Over the weekend, more than one intrepid reader sent me a link to a recent article in the Edmonton Jounal that's just delightfully appropriate. It starts:
Jeff Rubin says oil will soon return to triple-digit prices per barrel, a Canadian dollar at $1.20 US will give Alberta revenge for the National Energy Program, and National Hockey League teams will return to Winnipeg, Quebec and Hamilton.
Peak oil and sports stadiums and Hamilton? It's a trifecta of win for RTH!
Of course, we've been following Jeff Rubin's energy reports for several years, since he was the head economist at CIBC World Markets. His recent book, Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization was the kind of hard-headed economic analysis that cornucopians and oil industry apologists can't just hand-wave away (even if his central analogy seems exactly backward to me).
Rubin argues that it was the $147-a-barrel spike in oil in the summer of 2008 that brought the economy crashing down, and that our economic recovery will soon bring triple-digit oil prices with it. At that oil price, the economic gains from globalization disappear and it starts to make sense to manufacture goods closer to their destination markets.
As he puts it:
Triple-digit oil prices won't only bring back the Winnipeg Jets and the Quebec Nordiques, they'll do something Jim Balsillie could not: they'll bring the Tigers back to Hamilton and the steel industry along with it.
The article concludes:
Triple-digit oil prices will cause the invention of non-carbon forms of energy, but unfortunately our rendezvous with triple-digit oil prices is not in 10 to 15 years, it's in 10 to 15 months.
RTH wrote about this earlier this year. As at this writing, crude is trading just under $82 a barrel.
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