McGill alum Jeff Rubin, MA’82, was the Chief Economist at CIBC World Markets for almost twenty years. In 2009, Rubin walked away from his career on Bay Street to pursue the publication of his groundbreaking book, Why Your World is About to Get a Whole Lot Smaller? (Random House Canada) on how rising oil prices will reverse globalization.
On Thursday, September 24, Rubin will be the guest lecturer in McGill’s Arts Speaker Series, Working Outside the Box. In advance of the lecture, the McGill Reporter asked Rubin Four Burning Questions about the book and his views on oil prices and the global economy.
1. Can you explain the premise behind your book?
The central premise of the book is that triple digit oil prices will reverse globalization and bring about the reemergence of local economies.
When suddenly distance costs money, it will no longer make any economic sense to produce something in one end of the world and sell it at the other end. Whether you are moving those goods by air, ship, train or truck you are burning lots and lots of oil. And very soon the savings on labour costs from importing goods around the world will be dwarfed by the transport costs of moving those goods around. Hence many industries that have long disappeared in our economy may soon be returning home.
Why do you say ethanol and other alternative fuels are “a joke?
Nearly three quarters of the energy we get from corn-based ethanol actually comes from the concealed combustion of natural gas, oil and even coal that is used in either growing corn or in converting it into ethanol. Hence the resulting energy rate of return (amount of energy you get relative to what you burn up) is very small while the impact on food inflation can be quite large as we divert more and more of our agricultural production to feed our cars instead of our stomachs.
3. What steps can governments and individuals take now to prevent a worst-case scenario?
We can’t prevent oil prices from setting new triple digit highs but there is much we can do to mitigate its economic impact. Triple digit oil prices don’t have to lead to apocalyptic endings. They only do so if we try to burn as much oil in the future as we have in the past when the fuel cost a fraction of the price. Since roughly 60 per cent of all the oil we burn is in the form of either gasoline or diesel, getting off the road and on to public transit will soon be a critical battle against soaring energy costs. But why then are we spending billions of taxpayers’ dollars to bail out an auto industry that is doomed to obsolescence by soaring pump prices? It’s public transit, not defunct auto companies, that governments should be now investing in.
4. How have readers reacted to your book?
Eight reprintings of the book in Canada since it was first published in May suggest a very positive response from readers. I think the positive response is at least in part a recognition that there may be many silver linings that come with triple digit oil prices. While we have to make significant adjustments in our economy and in our lifestyles, the new smaller world that is about to emerge from oil scarcity may be in many ways a lot more livable ( not to mention a lot greener) than the larger world we are about to leave behind.
Admission to the lecture is free. A book signing will follow. For more information visit http://www.mcgill.ca/arts/alumni/events/ or contact Carly Grossman at 514-398-8986.