Country oblivious to next oil shock

The spike in oil prices to US$147 a barrel last winter helped trigger the global recession.

And soon after a global economic recovery, the inevitable return to triple-digit oil prices will lead the world right back into recession. So argues Jeff Rubin, who was until recently the chief economist at CIBC World Capital Markets, the investment-banking arm of the Canadian Imperial Bank of Commerce.

Rubin says we need look no further than recent history for the evidence. Four of the last five global recessions were due to oil shocks. And the latest oil spike saw prices rise three times as steeply as previously.

Germany, New Zealand and Japan were already in recession well before the sub-prime mortgage crisis broke.

Rubin is controversial, but has a penchant for being right on oil matters. He predicted oil’s rise to US$50, US$100, and most recently US$150. He is no lightweight, having been the top-ranked economist in Canadian financial markets for more than a decade.

His opinions and insights have appeared on the front page of the New York Times, Wall Street Journal, Financial Times and Economist, to name a few.

So is Rubin’s proposition really that radical? Or does our Government and media have a blind spot when it comes to energy depletion, and its potent effect on the global and local economy?

NZ Herald