Jeff Rubin: Small new world

I have good news and bad news for you. First the bad news.

With global oil supply dwindling and demand rising, you can expect scarcity. And scarcity means high prices. You can expect triple-digit oil prices in the near future. Yes, the price at the pump is going to go up. Count on it. In the United States, that should translate into as much as $7 per gallon of gasoline, and about $2 per litre in Canada. Europe is of course already paying those prices, so they should get ready for the equivalent of double-digit gas prices. But it will also hurt in a lot of ways you may not be thinking about.

Life as we’ve known it is up for grabs in a world of expensive fossil fuels. Expensive oil means a severe curb on the free-spending lifestyle that cheap energy has afforded us for some time now. It means you can say a long and wistful goodbye to the inexpensive products manufactured on the other side of the world. You may not love them, but they have been stretching our dollars for a while now and holding down inflation at the same time. You’ll miss them when it starts to become clear that your paycheque just doesn’t go as far as it used to.

Your food in particular is going to cost a lot more — in fact, it is already getting more expensive all the time. The stuff you burn in your car is the same thing the farmer in Iowa needs to plant and harvest his corn (to say nothing of the natural gas needed to manufacture his fertilizer). It’s the same stuff that powers all the trucks and planes and ships that move everything around, the same stuff that is used as a feedstock for the petrochemical industry that produces our plastics and pharmaceuticals. It’s what the navy uses to fuel its ships, and what the local government needs to run its lawnmowers to keep the parks looking groomed. Someone is going to have to pay for all of this, and less oil means less money. Some difficult choices lie ahead.

Vancouver Sun