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The second question: does the ethanol mandate make sense in the long term,considering that petroleum based fertilizers are the basis for ethanol production?

Jeff Rubin: Canada will be an even more important energy supplier to the world (ie. US market) than it ever was in the past in a world of triple-digit oil prices bacause of all the oil it will pull out of the tar sands. The Canadian dollar will rise and ultimately trade at a premium to the greenback. Sure, it falls in a recession but note it fell to 80 cents, not 60 cents. If 80 is the bottom in the world's depeest post-war recession, I see it at parity within 12 months of a global economic recovery.

Corn-based ethanol makes no sense either in the short-run or the long-run. For reasons that I've explained in the book - ie, the . But even as ethanol production is ultimately abandoned, remember that modern agriculture is really about turning oil into food. If the price of oil goes up, guess what happens to food prices.

Sonali Verma, Globe Investor: Jeff, we have a couple of questions on developing countries:

Bill Graham writes from Alberta: If $140 oil had enough destructive power to stop the 'rich' western consumers from driving, how can we possible believe that forecasts for oil consumption that reflect tens of millions of new Chinese drivers pushing the price of oil to $200 or more?

Laszlo Erdosy writes: What role do you see China and India in the near future? Will these countries replace the American consumer, who seems to have gone into hibernation? Finally, where do you think gold is heading?

Jeff Rubin: Because the big barrier to owning a car in the Chinas of the world isn't the price of filling up its tank - it's how many years you have to save to buy a car. And the price of buying a car over there is falling as rapidly as the price of filling it up is rising. Tata's will cost only $2,500 to buy in India. And everybody who buys a Tata in India or a CHERRY in China gets a straw to start sucking up the world's dwindling oil supply, which, incidentally, they have the right to do.

Ken writes from Surrey, BC: Can you explain why natural gas appears to be negatively correlated with oil prices? And do you see this as a long term trend or transitory phenomenon?

Jeff Rubin: It isn't - it only appears to be in North America right now. Gas costs three times as much in Europe or Asia, which is why we should be an exporter of LNG instead of an importer. Don't forget, oil has a world price while natural gas has local or regional prices because its hard to move it around the world.

Irene VanderSpek writes: Can you explain why the price for gas at the pump has not fallen in lockstep with the drop in price of a barrel of crude?

At the high I paid around $1.45 per liter with a barrel going for about $145.00. Yesterday I paid $1.02 with a barrel costing around $60.00 but I remember paying 33 cents per liter at one point in the late nineties and paying 69 cents on average back then. Obviously, at those price points refining-, operating-, transportation- and marketing costs were also covered.

Has OPEC created an artificial shortage, have refineries in North America cut back production or do oil companies maybe want to generate a higher profit at consumer level?

Jeff Rubin: A key reason is that a big part of the price of gasoline is taxes while oil prices are a pure commodity price.

A second reason is the crack spread, or the diffence between oil prices and refined gasoline prices. Crack spreads have been under pressure because of refinery capacity issues. Don't forget, many refineries can't take oil sand product because they involve much more processing. As we come to depend on more unconventional fuel like oil sands, we can expect crack spreads (or refining costs) to increase over time.

Elizabeth Fleming writes: How do we persuade our politicians to start making only land use decisions that future generations will be able to sustain?

Manitoba continues to allow sprawl in and around its urban centres even though peak oil and global warming are known realities.

The Government of Manitoba has drafted a new Provincial Land Use Policies document to guide future development. It is a discouraging, business-as-usual re-working of Policies that have not been effective in the past and now will actually further encourage urban sprawl.

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