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

Oil 101 by Morgan Downey

Jeff Rubin – the former chief economist at CIBC World Markets – has always struck me as someone who “gets it.” I have seen him do a number of interviews, both on television and in print – and he consistently sounds the alarm on peak oil. He understands very well that cheap oil is the lifeblood of the global economy, yet this is an era that will soon come to an end. His new book – Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization – goes through the peak oil story in a way that I initially thought of as “Kunstleresque“, but I changed my mind as I got deeper into the book.

Some will certainly describe Rubin as a ‘doomer.’ However, by the end of the book I had concluded that there are some significant distinctions between the overall message that Rubin is trying to convey and the message Jim Kunstler conveys in The Long Emergency. Maybe it’s because The Long Emergency really slapped me out of complacency, but I recall being mildly shocked after reading Kunstler. I did not experience that same sense of shock while reading Rubin – but those who are only mildly familiar with peak oil may be.

Rubin covers many familiar themes, such as the domestic cannibalization of exports by energy producers, the need to produce and consume more goods locally, corn ethanol (which he describes as a ‘head fake’), and the overall impact of high oil prices on the global economy. For regular readers, you will find that much of the book is familiar territory, and for a while I was thinking “There is nothing here that I haven’t seen before.” But the book ultimately grew on me, partly because there are two themes that distinguish it from other books I have read about peak oil.

The first involves a discussion of carbon dioxide emissions. In a chapter called “The Other Problem with Fossil Fuels”, Rubin started to make a argument that I have often made: Ultimately it is futile to attempt to regulate carbon emissions, because China is literally bringing several coal-fired power plants online every week. Rubin wrote that between now and 2012, over 500 new coal-fired plants are scheduled to come online. This was the theme of my essay Why We Will Never Address Global Warming. My belief has been that there really isn’t much that will convince China and other developing countries to cut back on their emissions. While I still think carbon dioxide emissions will continue to rise until we simply run out of fossil fuels, Rubin provided an interesting argument that caused me to think that a different approach might work.

Rubin argues that if we put a price on carbon emissions in the U.S., Canada, Europe, and other developed countries – we can apply a carbon tariff on imports to level the playing field. Rubin states that energy usage per GDP in China is four times that of the U.S. economy. By putting a carbon tariff on Chinese steel, for instance, two things are accomplished. First, the Chinese then have a much greater incentive to become more efficient. Second, domestic energy intensive industries (like steel production) suddenly become much more competitive. The flip-side of course is that it makes energy-intensive products more expensive.

The second theme that distinguishes Rubin’s book is that it is ultimately a hopeful book. About half way through the book, you won’t have that impression. Sometimes when I read books on peak oil, the message is essentially “Abandon all hope; all exits are closed.” I was 116 pages into the book and still thinking that this was standard peak oil fare. But then it started to become apparent that although Rubin sees and understands that this is a very serious and unprecedented challenge, he sees a world emerging with some distinct advantages. He also expects that there will be some technical breakthroughs that we simply can’t anticipate that will likely make our landing into this unfamiliar territory bumpy, but survivable.

Make no mistake, Rubin’s overall message will be sobering to the uninformed. The world Rubin foresees will contain less convenience than today’s world. Gone are fresh fruits and vegetables out of season, cheap Brazilian coffee, and New Zealand mutton. Replacing them will be more expensive, but more locally produced goods. There will be new opportunities and benefits in this changing world. Because of that, I think this book will be important for scaring people into action without causing them to simply abandon hope.

Conclusion

A couple of years ago, I took a road trip from Montana to Texas (described in My Last Long-Distance Car Trip). In that essay – described by some readers as gloomy – I mused about a world in transition. In the concluding chapter of his book, Rubin does the same. He is on a fishing trip in Canada, and he discusses what higher oil prices will mean for 1). The ability of people to fly to remote locations for holidays; 2). The impact on those who depend on those tourist dollars; 3). The future of entire populations in remote areas (much like I did when I drove through Wyoming). While fishing trips to Canada aren’t something most of us can relate to, we can certainly all relate to the idea that expensive energy is going to fundamentally change our lives – and that is the message he conveys.

The last chapter is a melancholy chapter in which Rubin sees an era coming to an end – with huge global implications. He admits that he doesn’t know how this is going to play out, but he thinks that our world is once again going to become a whole lot smaller. And that’s not all bad.

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May 24, 2009 - Posted by | book review, carbon tax, global warming, Jeff Rubin

18 Comments

  1. I just can’t see it. Once the new flexfuel Ecoboosts, and HCCIs get here ethanol will eat #3.00 gasoline’s lunch.

    We can produce prodigious amounts of ethanol, and at a price that will keep us “rolling.”

    And, then, there’s always HEVs.

    I think the only thing that’s “going away” is Oil.

    Comment by rufus | May 24, 2009

  2. I just can’t see it. Once the new flexfuel Ecoboosts, and HCCIs get here ethanol will eat #3.00 gasoline’s lunch.

    We can produce prodigious amounts of ethanol, and at a price that will keep us “rolling.”

    And, then, there’s always HEVs.

    I think the only thing that’s “going away” is Oil.

    Comment by rufus | May 24, 2009

  3. if we are able to exit the new paradigm[excessive national and personal debt; the demise of our currency; our economic uncompetitve status–in net, we are bankrupt]life is likely to be far different than any have envisioned. the simpler, more localised living may be driven by things beyond energy and unfamiliar with/to us today.

    fran

    Comment by Anonymous | May 25, 2009

  4. if we are able to exit the new paradigm[excessive national and personal debt; the demise of our currency; our economic uncompetitve status–in net, we are bankrupt]life is likely to be far different than any have envisioned. the simpler, more localised living may be driven by things beyond energy and unfamiliar with/to us today.

    fran

    Comment by Anonymous | May 25, 2009

  5. Electricity consumption in China is down (The Economist). Partly the world economy and partly heavy industry is on its way out there too.
    I don’t think the Chinese want to breathe brown air any more than we do.

    Comment by robert | May 25, 2009

  6. Electricity consumption in China is down (The Economist). Partly the world economy and partly heavy industry is on its way out there too.
    I don’t think the Chinese want to breathe brown air any more than we do.

    Comment by robert | May 25, 2009

  7. Well, they certainly don’t have to. They’ve got the money to fix it.

    Comment by rufus | May 25, 2009

  8. Well, they certainly don’t have to. They’ve got the money to fix it.

    Comment by rufus | May 25, 2009

  9. Again, much of the doomer argument was fabricated pre-Haynesville and pre-PHEV.
    But people stitched their doomster arguments onto their escutcheons, and now can’t say, “Well, the natural gas picture has changed, and batteries are really getting much better. I guess I was wrong.”
    Haynesville is the largest gas field ever discovered in the USA, google it. We have shale gas for 120 years, and we are just starting our exploitation of this resource. Shale gas is available globally.
    Rapid advances have and are being made in batteries. I mention Hitachi (one of many) as they are a serious manufacturer actually testing (with auto makers) their latest version of a battery that is 1.7 times as powerful as existing lithium batteries.
    For cars, trucks and busses, we can go to NG or batteries.
    So wher is the doom? Are you doomed as you drive a NG car? Or a PHEV that gets 80 miles to a charge, and than 60 mpg after that?
    Some airfreighting may be too expensive in the future. On the other hand, in California there is increasing use of greenhouses. You may get your out-of-season fruits and veggies form the Central Valley
    Frankly, a USA with fewer imports, oil or otherwise, would probably be a boom economy.
    Okay, that leaves airplanes. But how much of our fuel is used by planes? Must be a small fraction.
    It is worth noting that since RR’s gloomy missive about his last cross-country car trip, we now have a world glutted in oil, with literally not enough place to store excess production.
    The more I look at it, the more I wonder if oil is a sunset industry. Once it goes above $80 a barrel and stay there, many many alternatives will come out of the woodwork commercially speaking.
    If the oil thug states cannot deliver oil for less than $80 a barrel, they will see continuously shrinking markets.

    Comment by Benjamin | May 25, 2009

  10. We may see a return of sailing ships. New Zealand, for example, shipped frozen meat to Europe as early as 1888 using early refrigeration technology retro-fitted on sailing ships. We could do much better today.

    On the subject of climate change, I think the problem human society will face is the speed at which it will occur (as compared to natural processes) and the fixed nature of our property / national arrangements. Nomads can move. Nation states…..not so much.
    People being people, we will rather fight than think and adapt. We aren’t very bright. The track record of humanity is fairly clear on that point.

    On the bright side, by digging all this carbon up and releasing it, we are effectively returning the Earth to an era before plant life had sequestered carbon for hundreds of millions of years. It will be warmer. Ok, it may also be relatively toxic, but we may be able to compensate for that in our immediate localities.

    Having a much smaller human population will probably be a good thing. What a shame we will have killed our children and their children to make that possible. It could have been done consciously, by choice over time without any pain or suffering. But that would require intelligence and there is precious little of that to be found.

    Comment by Truth Seeker | May 25, 2009

  11. I agree that this is a very balanced book that isn’t alarmist, even more so than Heinberg’s work, and would be suitable to recommend to people who would be easily frightened by the prospect of having to grow their own food – or would dismiss such a suggestion out of hand as totally implausible. Rubin’s focus on the economic costs of peak oil is laudable too, IMO – those of a conservative political bent well might reject Heinberg as some kind of tree hugging hippy in short order. I’m by no means a proselytizer but I always had a gut feeling that the way to successfully convey the necessity of addressing peak oil was to focus on its economic impact, since no one likes to lose money, regardless of their background. Convince people to insulate their house and ride a bike – they’ll save money and get some exercise, win-win. Repeat that nation-wide and you’d conserve an awful lot of energy.

    Still not on board with Rubin’s pet theory that energy shortfall is the cause of all our sorrows, for obvious reasons others will likely elaborate on. I was also somewhat put off by how he covered the details of the Export Land Model sans reference to the work done by Brown+Foucher (which was published at least a year in advance of Rubin making his proclamation, and, more egregiously, describing energy return situations with neither the use of the term EROEI or any reference to Hall, Cleveland, et al; instead throwing in a quote from M King Hubbert.

    Comment by The Dude | May 25, 2009

  12. I agree that this is a very balanced book that isn’t alarmist, even more so than Heinberg’s work, and would be suitable to recommend to people who would be easily frightened by the prospect of having to grow their own food – or would dismiss such a suggestion out of hand as totally implausible. Rubin’s focus on the economic costs of peak oil is laudable too, IMO – those of a conservative political bent well might reject Heinberg as some kind of tree hugging hippy in short order. I’m by no means a proselytizer but I always had a gut feeling that the way to successfully convey the necessity of addressing peak oil was to focus on its economic impact, since no one likes to lose money, regardless of their background. Convince people to insulate their house and ride a bike – they’ll save money and get some exercise, win-win. Repeat that nation-wide and you’d conserve an awful lot of energy.

    Still not on board with Rubin’s pet theory that energy shortfall is the cause of all our sorrows, for obvious reasons others will likely elaborate on. I was also somewhat put off by how he covered the details of the Export Land Model sans reference to the work done by Brown+Foucher (which was published at least a year in advance of Rubin making his proclamation, and, more egregiously, describing energy return situations with neither the use of the term EROEI or any reference to Hall, Cleveland, et al; instead throwing in a quote from M King Hubbert.

    Comment by The Dude | May 25, 2009

  13. Benjamin,

    Thanks for info on nuclear. I checked it out,

    Thermo-nuclear power plants make electricity by producing heat that is used to vaporize water into steam that drives steam turbines that drive electrical generating equipment.

    A similar thing is true in our nuclear submarines. Heat energy from the Thermo-nuclear fission reaction is used to vaporize distilled seawater which is turned into steam which drives steam turbines which power the submarine.

    Wow !!

    Just a bunch of heat energy driving the old steam cycle.

    Amazing……

    John

    Comment by Anonymous | May 25, 2009

  14. Just a bunch of heat energy driving the old steam cycle.And that’s also true for other forms of electricity generation… oil, natural gas, coal, biomass, geothermal, solar thermal.

    Comment by Clee | May 25, 2009

  15. “It is worth noting that since RR’s gloomy missive about his last cross-country car trip, we now have a world glutted in oil, with literally not enough place to store excess production.”

    But why? Why do we have a glut? We have a glut because a recession destroyed demand. That is quite a bit different than if alternatives had simply sprung up and people had switched over. Besides natural gas – and we do have a lot of natural gas and we need to have a coherent national strategy there – there still aren’t a lot of alternatives that can compete at $80 oil.

    I always remind people of Europe, where oil essentially trades for 3 to 4 times what it does in the U.S. because of government taxes. People certainly use less and public transport is a lot more popular, but there are still gasoline-powered cars all over the roads.

    Demand in the U.S. will recover, and I am betting in the long run that oil at or above current prices will be the norm.

    RR

    Comment by Robert Rapier | May 25, 2009

  16. “I was also somewhat put off by how he covered the details of the Export Land Model sans reference to the work done by Brown+Foucher”

    I have this review in the queue at TOD, and I noted this. Someone told me that Rubin has been talking about ELM for about 5 years. I don’t know. When I first heard him speak, I thought “He has been reading TOD.”

    I have had similar things happen to me. You read your own words coming from someone else, and wonder whether they independently came to the same conclusion, or they are just ripping you off.

    Cheers, RR

    Comment by Robert Rapier | May 25, 2009

  17. If we assume that there actually is an objective truth, i.e. a truth that can be arrived at by logical deduction and not subjective experience, and we also assume that out of 6 billion people there are many at least as smart as I am, then it is highly likely that one or more other people will arrive at the same conclusions as me.

    I also conclude some people are pretty paranoid – not an original conclusion either 😉

    Comment by bc | May 25, 2009

  18. The world is a complicated place. If you happened to have a tanker full of oil, you would find that you could sell the oil today for a certain price — or sell it for future delivery at a higher price. If the cost of parking the tanker for a month or two or three is less than the higher future price (which can be tied in today), what would you do?

    Short version of above — don't attach too much weight to all those tankers on demurrage.

    There is quite a lot to be said for re-industrializing the US. Jobs, for one. Why depend on flat panel displays made in China and automobiles made in Germany?

    But re-industrializing the US would have some serious negative consequences e.g. for the Chinese & Germans. And it would require a willingness once more to build factories in the US, i.e. a roll-back in excessive intrusive regulation.

    Maybe the underlying message of this book is that the "free ride" that the Political Class, their bureaucratic enablers, and the anti-human pseudo-environmentalists have enjoyed since the 1960s is going to have to come to an end.

    Comment by Kinuachdrach | May 25, 2009


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