world economy into its deepest post-war recession. And unless the economy starts to wean itself off an ever depleting supply of affordable oil, he believes there will be other recessions to follow as economic recoveries quickly push oil prices right back into triple digit range. But weaning our economy off oil means some fundamental changes in the way we live.
That's not the kind of message chief economists' at investment banks are supposed to deliver so he resigned from CIBC World Markets to write about it in his new book Why Your World Is About To Get A Whole Lot Smaller. See his website at jeffrubinssmallerworld.com.