“The world will never run out of oil, but what the world has run out of is the oil we can afford to burn,” was the controversial claim made by renowned economist Jeff Rubin at a Centre for International Governance Innovation (CIGI) signature lecture on Oct. 28.
Rubin is a former long-standing chief economist for the CIBC World Markets and is now the author of the bestselling book Why Your World is About to Get a Whole Lot Smaller.
There is a widely held belief that the world’s oil dependency will eventually be forced to a halt when the last drop has been sucked from the earth and our cars roll to their final stop, imposing drastic change and inevitable self-sustainability.
What Rubin foresees is a different means to a similar end.
A climb in oil prices, he said, has been associated with many prior recessions. However, the easy solution of finding cheap, new oil sources is a bridge now burned and what is left are sources which consume large amounts of energy to extract.
They are consequently far more expensive. An example is the environmentally controversial Alberta tar sands. Although their potential was previously recognized, Rubin explained, “What’s new is that the tar sands could be considered a valid supply [of oil].”
How consumers will react to the environmental aspect of this remains to be seen. What is certain, Rubin believes, is that with ever-climbing prices at the pump, demand will drop as many will be forced to retire their cars in favour of cheaper transit methods.
In an alarming prediction, Rubin added, “Our rendezvous with triple digit oil prices … could be in 12 to 15 weeks.”
A question from an audience member during an opportunity for discussion following the lecture called attention to the trend towards electric cars.
To some, it seems logical that rather than abandoning personal vehicles as a primary source of transportation, other innovative technologies will see their potential realized.
Rubin responded, “Whatever emission savings we get out the tailpipe are more than trumped by the smokestack,” because the electric car is equally as unsustainable. The capacity to “plug in” millions of cars simply does not exist, he said.
However, Rubin firmly denounces the belief that “the realm of three digit oil [is] the realm of the apocalypse,” choosing to focus instead on the positive aspects of future change.
He associates ever-climbing oil prices with what will be a steady and unavoidable decline in globalization.
Already Rubin claims we are seeing evidence of a movement from ‘cheap’ labour to home production due to the rising costs of transporting goods, citing the United States’ lowered dependency on China for steel as an example.
Inexpensive foreign markets may become a thing of the past through a forced metamorphosis to self-sustainability, creating a smaller, more community-based world. Markets, he explained, will be left with no choice but to condense, as “accessing cheap markets becomes pennywise and pound foolish.”
Rubin anticipates a world which may be far more appealing than the one we live in now.
To simplify, albeit in a slight mockery of the absurdity of modern globalisation, Rubin concluded, “In a world of triple digit oil prices, we won’t be accessing our chicken wings from China.”