Monday, May 31, 2010

Why Your World is About to get a Whole Lot Smaller by Jeff Rubins

An accessible book that rigorously examines the numerous impacts that would result from oil becoming ever more expensive, primarily aimed at an American audience. Rubin describes a world where fuel becomes too expensive to transport many things (i.e., goods and people) and logically argues for the consequences of less trade, less travel, less variety in of food and a greater engagement with one’s local community and economy. It is hard to disagree with much of his economics and logic, but I felt there wasn’t enough attention given to ways in which peak oil problems might be avoided. More explicitly, Rubin believes we will run out of energy for our technologies before those new technologies can help us. I disagree.
Similarly, when he would describe how some people don’t even have access to any fuel/resources due to poverty so we should keep that in mind, it seemed a bit like lip service because most of the framing in the book was closer to “OTHER people are going to be using YOUR oil.” (How dare they!)
I appreciated his analysis of energy efficiency and how it does not usually help energy conservation (aka the Rebound Effect). The reasoning is as follows: if things can become more efficient, while people don’t have to use as much energy, they tend to just use the energy elsewhere to increase productivity (or leisure) even more, which helps to grow the economy, which, of course, uses more energy. Therefore, if the purpose of increasing energy efficiency is to use less energy, the gains from efficiency cannot be passed directly on to the consumer without it being counterproductive.
The most original argument in the book (chap 7) was that oil issues, not quants/sub-prime mortgages caused the financial meltdown. Gist: Low oil prices enabled globalization which kept down inflation. Low inflation allowed borrowing by those who normally wouldn’t be able to do so. “The credit bubble needed low inflation and low inflation needed cheap energy. The problem was that oil prices started moving up so rapidly that inflation, and hence interest rates, would soon be quickly on the rise as well.” (p. 190) This caused complications for the sub-prime mortgages and derivatives. While there is certainly some truth to the interrelation of these things, I think it goes a bit far to say oil the primary causal factor.

Chronological (mostly point-form) Notes (which may be of limited use to those who haven’t read it):
Good start, easy to read.
Main argument is about limited supply and increasing demand, therefore increasing prices.
Consequences are a changing society due to transportation costs.
Chapter 1
Cracked spread – how oil is turned into gas.
Obviously there isn’t infinite supply (pretty much nothing is infinite.
Ratio of 1:3 for energy in/energy out of the Oil Sands.
There are limitations/complications of natural gas too.
Repetition of main thesis (which is useful for remembering).
Chapter 2
There are different oil prices for different countries because many in the midEast subsidize their citizens’ consumption. In these countries, domestic consumption has increased.
Tone/style appears to imply that oil is “ours” instead of it just being a problem.
Chapter 3
Great analysis of the Rebound Effect. I already knew of it, but not to that extent. Increased efficiency increases usage which increases the economy which increases usage.
Good coverage of how ethanol is mostly a waste of resources (but perhaps it is more about food security?)
Said what needed to be said but not too much depth.
Chapter 4
Oh, the electric car – how unfortunate.
Good at working through consequences and the history was useful too.
Chapter 5
Fuel is expensive and will have large effects on transportation of goods, and therefore trade.
Chapter 6
He seems to skip over the climate-change deniers.
Good sentence: “The increase in emissions in the developing world dwarfs the decline in emissions in the developed world, just as the increase in oil consumption has dwarfed the cutbacks in oil consumption in North America and Europe.” (p.161)
Pages 163-164 seem biased. As if it is okay for Australia to burn carbon but not for China?
His idea of a carbon tariff I first saw almost 3 years ago from Tom Courchene, who he probably should have cited.
Doesn’t mention how cap and trade ideas might just be a shell-game for the wall street crowd to make money from trading.
If there are more Americans or the US economy grows, does that increase emissions even more because of the high rates of energy usage?
Follows a lot of the logic but there is little about fairness.
This is for a US audience.
Chapter 7
Oil, not quants. Oil caused 4/5 last recessions.
He seems to assume that the bubble still wouldn’t have burst if there weren’t oil issues.
War bonds can become unprofitable over the years due to inflation.
So inflation will increase as soon as oil prices do?
Is there a macro/micro false dichotomy? People vs. individual?
Good coverage of the future of, and need for, public transportation.
Chapter 8
Cute, quick history of coffee.
Imports have increased but they will decrease.
Good, brief coverage of food and how energy intensive animal farming can be.
Odd/bad definition of fair trade on page 228 (about competition instead of fairness)
He thinks our technologies will run out of energy before they can overcome the problems.
The stat about the “energy” in a microchip was interesting but might be specious.
Saying “we all enjoy” air travel is quite obtuse. Perhaps most people reading the book, but within NA there are many people who can’t afford to fly and if they travel at all, they take the bus, let alone people in other countries who are so poor they will never even sit in an airplane.
Will air travel decrease?
That 15% of Kenya’s GDP comes from selling flowers was surprising.
He usefully describes how immigrants often get blamed when things start going poorly in a country.
An optimistic ending (that doesn’t at all talk about the battle over scarcity)
Decent dénouement – a narrative related to the themes explored.


Anonymous Daniel Hirsch said...

Marvelous,and a very impressive so i like very much......................
Domestic Heating Oil Prices

2:28 AM  

Post a Comment

<< Home