Moore says globalization simply isn’t that fragile. It will not get thrown into reverse, but it will continue to evolve, as it always has. “Twenty years ago we didn’t talk about [outsourcing to] China or India very much at all. If you had said those are two big trends, we would have scratched our heads and said, ‘I don’t see it.’ ” Short of truly extreme oil prices (in the range of $500 a barrel), globalization will “continue to go in new and surprising directions,” he says.
Alarmists tend to portray affordable oil as the precondition for global trade, when it is really just one variable among many. Jagdish Bhagwati is a professor of economics at Columbia University and the author of In Defense of Globalization. He says there is a basic flaw in this end-of-globalization argument. It assumes that rising oil prices will affect only transportation costs. But that’s not the case, he says. Oil prices also affect the production costs of traded goods. If those production costs go up more in the importing countries than exporting ones, that makes trading more profitable, which offsets the added transportation costs, explains Bhagwati.
Fears of China’s rising energy demand pushing up oil prices—and wrecking globalization—also tend to be overstated, argues Lovins, the head of the Rocky Mountain Institute. Much has been said about U.S. President Barack Obama’s ambitious new energy scheme, but already China is on pace to become the world leader in fuel cell technology and electric motors and has far surpassed the U.S. when it comes to developing and building cleaner coal plants. “China’s leadership is deathly afraid of falling into the oil trap that we did,” said Lovins, speaking at a recent conference on energy security.
As fuel costs eventually begin to rise again, some trade will inevitably dry up. Indeed, as Rubin outlines, that’s already happened with steel shipments from China to North America and the trade of bulky furniture. But for all the panic of last year’s oil spike, the changes it prompted haven’t been overly dramatic. It turns out there’s a lot of low-hanging fruit that can be picked off by rising oil prices before society starts to crumble. Rubin highlights a few, from lamb shipped from New Zealand to salmon that’s caught off the coast of Norway, shipped to China for processing, then finally to North America for consumption.
Rubin argues that if you add up enough of these seemingly minor changes, the world will eventually be unrecognizable. But this isn’t necessarily a bad thing, he says. “I don’t think this book is apocalyptic in any sense,” he says. There are upsides to the story: manufacturing jobs will come home, far-flung suburbs will be reclaimed by farms for local food production, he argues. And while Rubin disagrees that the world will be able to sidestep future oil spikes through new energy policies and new technologies, he doesn’t completely buy the dark prophecies of the peak oil theorists. “We may be energy poor, but we are innovation rich and necessity is the mother of invention,” he writes in the book’s conclusion. “I wouldn’t write off our economies just yet.” Luckily for the doomsday set, the people now shaping our energy system have not.
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