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Monday, March 27, 2017

Book Review: Why Your World is About to Get a Whole Lot Smaller

Posted by Tim Stobbs on January 29, 2010

Well, Why Your World is About to Get a Whole Lot Smaller, is likely one of the longer titles I’ve seen for a book, but thankful the text is no where as long a the title.  Actually Jeff Rubin writing is a very readable style that makes the pages just fly by so I managed to read the full 265 pages of text in just a few days.

Overall the book focuses on one major driver in our lives: the cost of oil.  Which when you start to think about it really touches just about everything in your life via one important fact: transportation of goods.  So from your apple at lunch to your cheap clothes from China everything today gets touched by the price of oil.

Really cheap stuff from China is only possible by cheap oil  since no one in their right mind would transport stuff half way around the world to process it and then ship it back unless there was money to be made doing it.  Rubin does his best in this book to point out that is going to end sooner than later by oil prices going through the roof, like in the range of $225/barrel in the next decade or two (current price is around $70 to 80/barrel).

The problem is really two fold with those classic drivers of supply and demand.  On the supply side he points out the obvious we are running out of the really easy and cheap oil.  Otherwise no one would spend the money to extract oil from the oil sands.  And it’s not just happening here but just about everywhere there is oil.  Also the new finds are not nearly big enough to offset declining production.  Then to top it off demand is going through the roof just about everywhere but especially China and India.  But it’s not just there for example a lot of production in the middle east is actually being used internally at highly subsidized rates.

So the interesting implication to all of this will globalization will halt in its tracks and things will revert back to a more local production base.  So yes there will be some down sides like no more cheap dollar store toys, but there will also be some positive parts especially with greenhouse gases. To illustrate his point I will quote:

In OECD countries, where consumers pay the full price for a barrel of oil, triple-digit prices will do more to reduce greenhouse gas emissions than a hundred Kyotol Protocals.

Rubin predicts we won’t solve emissions with accords but rather good old fashion trade.  To illustrate the point I’ll provide another quote:

The most direct strategy for halting the seemingly endlesss growth in global carbon emissions, is not another round of Kyoto talks calling for voluntary cuts.  What we need to do is to impose a carbon cost on emitters at home, then impose the same standards on imports.

So we will likely solve the problem with the US and Europe having either a carbon tax or cap and trade and then putting that same standard on imports.  Sudden shipping distance will matter again and local will be cheaper driving a new round of local manufacturing for all countries.

Overall I rather likely the book.  It’s very readable, brief and to the point.  Also he doesn’t point out the world will end, rather it will just change again.  Which when you think about it happens all the time.

Comments

3 Responses to “Book Review: Why Your World is About to Get a Whole Lot Smaller”
  1. Off Topic…What impact does divorce have on early retirement plans? Food for thought.

  2. Canadian Dream says:

    CM,

    Off the top of my head divorce would ruin just about most plans. Loss of assets, loss of income splitting, loss of their CPP/OAS to your plans and potentially crushing payments for any kids and/or your ex-spouse.

    I would say even under an optimistic scenario you would lose at least a decade off your date.

    So the easy way out is: stay married. Look after your relationship or pay big time in more than just money.

    Tim

  3. The fear of rising prices has come up several times in the past. What happens though is as prices rise we find alternatives and better drilling techniques. I can’t really see China given up on the foreign market. Or Canada that relies on it’s exports. Need drives invention.

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