The Future of Oil

Jeff Rubin, author of Why your world is about to get a whole lot smaller, and Canadian journalist, Andrew Nikiforuk discuss the economic, environmental and social implications of conventional oil. The video is courtesy of TVO and was filmed at the Rotman School of Management at U of T earlier this year.

Jeff thinks that we have not reached peak oil per se, but a series of forthcoming commodity price shocks will make the price of oil more volatile and push it over $100 a barrel and eventually to $200 a barrel. Conventional oil is becoming more scarce but the unconventional stuff found in the Alberta's oil sands or in Venezuela, is plentiful but will become really expensive in the near future. Off-shore drilling has provided cheap oil to this planet for many years, but disasters like the recent Gulf Oil spill point to the precarious nature of such a process and the enormous risks posed to ecology and human beings.

"The world isn’t about to run out of oil—it’s just running out of oil that we can afford to burn. And whether we move goods by air, ship, truck or rail, the global economy runs on oil".

"In order to insulate ourselves from even greater oil price shocks in the future, we must move from the hugely energy-intensive model of a global economy to the far more sustainable model of a local economy. And that means we must re-engineer our lives to adapt to the contours of a much smaller world."

Andrew Nikiforuk is an outspoken critique of the Alberta oil sands which he regards as a petro state. He draws our attention to the negative environmental ramifications of the project and how it is tainting our image internationally. He also suggests that there are smart petro states such as Norway who have sovereign funds that help stabilize the oil economy. In essence, they maintain good oil production while diversifying the economy. They invest oil revenue into many sectors of the economy and also put money aside for future generations. Canada has lost over 300,000 jobs in the manufacturing sector because of an appreciating petro dollar. Without diversifying the economy, petro states will inevitably push up their real exchange rate and contract Dutch Disease.

Anyway, check out the video.