Stop the world, Jeff wants to get off

…Mr. Rubin has since departed from CIBC. This, he claims, is significantly due to his new book: Why Your World Is About To Get a Whole Lot Smaller. It’s easy to see why the bank wouldn’t like it. But that’s likely not because it’s too boldly insightful, as Mr. Rubin might believe. It’s because Mr. Rubin has gone from the dismal science to the Dark Side.

The former CIBC star is both a fine writer and an engaging speaker, but he has contracted a bad case of Peak Oil Theory, a condition that afflicts those inclined to anti-materialism, Big Oil paranoia and Pollyanna-ish belief in policy wisdom (But then Mr. Rubin is actually in favour of carbon tariffs, which would collapse world trade faster than you could say Smoot-Hawley).

Mr. Rubin admits to having caught the Peak Oil bug from Dr. Colin Campbell, its leading guru. Dr. Campbell thinks that the plateauing of conventional oil production would mean “the end of economics.” Similarly, Mr. Rubin claims to foresee the end of life as we know it, and asserts that “It is hard to say which possibility is more alarming to economists — that the world has reached its peak oil production plateau, or that the rules of their vocation don’t seem to be working any more.”

But Peak Oil is essentially a primitive, static theory based on treating the entire energy economy as if it were a single, depleting oil well, underplaying innovation and failing to grasp — or refuting– the role of market pricing because, as Mr. Rubin claims, economics only tells “half the story.” To argue with a Peakster, meanwhile, is to be cast as someone who “just doesn’t want to believe.”

Mr. Rubin’s take is, like that of most peaksters, profoundly moralistic. Anybody who writes about “the 18-wheeler of globalization” being thrown into reverse is clearly no great fan of world trade. Expensive oil will mean “a severe curb on the free-spending lifestyle.” But then he suggests that that life “wasn’t particularly great to start with,” since “Smog-congested cities, global warming, oil slicks and other forms of environmental degradation are all part of the legacy of cheap oil.”

Financial Post