Jeff Rubin is at it again. The unconventional former world-markets whiz from CIBC has made another one of his wild, out-on-a-limb forecasts. Rubin has made a name for himself making bold and often unsettling predictions that have a knack for proving themselves accurate – or at least as accurate as economic predictions can be. Over the years, he has anticipated fluctuations in the interest rate and Canadian dollar with surprising precision, projected the decline in the Ontario real-estate market, and predicted soaring energy prices in the 2000s. Now, in a new book entitled Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization, Rubin has declared that peak oil will lead to the collapse of global shipping and global industry along with it.
The basic premise of Rubin’s argument is simple. The global supply of oil is tapering off while global demand for oil continues to rise. As a result, oil prices will continue to inch upwards with gathering momentum as oil becomes increasingly scarce. Skyrocketing (triple-digit) oil prices in the upcoming decades will inflate shipping costs to the point that it becomes no-longer viable to produce commodities on one side of the planet then ship them half-way around the globe to consumers. Rubin expects agriculture to be the hardest hit. The collapse of global agriculture has especially worrying concerns for Rubin, and he argues that peak oil presents a tremendous threat to food security for food importing countries. The United States, for example, imported $6 billion worth of food from China last year which, Rubin quips, “brings a whole new meaning to having Chinese food delivered.” Rubin’s inner-futurist leads him to the conclusion that new, decidedly anti-global forms of production will prevail when the scarcity of oil forces humanity to abandon shipping their meals across the globe.
Rubin is no doomsday prophet, however. In fact, he finds hope in the collapse of global shipping and global agriculture. According to Rubin, triple-digit oil prices will provide the disincentive necessary to force consumers to abandon their energy-intensive lifestyles that rely so heavily on the gas-guzzling transoceanic container ships that have become the backbone of the global economy. In his vision of a post-petroleum-dependent world, local food economies will thrive again. He explains that “Not only does replacing foreign food with local food save energy, but in the process it reduces carbon emissions – a double win in an economy that not only has to contend with triple-digit oil prices but that will soon put a price on burning oil as well.” Rubin likes to think he has found the silver lining to an otherwise disturbing global economic collapse.
Part One of my loosely joined series on global food has already detailed how new research continues to disprove Rubin’s assumption that replacing foreign food with local food will save energy and reduce carbon emissions. Rather than repeat all these facts, figures, and explanations, I will briefly summarize the key points. Global shipping is enormously more efficient at moving enormous quantities of food cargo than the small highway trucks and old farm pickups of the local food economy. Even though the distances involved are further, global shipping allows food production to occur in the world’s least energy-intensive locales, and considering production is where the bulk of the energy is expended, our food arrives in our supermarkets with smaller carbon emissions overall. Global agriculture owes its creation to a search for the most economically efficient way to feed humanity’s appetite. The same benefits of a global scale already apply to environmental efficiency as well.
Another important factor Rubin seems to ignore in his local food utopia is the question of how local food would be transported once peak oil has rendered gas prices prohibitively high. Does he expect the horse-and-buggy to make a comeback? Or, perhaps he expects wheelbarrows will conquer the abandoned highways? These antiquated modes of transportation could never provide the transport capacity humanity needs to feed itself. The reality of the situation is that local food economies are just as vulnerable to peak oil, if not more so than their leaner, more efficient global counterparts. There is no silver-lining here.
While Jeff Rubin’s argument that peak oil is desirable can be discounted by this new research, his argument that peak oil will have inevitable and profound impacts on global shipping still stands as a problem that deserves serious attention. Can global shipping continue to thrive in a world of triple-digit oil prices? I submit that it can for two reasons. First, the processes of economics dictate that global shipping is better positioned to absorb input-cost inflation. Second, the processes of innovation dictate, or at the very least suggest that fresh ideas and new technologies will help global shipping use their oil more efficiently and more environmentally.
Hopefully, readers will not be scared away by some economic terminology. Price elasticity of demand is the measurement of how demand for a commodity responds to changes in prices for that commodity. In other words, the likelihood that a shopper will leave the product on the shelf once they discover the price had increased. The peak oil premise is founded upon this economic concept, and the security of transporting food through networks that rely heavily upon oil, a commodity notorious for its price volatility, has increasingly been called into question, and not just by Rubin. The major short-coming with this food security narrative is that different price elasticities exist for different types of oil consumers. A weekend traveller or commuter-of-convenience, for instance, is more likely to drop out of a bidding war for oil than a large institutional transporter that requires oil to fuel an important and necessary economic activity. Sadly, little economic research has been conducted on this question, and it is hard to say how much sooner the weekend traveller or commuter-of-convenience would drop out of the bidding war. One hundred dollars sooner? Fifty dollars sooner? One dollar sooner? Nonetheless, the basic premise remains sound. The North-American car lifestyle will die out long before global shipping does. And once it does, remaining oil supplies can be concentrated on industries we rely upon to feed ourselves while innovation and technological advancement transforms humanity into smarter, less dependant oil users.
Global shipping is at the forefront of this innovation and technological advancement. Bold strides have been taken in this direction, and they have been well documented. A recent BBC article recounts some of these exciting new developments in the world of ship-building. For instance, the world’s largest container ship, the Estelle Maersk, makes use of several innovative design features that increase her efficiency and allow her to travel farther on each fill-up. Internal funnels on her engines capture waste heat to drive power-boosting turbines that reduce fuel consumption by 10%, kind of like the world’s largest supercharged street racer. Additionally, cutting-edge hull design, computerized systems control, and an extra-slippery coat of silicon paint make her one of the sleekest, most efficient ships ever built. All together, these technologies reduces her fuel consumption 25% when combined with new, smart sailing practices. Other innovations for global shipping are in the works, including kites to harness nautical winds, and as new discoveries are made, new technologies will continue keep global shipping on the cutting edge of efficiency.
Jeff Rubin’s book is engaging food for thought, and it raises important questions about the security of our food supply and the future of our global food economy. Sadly, his book fails to recognize the folly of local food economies as a solution to clear and present ecological concerns. Furthermore, it fails to recognize the innovations that have been made in global shipping and the promise they hold that efficient global economies might continue to benefit the residents of our small planet. They say that necessity is the mother of all invention, and the vast appetite of humanity has already required us to invent global agriculture. Now, the fragility of our world is requiring us to invent new ways to fuel our food. Hopefully, these inventions will prevail before our world and our food security comes crashing down around us.
Posted by thebigblockofcheese
Posted by thebigblockofcheese
Posted by thebigblockofcheese