Jeff Rubin, former Chief Economist at CIBC World Markets, has written a very enlightening book about the end of cheap oil and the rise of global warming, titled Why Your World is About to Get a Whole Lot Smaller.
Here is a short video in which Rubin summarizes some key points of the book:
One of the happier possibilities for Hamilton is that higher energy costs and carbon pricing are going to make globalization more expensive. With shipping costs high, some jobs outsourced overseas will be coming back to North America.
Particularly susceptible to de-globalization are heavy goods with relatively little labour cost embedded in their price, e.g. steel. He notes that in a host of industries "ranging from chemicals to metal processing, putting a price on carbon emissions, just like soaring transport costs, will tip the competitive scale back in favour of North American industry.
On the other hand, here is what he has to say about local airports:
Most airlines need to see oil prices below $80 to so much as break even. At over $100 per barrel fuel costs, US airlines can expect to lose around $7 billion a year. As one airline executive recently commented, 'This is structural, not cyclical.'
Unable to immunize themselves from soaring fuel costs, airlines will have to dramatically change business practices. Flight of half-empty planes traveling to more remote secondary locations will be cancelled...
You may soon find yourself driving past the empty local airport on the way to a bigger one in the next city down the highway.
Pearson Airport in Toronto is not going to close.
So does it make more sense for Hamilton to expand at the airport, or to shore up its inner core in an effort to attract any steel production re-locating to North America?
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