Public intervention today by Jeff Rubin at the conference of ASPO-USA which was held in Washington two weeks ago. former chief economist Jeff Rubin at CIBC World Markets is the author of the book, among others: Why your world is about to get a lot smaller . His views on the crisis corresponds to what we have repeatedly argued (with some dissent, indeed, we would not otherwise radicals) in Rientrodolce and that ASPO is essentially a fact. The 2008 crisis was triggered by the rising cost of energy in the preceding four years the crisis. Moreover, the consequences of this crisis will be very important:
the end of economic globalism powered by cheap oil. It would obviously be an excess of pride
say exactly what lies ahead instead of globalization, no one knows. But not even be prepared for a change and try to restore conditions impossible is an excess of pride even worse.
The limits of the analysis of Rubin are all in his, said, economism. The conclusion appears to the undersigned, in his rather simplistic to provide a return of Suburbia (the product of an urban decades, the so-called suburban sprawl ) the status quo ante , come se ripristinare campi coltivabili al posto delle villette e delle strade fatte per raggiungere le villette fosse un lavoretto da nulla, anche eventualmente guidato dal costo dei prodotti agricoli.
La traduzione è mia e perciò non priva di difetti. Chi volesse ascoltare Rubin può andare su ASPO-TV e godersi il suo keypoint, oppure leggere la trascrizione in inglese su The Oil Drum .
Il petrolio e la fine della globalizzazione.
(traduzione italiana della trascrizione dell'intevento di Jeff Rubin ad ASPO-USA)
Conoscere la natura della malattia è di solito un primo passo essenziale per trovare una cura. E così, is a recession. Knowing the true nature of a recession can help us a lot not to fall into another. In particular, when the recession seems to be that we have just experienced the deepest global recession ever since the war.
The conventional point of view, married by central bankers, finance ministers, and experts that you see on TV would have us believe that the recession that we are still living here in America, and indeed throughout the world, not was nothing but a financial crisis, whose roots lie in the failure of sub-prime mortgage market in the United States. In other words, a series of patched and unsaleable houses in a depressed real estate market in places like Cleveland, all financed by easy credit and subprime mortgages, they would hit the financial markets as some toxic hydrogen bomb, all of a sudden, a collapse of the housing market in the United States, it would be somehow transformed into a deep global recession.
Damn, I did not think Cleveland was so great! Anyone to tell me the impact of the subprime mortgage market in the financial markets. [... ..] But there is a big difference between blowing up the bonus pool of investment banks, and to blow up Wall Street, with all that followed.
If you're wondering why risk-averse institutions such as the bank I worked for, had to sign almost $ 10 billion of assets in things called collateralized debt obligations, which were funded pool of subprime mortgages. The reason is quite simple: they had a AAA rating, which means that the rating agencies assigned the risk of default with the same probability that the U.S. Treasury would end up in default. What the banks have lost sight of is how the rating agencies are paid. Rating agencies are not paid by investors, are paid by issuers. In economics, we call this moral hazard problem. In the field of investment banking, we call it "Shit Happens."
It 's easy to see how the sub-prime mortgages blew up Wall Street, is a bit' more difficult to see how this is the cause of the global recession. Because there are economies that had subprime mortgages and who have suffered a recession even deeper than the U.S.? Because these economies went into recession even before the American economy? Maybe, just maybe, there was something more important in the course - more important for the global economy on Wall Street or the sub-prime, as a barrel of oil at $ 147, for example. If we know something of the world economy over the past 40 years, we know that the cheap oil works very well. All of a sudden, oil becomes expensive and everything freezes.
Every major recession in the postwar period has the impression del petrolio. Il primo shock petrolifero del 1973 portò a quella che allora fu la più grave recessione del dopoguerra. Il secondo shock petrolifero OPEC ha portato a non meno di due recessioni: nel 1979 e nel 1982. E poi, quando Saddam Hussein invase il Kuwait, e lasciò metà dei suoi giacimenti di petrolio in fiamme, l'olio schizzò al prezzo allora inaudito di 40 dollari barile, ed ecco che il mondo industrializzato cadde di nuovo in recessione.
Accidenti, mi chiedo cosa sia successo al prezzo del petrolio prima di questa recessione. Mi sembra che il prezzo del petrolio sia passato da circa 30 dollari barile, all'inizio del 2004, a quasi 150 dollari barile entro il 2008. Anche in termini reali, cioè aggiustati per l'inflazione, questo aumento dei prezzi è stato più del doppio rispetto all'aumento del prezzo sia del primo che del secondo shock petrolifero dell'OPEC. Se questi ultimi hanno portato a recessioni devastanti, perché il più grande shock petrolifero di tutti i tempi, non dovrebbe essere il colpevole evidente di quella che è stata la più profonda recessione fino ad oggi?
Ci sono molti modi in cui gli shock petroliferi creano recessioni globali. In primo luogo, il trasferimento di reddito. Quando il petrolio è passato da 30 dollari barile, a circa 147 dollari barile, oltre 1 trilione di dollari di reddito è stato trasferito dal mondo industrializzato consumatore di petrolio ai paesi dell'OPEC. Fatto che non è stato neutrale per the economy because savings rates in the countries from which the money was, like the United States has dropped to almost zero, which means that consumers were spending everything they earn. And where the money was going, places like Saudi Arabia or Kuwait or the UAE, the savings rate rose by almost 50%, then certainly a process is not cost-neutral with respect to the question.
The high oil price leads to recession, but also causing a displacement of non-energy costs. Two years ago, when a gallon of gasoline cost $ 4, the low-income Americans were paying more to fill the tanks of their cars than they used to fill their stomachs.
But by far the most important mechanism, the most important route by which oil prices cause recession is through their impact on inflation, and their impact on interest rates.
There are people to blame the subprime crisis. You could start with the housing finance companies that have approved fraudulently mortgages, then quickly sold to financial institutions. We can blame the financial institutions have played Russian roulette with depositors' money, and of course we can blame the rating agencies has assigned AAA rating to all this. And we can blame the regulators, who were sleeping driving, such as the Securities Exchange Commission, who were either blind or indifferent to the systemic risk on Wall Street for subprime mortgages.
However, the real culprit behind subprime mortgages was the lowest cost of capital and interest rates of 0%. All the greed of the world could do what he has done the easy money that the Fed has made it possible. The rates of subprime mortgages were created by interest rates. And the subprime market has been fooled by interest rates. Everyone agrees on this scenario. The question that people do not seem to ask is: "Why do interest rates have gone from 1% to 5.5% from 2004 to 2006?"
Well, any central banker, even Alan Greenspan, acknowledged that the cost of taking a debt is a mirror image of the inflation rate. We had a rate of 1% of federal funds in 2004 because we had an inflation rate of 1%. All of a sudden, in 2006, inflation was more than 5.5%, the highest in America, because, look what a coincidence, in 1991 there was the last oil shock. All of a sudden, money was no longer free. All of a sudden, you got more credit cards that you never asked in the mailbox. And suddenly, people who had lived with rates of negative amortization loans sub-prime had to begin paying 7% or 8%.
Well, if interest rates were not increased, this would not occur. Why is inflation rising? Almost all the increase in inflation came from one component of the consumer price index basket of the United States - the energy component. By the end of 2006, inflation was running at 35% efficiency, due to a price: the price of oil. The price of oil rose from $ 30 per barrel, and, incidentally, every oil analyst at the time said that he would remain at that level to more than $ 70 a barrel. If oil had remained at $ 30 a barrel, or inflation or interest rates would have never grown. All these good people in Cleveland would probably ancora lì, nelle loro case finanziate mutui sub-prime con tasso di interesse dello 0% . Lehman Brothers e Bear Stearns esisterebbero ancora, e probabilmente io sarei ancora il capo economista di CIBC.
Ma non è questo quello che è successo. Perché i prezzi del petrolio salirono a 147 dollari barile? Ad un livello dove praticamente ogni economista ha detto che non poteva arrivare. Beh, ci sono due ragioni per le quali gli economisti dicevano che i prezzi del petrolio non potevano entrare nel dominio della tripla cifra, e questi attengono al venerato principio della domanda e dell'offerta. In primo luogo, la teoria della curva di offerta inclinata verso l'alto - dei prezzi del petrolio produrrà l'aumento dell'offerta, proprio come did after the OPEC oil shock, when oil began flowing from Prudhoe Bay and the North Sea. And this not only allowed him to break the stranglehold imposed by OPEC countries, but brought down oil prices.
Unfortunately, as you all know, there are more than Prudhoe Bay or the North Sea. Yes, there are the oil sands, and deep water deposits, and the supply curve upward sloping brought new sources of supply, but only at prices that ultimately could not afford to burn.
And the venerable principle of supply? Should not the price of oil in the triple digit reset question? Well, it did so in some places. He did the United States. He did it in Canada. He did it in Japan. He did so in Western Europe. Fifteen years ago, if the economies had suddenly reduced their appetite for oil, oil prices would fall, because 15 years ago, these countries would represent almost three-quarters of global oil consumption. Today, they account for barely half. Tomorrow, they represent less than half. It was not the American consumer that has driven the demand with its price per barrel to $ 147 during the last cycle, and certainly not the American consumer who will lead a barrel of oil at $ 147 and even higher in the next cycle. We have already seen the peak demand in this economy, e l'economia degli altri paesi industrializzati.
Dove pensate che la domanda di petrolio sia cresciuta più forte? Molti di voi diranno probabilmente la Cina, e in effetti è così. La domanda cinese e 'cresciuta da circa 2 milioni di barili al giorno, a circa 9 milioni di barili al giorno. Ma io conosco un posto dove la domanda di petrolio sta crescendo anche più velocemente che in Cina. Ed è lo stesso luogo da dove i vostri politici hanno detto che la vostra offerta verrà in futuro. L'anno scorso, l'OPEC e i due produttori non di cartello, Messico e Russia, hanno consumato 14 milioni di barili al giorno. Cioè quasi due Cine.
Cosa rende l'OPEC così assetato del suo stesso carburante? Beh, se avete never been very successful in Caracas, you'd understand. In fact they are paying 20 cents a gallon. And if you go to Riyadh, Saudi Arabia, just a little 'more: 40 cents per gallon. And are 40 cents a gallon, and that costs $ 20 a barrel, or $ 150.
If you think that driving is a good deal in the OPEC countries, know that nothing can compete there as the convenience of large consumers of electricity. What is the best thing to do in Dubai? Skiing, of course. I like skiing, I am from Canada. But skiing in an area where it is so hot to fry an egg on the sidewalk leading to consume a lot of energy. In fact, one day, to Ski Dubai requires energy equivalent to a North American consume in a month of driving. So the question is not really productive capacity that OPEC has. But the ability to export is the real issue, and every year this is always less, because every year, domestic consumption grow.
As is their oil and gas them if they want to enjoy skiing in one of the hottest deserts in the world, it is their right. All I'm saying is that, probably, the future supply of oil will not come from OPEC, and most likely will not be cheap.
Sure, the price of oil fell to $ 40 per barrel during the recession. And for many people, this is proof enough that there can be businnes with the price of oil in the triple digits. But what these people forget is that the last recession, world oil demand has dropped. E 'fell for the first time since 1983. Such was the severity of this recession.
Peak Oil is not a problem if you're feeding the economy declines. Peak Oil is only a problem if our economy starts to grow. The first thing to know about an economic recovery is that economies begin to consume more oil. The second thing to know about an economic recovery is that oil prices start rising. Where is the price of oil today? Over $ 80 a barrel. With the exception Germany and Canada, any other G7 economy is still miles below the level of GDP before the recession.
And yet, go back three years and the price at which oil is traded today would be a world record of all time. Now is the price at which it traded in the shade of the deepest global recession since the war. Where do you think oil prices are going?
I'll tell you where I think oil prices are going. Even in the most anemic economic recovery like the present, we are going to triple-digit oil prices. And we'll get there in 10 or 15 years. It is certainly not clear to me that the global economy is able to manage this event better than in 2008. Now, a lot of people say, 'Jeff, economic history tells us that the Scarcity is the mother of invention. Give us 10 or 15 years of adaptation, and we will develop alternative technologies, so as not to be dependent on fossil fuels. "
And they are right. Give us 10 to 15 years, and we will solve this problem from the supply side. But as I said, our meeting with the triple digit oil prices should not be here in 10 or 15 years, but in 10 or 15 months. So instead of trying to transform into high-octane fuel, the cow shit, what we are about to learn is to literally leave the road, and it is one that is already success. In 2009, we had 4 million cars on the road in less than last year. In the next decade, 40 million North Americans take the exit lane. The question is: "There will be a bus to go on?" Instead of giving $ 40 million to General Motors, what we should do is spend 40 billion U.S. dollars for public transit, so we had a bus to go forward.
suddenly in a world with oil prices at triple digits, all speed limits changing economy. And this is one of the problems we have here in America (and what about Europe and Italy? NDT), is that we do not realize that the limit of velocità della nostra economia è cambiato. L'economia può crescere ad una velocità del tutto diversa quando il petrolio è a 20- 30 $ al barile o quando il petrolio è 80-150 $ barile.
E questo è qualcosa che non credo che l'amministrazione abbia capito. Perché ciò che il Presidente Obama non può portarci è il petrolio a buon mercato. Si può avere petrolio costoso. Possiamo costruire un gasdotto dalle sabbie bituminose canadesi verso le raffinerie del Golfo (del Messico NdT), e possiamo estrarne il petrolio. Ma per ottenere il tipo di petrolio necessario, saranno necessari quei prezzi del petrolio in tripla cifra che non possiamo permetterci di pagare. Ma cercare di rianimare l'economia con misure di stimolo fiscale non è un sostituto del petrolio a buon mercato. Non può far crescere l'economia più velocemente. Renderà solo il deficit molto più grande.
Peggio ancora, il prezzo del petrolio a tre cifre non solo manderà letteralmente fuori strada milioni di persone, ma rimanderà di nuovo la nostra economia in recessione, a meno che, naturalmente, non cambi l'economia. Non possiamo fare molto con il prezzo del petrolio. È qui che si trova la curva di offerta. E se qualcuno ha dei dubbi basta guardare alle sabbie bituminose canadesi. Lì ci sono sicuramente 170 miliardi di barili, e altri 500 miliardi di barili di olio pesante giacciono nella cintura dell'Orinoco, ma non è questo il problema. L'esaurimento is not only a geological concept, is fundamentally an economic concept. Because if the cost of extracting oil from tar is bigger than we can afford, no matter how many billions of barrels of oil are in tar sands.
So how can we adapt? How do we grow in an economy with three-digit oil prices? It changes the nature of our economy. In a world of triple-digit oil prices, distance costs money. The global economy, which produces something to be a part of the world to sell across the world, it makes no economic sense.
Take for example the steel industry. Shortly before the recent recession, some very strange things were happening in the U.S. market. When oil prices rose above $ 100 a barrel, all of a sudden, China's exports of steel in the U.S. are down to two-digit rates. And suddenly, the production of steel in the United States began to grow. And suddenly, U.S. Steel Corp., which was one of the biggest losers in the market, has seen the stock price doubled.
What was happening? I'll tell you what was going on. For the first time in 20 years, was more economical to produce steel in the United States to import it from China. Why? Consider what China must do to send steel. First, should receive iron ore from Brazil across the Pacific Ocean, turning it into steel, which is itself an energy-intensive process, and then send it to you again across the Pacific Ocean. A $ 20 a barrel, it works. A barrel of $ 100, does not work. Adds 60 to 70 dollars, the cost of a ton of hot rolled steel. How much time do you think there is work in steel production today? An hour and a half to two hours (per tonne NDT). Transport costs have suddenly exceeded labor costs. Who would dream that the triple-digit oil prices would breathe new life into our hyper exploited Rust Belt? In a world where distance costs money is exactly what is going to happen.
take food. Last year, China exported 6,000 million dollars worth of food in America, everything from apples to frozen chicken wings, giving a new meaning to the delivery of Chinese food. The steel should not be refrigerated. Hopefully chicken wings must be frozen. What do you think food refrigeration units? Fuel! The same thing that powers the ship. In the world of triple digit oil prices - does not matter that the agricultural labor is cheaper in China than the United States because the cost of bringing those frozen chicken wings from us will be too high.
The fact is that it will stop using steel in America, certainly not how we are going to stop eating. What we are going to do is produce our steel and our food. Unfortunately, most of our agricultural land has been cementified expansion of residential suburbs (suburban sprawl). As the price of oil in triple digit gives new life to our Rust Belt, the oil price to three figures turn away those in the suburbs that were farmland, thirty or forty years ago. The same economic forces that have devastated the manufacturing sector and cemented our agricultural land, when oil was cheap and plentiful, and transportation costs accessories, those same economic forces will do the opposite in a world of prices oil to three digits. And this is not determined by the government, is not determined by ideological preferences, and is not determined by our willingness or unwillingness to reduce our carbon emissions. This is just Economics 100%.
The three-digit oil price is going to change the cost curves. And when you change the cost curves, it is going to change the economic geography at the same time. I know that the world of triple digit oil prices has been the domain of the apocalypse. For many, the advent of peak oil and the oil price to three digits mean the end of our economy. For some, civilization as we know it. I do not share this pessimism. I do not share this vision. I am an economist and I believe in the power price.
Certainly, if we want to take frozen chicken wings and our steel across the world, if we want to commute back and forth eighty miles in our SUV, peak oil will not just be a recession, the Peak Oil will be the peak of GDP, and this will be apocalyptic. But as I said, I'm an economist, and I believe in the power price. I think we're about to change. I believe that our food does not predict or steel imports from the other side of the world and I do not think that we are committed, irrevocably, in the suburban sprawl.
And you could even discover that new world just around the corner is also a nice little bit 'more livable, more sustainable and "fat" Big One we are going to leave behind.
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