Talk about sustaining the unsustainable. Globalization would not have endured sustained $150+ oil. They better start pumping out millions of EVs in short order or otherwise, we have a problem…
And what if oil hit a hundred dollars a barrel? That “would be tantamount to an almost tripling of current tariff rates and a de facto elimination of the entire cumulative tariff reduction of the past 45 years.”
Tariff reductions = “trade liberalization.” Globalization, meet your nemesis: peak oil. As supplies of cheap oil get tight, long-standing global economic trends could be poised for upheaval.
The relationship between cheap transportation costs and growing world trade is complex, and some economists have argued that it is less important than others. But as oil prices rise and the cost of container shipping and air freight surge with it, one is hard-pressed to see how that cannot have a serious impact on global trade.
The implications could be dramatic. One reason Mexico hasn’t seen the economic gains that advocates of NAFTA hoped for is that China undercut it. But what happens if trucking plastic chairs from Mexico suddenly becomes cheaper than the slow boat from Shanghai? Eighty-five percent of Wal-Mart’s suppliers are in China — what happens to its margins if transportation costs keep going up?
The logic of globalization mandates that the world is becoming a smaller place, but if energy costs reverse that, the Far East might start living up to its nickname, once again.
