Why Your World is About to Get a Whole Lot Smaller: What the Price of Oil Means for the Way We Live [Hardcover]

Its refreshing that peak oil is finally getting detailed analysis from someone who cant be ignored, albiet strange that economists shoud be taken more seriously than geoligists!

The book explains why oil is depleting and when and how it may effect us all, it was clear and well written, especially for people who are new to the subject. While Mr Rubin explained the problem and its consequenses in detail the book could have done with some charts or graphs. I would have also liked some more detailed predictions. Finally, Mr Rubin falls into the trap of of being over optomistic about innovation and people power being a silver lining - just becuase great discoveries and innovations have occured in the past doesnt mean they will in the future - especially if peak oil has economic effects (that the book is predicting) which will reduce investment and the circulation of cash.

That said, the book is well worth a read, Ive been studying peak oil for two years and I still found it interesting, not at all dry for such a complex subject and I learnt a lot from it.

Good job Mr Rubin!

Most peak oil theorists seem to be geologists, political commentators, or environmentalists, so I've read plenty on the geo-politics of peak oil. Jeff Rubin is an investment banker, which makes for a rather different angle. Forget picking dates and analyzing remaining reserves, it's the price of oil that really matters. What happens to the economy at $100 a barrel, or $150? At what point does the oil price begin to bite into world trade? How will this affect development? What becomes of the whole globalization experiment?

"Cheap oil gives us access to a pretty big world" says Rubin, and that's not just about holidays and travel. We can move production around to get the best labour price, as transport costs are negligible. This keeps our shops piled high with cheap consumer goods, from toys to furniture. Cheap oil has also given us access to all kinds of foods, both cheaper everyday products, and a broader range of luxuries and international delicacies

When oil prices rise, transport costs suddenly have to be factored in, and at this point the global economy no longer makes economic sense. Transport costs will rise to the point that importing goods is prohibitively expensive. At $150 a barrel, the energy price increase "offsets all the trade liberalization of the last three decades". There are both good and bad aspects to this. On the one hand, everything becomes more expensive, consumption drops away, and the growth rate of the economy slumps. On the plus side, offshoring production is no longer economic, and industry will start to `come home'. Factories will re-open for local markets, as the savings on labour in poorer countries will be cancelled out by the transport costs. That peak oil could be the saviour of the US rust belt is not a side of the debate that gets much attention, it has to be said.

There's a lot here that you won't find elsewhere in peak oil texts. Rubin examines it as an economist, extrapolating the impacts of supply and demand in a very logical and plausible fashion, and doesn't shy away from the reality that "oil consumption and economic growth go hand in hand". This is a post-credit crunch book, which means there's some useful perspective on the outlook for the recession, and how quickly it will be over. "Recovery from recession will trigger a spike in oil prices that could provoke another recession" he warns. "What is at stake is nothing less than economic growth itself and hence our very standard of living."

Chapters on climate change are less useful. For one thing, Rubin seems to believe the US is a world leader on climate change, which is a bad place to start. No wonder then that he fixes on China as the main problem, particularly on their use of coal. Convenient, but he ignores the fact that China's emissions are our off-shored emissions, since much of it is for exports. He also ignores per-capita emissions. China is the world's largest country - of course its emissions will be huge. A bit more balance needed on these sections I think.

Overall however, this is an insightful contribution that broadens the debate considerably.

When I was young, I spent a lot of time wondering what the world of the future would look like. Would I have one of those robot dogs, like on Battlestar Galactica, for example? Would they invent time travel? Would I have bionic arms and a personal spaceship? Ironically, as we grow older and our own future starts to narrow down to slippers, the Daily Telegraph and Antiques Road Show, the future of the world becomes more obscure and more concerning. What will it hold for us all? What will it look like?

Now, thanks to Jeff Rubin, we know. It will look a lot like 1973. If you're lucky, that is. If not it might be 1958.

In successive chapters Rubin, an oil economist with CIBC Markets and an international authority on energy economics, shows how oil supply is slowly but steadily decreasing while oil demand - particularly from Middle Eastern oil producers and other developing countries - is steadily increasing. It doesn't take a Nobel prize in economics to realise that that means oil is going to get a lot more expensive. Subsequent chapters show what this will mean for us personally and society as a whole.

Of these, some are pretty obvious. It will get more expensive to drive, so people with SUV's will be trading them in for smaller models, people will drive less, and perhaps more people won't be able to have cars at all. So public transport will have to get better. Holidays are more likely to be taken at home. Similarly, it will cost more to import goods, so home made or home grown produce will become more competitive again and globalisation (or at least some aspects of it - it will still be cheap to offshore back office functions, for example) will be thrown into reverse.

This doesn't just mean getting hold of foreign grown fruit out of season will get harder. It could also mean the resurgence of domestic manufacturing industries that most of us have given up on. Unfortunately, Rubin doesn't follow this line of enquiry to its obvious conclusion - what will it mean for geopolitics when, for example, China ceases to be the workshop of the world? Will it have developed sufficiently large domestic demand that this won't matter, or will the drop in demand cause a damaging slowdown across South East Asia? He doesn't say - probably because it's too early to do so.

Perhaps the most interesting chapter is on the recent recession, which Rubin believes had more to do with oil than banking. For him, while complex financial derivatives fanned the flames, the initial spark was provided by the relentless rise in oil prices. It's possible that this underestimates the role of the miss-selling of subprime mortgages (something companies thought they could get away with because CDOs and credit default swaps allowed them to lend `risklessly', shifting the risk off their books using complex hedging arrangements - ha ha). Nonetheless, he makes a surprisingly plausible case. And, with oil at the time of writing approaching a worrying $80 per barrel, despite the fact that we are barely out of recession, we should certainly be worrying about the potential for energy prices to squash a nascent recovery before it's truly underway.

Readers should be aware that this book is clearly written for a North American audience. Rubin keeps returning, for example, to the awful prospect that you will have to start living like people in the UK or France, ditching your SUVs, taking holidays at home and relying more on public transport. For those of us living in the UK or France and doing all that already it doesn't honestly sound that bad: surely that can't be all?

That aside, though, this is an excellent book - a good, clear, persuasive argument, economically presented and well supported with both evidence and anecdote. I for one will be applying for an allotment, putting on some ABBA and looking out my old flares.