Jeff Rubin says: get ready for a bumpy ride!
I've just finished reading Jeff Rubin's latest book titled "Why Your World Is About To Get A Whole Lot Smaller". I was pleasantly surprised with its readability, well structured argument, and solid list of supporting source notes.
Jeff draws on his twenty years as Chief Economist at CIBC World Markets to make the case that our world is about to get a whole lot smaller as transportation costs rewrite global economics. Global markets grew up and thrived when oil was averaging $20 per barrel. Current oil prices are near $70 per barrel and projected to rise significantly as the world's supply of conventional oil stocks deplete at the rate of 4 million barrels of oil per day.
Total world oil production now sits at 73.3 million barrels per day, with the US alone consuming more than 27 percent. Western Europe, the OPEC countries, Russia and Mexico together consume another 34 percent. China, Japan, India, Brazil, Canada and South Korea jointly account for a further 30 percent of world oil consumption; leaving just nine percent to all remaining countries. Jeff predicts that demand will continue to outstrip supply as China, India and Brazil strive to grow their economies in an attempt to achieve a standard of living nearer that of Western countries.
We have become so dependant on a continuity of oil stocks that we are now pouring tens of billions of dollars into unconventional oil supplies like Canada's oil sands (estimated to contain 165 billion barrels of oil). The technological hurdle of extracting oil from the sand is such that best estimates put us at only producing 4 million barrels of synthetic oil per day by 2020. The environmental costs are such that we may never reach those targets. The production of a single barrel of oil from the Canadian oil sands pollutes 250 gallons of fresh water, consumes 1,400 cubic feet of natural gas, and emits over 220 pounds of carbon dioxide into the atmosphere. We expend 1 Btu of energy for every 3 Btu we extract from the sand -- 33 times the expenditure when compared to extracting and processing conventional oil.
With ninety percent of every shrinking barrel of oil committed to transport fuels, the disruptive economics on transportation will have a huge impact on our lives. Get ready for far less travel, ever smaller and fewer cars per capita, smaller homes, denser cities, fewer imported goods, and more costly and less varied food stuffs.
If you're betting on alternative sources of energy to save the day, Jeff Rubin pours cold water on that idea. No mix of alternative energy will be able to adequately step in to alleviate the world's diminishing supply of cheap oil.
It's not all bad news though. Jeff predicts that local economies will be revitalized as rising transportation costs bring jobs back home. He also sees a better future for our cities and neighbourhoods as we are forced to wean ourselves from an unhealthy addition to cheap oil, the automobile and suburban sprawl.
Get ready for a bumpy ride into the future!
Jeff draws on his twenty years as Chief Economist at CIBC World Markets to make the case that our world is about to get a whole lot smaller as transportation costs rewrite global economics. Global markets grew up and thrived when oil was averaging $20 per barrel. Current oil prices are near $70 per barrel and projected to rise significantly as the world's supply of conventional oil stocks deplete at the rate of 4 million barrels of oil per day.
Total world oil production now sits at 73.3 million barrels per day, with the US alone consuming more than 27 percent. Western Europe, the OPEC countries, Russia and Mexico together consume another 34 percent. China, Japan, India, Brazil, Canada and South Korea jointly account for a further 30 percent of world oil consumption; leaving just nine percent to all remaining countries. Jeff predicts that demand will continue to outstrip supply as China, India and Brazil strive to grow their economies in an attempt to achieve a standard of living nearer that of Western countries.
We have become so dependant on a continuity of oil stocks that we are now pouring tens of billions of dollars into unconventional oil supplies like Canada's oil sands (estimated to contain 165 billion barrels of oil). The technological hurdle of extracting oil from the sand is such that best estimates put us at only producing 4 million barrels of synthetic oil per day by 2020. The environmental costs are such that we may never reach those targets. The production of a single barrel of oil from the Canadian oil sands pollutes 250 gallons of fresh water, consumes 1,400 cubic feet of natural gas, and emits over 220 pounds of carbon dioxide into the atmosphere. We expend 1 Btu of energy for every 3 Btu we extract from the sand -- 33 times the expenditure when compared to extracting and processing conventional oil.
With ninety percent of every shrinking barrel of oil committed to transport fuels, the disruptive economics on transportation will have a huge impact on our lives. Get ready for far less travel, ever smaller and fewer cars per capita, smaller homes, denser cities, fewer imported goods, and more costly and less varied food stuffs.
If you're betting on alternative sources of energy to save the day, Jeff Rubin pours cold water on that idea. No mix of alternative energy will be able to adequately step in to alleviate the world's diminishing supply of cheap oil.
It's not all bad news though. Jeff predicts that local economies will be revitalized as rising transportation costs bring jobs back home. He also sees a better future for our cities and neighbourhoods as we are forced to wean ourselves from an unhealthy addition to cheap oil, the automobile and suburban sprawl.
Get ready for a bumpy ride into the future!
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