Peak oil, price fluctuations and globalization

Chen and Hsu have published a recent study about oil price volatility and its impact on global trade. A large annual panel data set covering 84 countries has been examined and the evidence shows that trade will be lower when oil prices fluctuate significantly. This supports the ideas presented earlier by Rubin in the book “Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization” that peak oil may in fact reverse globalization.

Abstract:
This paper examines whether higher oil price volatility causes a reversal in globalization. Using a large annual panel data set covering 84 countries all over the world from 1984 to 2008, we investigate the impacts of oil price fluctuations on international trade, namely exports and imports. We present strong and robust evidence that international trade flows will be lower when oil prices fluctuate significantly. We therefore conclude that oil price volatility hurts globalization.

Available from: ScienceDirect

3 Comments on "Peak oil, price fluctuations and globalization"

Kenz300 on Wed, 29th Feb 2012 5:37 pm 



Is globalization necessarily a good thing?
Each country needs to develop a plan to balance population, resources, energy and jobs. A more sustainable economy could result from a balance of population, resources and jobs.

MrEnergyCzar on Wed, 29th Feb 2012 8:46 pm 



Reversing it will bring jobs back to the states. When oil is too high to justify toilet seat covers being shipped from China, we’ll make them in our own country..

MrEnergyCzar

BillT on Thu, 1st Mar 2012 1:49 am 



Globalization is a bad thing. It was designed to do just what is happening today. The leveling of wages in China and the US. Chinese are getting raises and raises some more. Americans are getting pay cuts and fired form $25/hr jobs and hired at $12/hr jobs. A graph I recently seen shows that wages will be about equal in 5 years. THAT was the reason behind globalization. Getting the middle class serfs to work for less.