Author Jeff Rubin by a gas station in downtown Toronto. His book is called, "Why Your World Is About toGet a Whole Lot Smaller" and is about the fact that Rubin believes oil prices are going to surge again and change the way we live - forcing us to produce, consume, live and work much closer to home.Charla Jones/The Globe and Mail
Jeff Rubin's Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization won Canada's 2010 National Book Award on Wednesday. The award was established in 1985 to recognize the outstanding talent in Canadian business writing. The $20,000 prize is sponsored by PricewaterhouseCoopers, BMO Financial Group and media partner The Globe and Mail.
Mr. Rubin, former chief economist at CIBC World Markets, is well-known for challenging economic orthodoxies. His book argues that North American consumers who rely on low-cost goods and services from around the world should gear up for significant changes in the way they live their lives as the supply of cheap, easy-to access oil diminishes.
Mr. Rubin argues that rising oil prices were the main cause of the recent global recession, not the crisis in subprime mortgage lending. In analyzing the longer-term impacts of rising oil costs, he turns globalization on its head, and contends that interests and policy will shift towards regional and local economies and environmentally sustainable enterprise.
Mr. Rubin also writes a blog for ReportonBusiness.com called Jeff Rubin's Smaller World.
His first book was published in May, 2009, and since then has been published in more than 15 countries.
The Globe and Mail caught up with Mr. Rubin shortly after he won the award.
How does it feel to have won?
It was great even to be nominated, and it's even better to have won.
It's nice to have won an award for your only book, so it's probably good to stop here.
Will you stop here?
I don't know, I have a paperback version of the book coming out later and of course it's still being published in various places. For example, I just came back from Portugal where my book has just been published. It's been published in Spain, Latin America, Italy, Germany, and soon China, so I'm still in the process of publishing it.
What have you learned since your book was published a year ago?
What I've learned is that a lot of the concerns, particularly about the need to go back to a local economy, are pretty well felt everywhere I go. And that there's sort of a notion, as strong in places like Barcelona or Lisbon, where I've recently been, about the unsustainability of globalization, as there is in Toronto. This is particularly strong in Europe, because the euro is in some sense a vestige of the global economy, and it's a small microcosm of that global economy coming apart at the seems.
Have any of your views changed since your book came out?
I don't think any of my views have changed. I think that in some sense, the issues that I talk about, like scraping the bottom of the barrel and where we're going with the world's oil supply, have a greater sense of urgency given the rupture of the Macondo well in the Gulf of Mexico. This is potentially the equivalent of Three Mile Island for the offshore drilling industry, and if that is indeed the case, then world oil supply is going to shrink a lot sooner and at a lot more rapid rate than I had thought a year ago.
Deep water oil has accounted for almost half the increase in world oil supply over the last 10 years, so if anything, I think it underscores how desperate we've become and how problematic, not just from a dollars and cents economic standpoint, but also from an environmental standpoint, how problematic the new sources of supply are.
The other thing that's top of mind is not so much the disaster because that pertains to supply, but particularly in my trips to Europe, Spain and Portugal, the so called PIGS, is that the legacy of our first encounter with triple-digit oil prices has been these huge colossal deficits, and not only does that preclude the possibility of using fiscal stimulus the next time we hit triple-digit oil prices, but it means that probably the next time we hit triple-digit oil prices, yesterday's bailouts will be tomorrow's cutbacks. And that this will be in the face of huge fiscal restraint, which I think only will underscore the necessity of re-engineering our economy.
When will we see the $200 per barrel oil you talk about in your book?
When I first forecast $200 per barrel oil in 2008 at CIBC World Markets, it was, where would oil prices be if the world economy kept growing? Of course it didn't keep growing, it fell into recession, but certainly, we can go right back into recession and oil prices will go back to $40 per barrel.
The point of my book is that we're not going to be able to grow our economies without encountering triple-digit oil prices. So when will we see triple-digit oil prices? We already saw prices as high as $85 to $86, they've sunk back to $73 or $70 because people are questioning the sustainability of that recovery, but if the recovery continues, I think we'll see triple-digit oil prices by next year, and we'll realize that 2008 was not some result of some speculative fix in the market, but rather a fundamental imbalance between global demand and global supply.
So you're predicting triple-digit prices by 2011?
Unless we slide back into recession, in which case oil prices can go right back to $40 a barrel, but the point of my book is that in the global economy, oil is the economy's DNA and the global economy can't grow without oil prices pushing right up against that triple-digit barrier like we saw in 2008. If what's happening in countries like Greece and Spain and Portugal become felt through the entire OECD and particularly the U.S., oil won't get to triple-digit prices because the world economy will go back into recession and it won't matter that we're not getting this new supply. But I think we'll find that any kind of sustainable economic recovery is going to see oil prices pushing right up into that triple-digit range.
I think if critics read my book they'd realized that my book doesn't say that oil prices can't go to $40 per barrel if we go back into another oil-induced recession, but to my critics I'll say, show me a world where the world economy has recovered and oil prices aren't $100 a barrel or more, and I think we'll see that in the next four to five months. Either the world economy will slump back into recession, or we will see those prices that I'm talking about.
How else will the BP disaster affect the oil sands?
It doesn't make the tar sands any greener, but what it does mean is the tar sands become more vitally important in the world supply link, and that if we're going to lose deep water, or have a significant curtailment of deep water production, tar sands is the next step down on the world supply chain, and we're going to have to see a huge ramp up in tar sands production, not just in Canada, but in Venezuela as well, if we're going to replace the four million barrels a day that we lose every year to depletion. I'm not sure that the tar sands will be up to that task, but I' am sure about one thing, if they are, it won't be in a world of $70 a barrel oil.
What's coming up on your
Since the G20 is in Toronto and it's carrying a billion-dollar price tag for security, I better find out something to say about it. What the G20's really talking about is a sustainable recovery and there seems to be two camps: One camp saying we've got to stimulate more, and the other camp saying we've got to contain our deficits. During our first encounter with triple-digit oil prices, we had the luxury of enormous fiscal stimulus. Not only will we not have that luxury next time, but all of yesterday's stimulus is going to become tomorrow's restraint, and that's not a Canada story, that's a global story.
With a file from Andrew Binet
|
Read excerpts from all of this year's National Business Book Award nominees:
|