This concept became Rubin’s preoccupation, and in his spare time—unbeknownst to his bosses at CIBC—he started writing a book about how the era of soaring oil prices would change the world profoundly and forever. This winter, Rubin told CIBC about the project and his plans to promote it, and the two decided to part ways. “I don’t think the message of this book is necessarily a message that any particular investment bank would want to be associated with,” said Rubin in an interview.

It’s easy to see why. Oil has since fallen back to about $60 a barrel, but Rubin is as certain as ever about the future of fossil fuels. In Why Your World is About to Get a Whole Lot Smaller, he argues that the current cool-down in prices is merely a brief respite before the next, even more severe spike. When the recession ends, “demand is likely to pop back up like a jack-in-the-box,” he writes. And, because “our whole way of life depends on the price at the pumps,” the disappearance of cheap oil could mark the end of life as we know it. Rubin subscribes to the notion of “peak oil”—a long-held hypothesis that production will soon max out and begin a long, slow descent, one that will bring about the end of cheap food, air travel, car culture, the potential disintegration of our tolerant society, and most importantly, the breakdown of the system of globalization.

- Ok, right here, I’m going to have to accuse Colin Campbell of some spin. Peak oil is not a notion. It has either already happened, will hit soon or will hit eventually. This is because oil is finite. It has to peak. I also don’t think it’s likely to be a long, slow descent. I suspect that with the volatility of oil prices of 2008, there could easily be more monstrous volatility in price and surprising elasticity in this staple of existence for the minority world. To imply notional status to peak oil, in quotes even, is to put Campbell on the path to denial like climate change deniers who I’m still happy to put in the same Venn diagram with holocaust deniers.

But there is a problem with the premise to which Rubin has attached his career and his reputation: a growing number of economists, and even environmentalists, say this dark scenario is flat-out wrong. It obsesses with counting how many barrels of oil are left in the ground. It also oversimplifies the powerful force of globalization, all the while ignoring some dramatic changes now unfolding; changes that could significantly reduce the world’s reliance on oil. New technologies, new forms of energy, and a new focus on conservation and efficiency are shifting us onto a dramatically different energy path. Your world is not about to get smaller, they say, but it is about to get a whole lot leaner.

- If we choose to not obsess about the number of barrels left in the ground, we can just count them. Then when they’re gone, they’re gone. Some time before that will be peak oil. And we go with counts from OPEC: they’ve been lying about their reserves for up to a few decades, which is why we don’t really know how much oil is left. The producers know, but “we” don’t. So how closely we count barrels may not really matter much.

- Oversimplifying globalization is a stretch of a criticism of the former chief economist of Podunk Bank. No, I meant CIBC World Markets. Rubin may understand better than everyone in the world except for a few hundred people the sophistication of globalization.

- Conservation, efficiencies, new technology and new energy forms are great. I love them. I want to see them all on-stream and making the world awesome in 12 months or less. In fact, I so want them to happen in the next 5 years or so to meet our last window to stop what the UN climate scientists have been warning about. Do I think corporate and thereby, political, will is capable of ensuring that, even with the nationalization of GM today? No. We’re more likely to bypass our proactive window and suffer radical energy and economic shocks. Humans are lazy, greedy and focussed on today more than saving or planning for tomorrow. Please, someone, prove me wrong so the Arctic ice cap doesn’t melt a few summers from now.

Two years ago, Peter Tertzakian, the chief energy economist for ARC Financial Corp., appeared as a guest on The Daily Show with Jon Stewart. Talking about a future energy crisis, Stewart posed one of his trademark, over-the-top questions: “How long do we have before masked madmen roam the cities with AK-47s, Mad Max style?” Tertzakian, who looks like a brainy version of Stewart with glasses and flecks of grey hair, cracked a lopsided smile. “It may not come to that,” he deadpanned. “The good news is that although these transition periods in energy are uncomfortable, usually we come out for the better.” Just as whale oil was replaced by kerosene, which was eventually replaced by today’s fossil fuels, another shift will come.

- Sure energy shifts do occur. Comparing the most profound reliance on one energy source in all of human existence, oil, to the transition from whale oil to kerosene to fossil fuels suggests the scale of economic/energy activity during all those shifts, as well as their effect on climate, are comparable. They’re far from comparable. That’s a terrible, self-serving analogy.

In his latest book, The End of Energy Obesity, Tertzakian goes even farther, arguing that escaping the energy trap may not be as difficult as it’s made out to be. Some relatively painless changes in our everyday behaviour could radically, and quickly, reduce the amount of oil we need, he says. Many of Tertzakian’s arguments actually closely parallel Rubin’s. Both authors trace the same historical problems with society’s oil addiction and how closely energy consumption has always been tied to wealth creation. And both see problems with past efforts to create energy efficiencies—ironically, past gains have only prompted people to use more energy. But Tertzakian sees the world heading off on a very different trajectory than Rubin.

- I loved the end of Gore’s movie because it showed a graph with curves of our intervention. We “could” change this, that and the other thing and avoid the 2 degree temperature increase that will put us over the climate edge. But will we? Tertzakian thinks it’s possible. So do I. But judging from the corporate-government cabal that is, at best, producing greenwashing, irrelevant plans to avert climate breakdown, I’m growing pessimistic. That really bugs me.

- But I will also suggest that such “relatively painless” changes are mythical. 20 years ago, many people were quite satisfied that recycling paper and containers will save the planet. Naive? Yes. Convenient? You bet. Then we grew to love Hummers and NASCAR.

Too often, says Tertzakian, writers and economists who subscribe to the doomsday scenarios are “trapped into thinking about energy in the energy realm.” He argues you first need to flip the problem on its head. The amount of energy we use is actually much less than the amount that’s extracted at the source, he says. For instance, of every 100 barrels of oil produced at the wellhead, only 15 barrels are ultimately used by the consumer. All the rest—85 barrels worth—is frittered away, whether in the refining process or in gas engines (where most of the fuel is burned off as heat, not power). The losses are even more dismal when it comes to electricity. For every 100 lb. of coal used to produce electricity, only two per cent reaches the light bulb in your house—98 lb. are lost, either escaping as heat in power lines and transfer stations, or wasted by inefficient appliances. That means small changes in behaviour to limit the amount of energy we use (or waste) ripple up through the system exponentially. “For every unit I don’t use at the wheel, I don’t have to find six units at the wellhead,” says Tertzakian. And for every unit of electricity that isn’t used, there’s a 50-times savings at the power plant. These inefficiencies are “our biggest failing when it comes to energy, but also our biggest opportunity,” he says.

- This whole paragraph presumes that the light bulb I don’t turn on today will allow the multiplied amount of energy to be stored so that it can be more productive way in the future at a lower multiplier level. Honestly, someone is going to turn on a light bulb tomorrow and it will be just as inefficient. If we left the tar sands oil in the ground…now THAT would make a difference!

Of course, the idea of cutting back energy use has long implied cutting back on our standard of living. But for the first time ever, that may no longer be true. New technologies emerging, not from the energy business, but out of California’s Silicon Valley, could make all the difference, says Tertzakian. Take Cisco’s new virtualization technology—a kind of futuristic version of Skype—that could dramatically reduce the need for people to travel and commute in the near future. Or “intelligent buildings” that can automatically monitor where people are and cut back unnecessary energy use. Other technologies have already started to change our habits, from the way we buy music to the way we get our news. These “very small changes in the way we live, work and play can amplify up into big changes in not needing energy at the source,” says Tertzakian.

- Technolust, Star Wars-loving capitalists often use the old dream that new technology will solve today’s unsolvable problems so we should just keep on being irresponsible because our future selves will save us. This is the height of immaturity.

- Fewer business flights, better power management in buildings, purchasing fewer physical CDs and newspapers are fantastic. They’re also drops in the bucket of what is contributing to climate breakdown. The public desperately wants to hear that putting on a sweater and turning down the heat will save the planet because we don’t want to admit what we’ve known for decades: the rich, minority world is using more energy and resources than everyone else and we’re destroying the planet with our footprint. 

Oil demand is already falling. The International Energy Agency said demand this year will fall by over 2.5 million barrels per day, the steepest drop since the early 1980s. Much of that is because of the recession—business is cutting production and people are buying less and therefore we’re consuming less energy. But there is also some evidence of these early technological changes at work, argues Tertzakian.

- I’m very excited about these technological changes. How many business flights must we choose to forego, however, to make a real dent in our climate breakdown contributions? All of them? How many times must we turn off the lights in the bathroom at work? All the time? Will that make that much of a difference? The trick is to figure out where the carbon emissions come from and stop those. Not just drop them 10%. The tar sands: we have to leave it all in the ground. Do we have the political will to resist the temptation? Ralph Klein and Dick Cheney have already planned the tar sands’ exploitation so the boat sailed on that option already. 

The Rocky Mountain Institute, an NGO led by the energy scientist Amory Lovins, has been advocating for several years that not only is it possible to wean ourselves off of oil in the next few decades, but that it can be done almost entirely through changes in transportation. Some of the biggest savings can be found simply by making cars lighter and continuing the shift toward hybrids and electrics, says Lionel Bony, a director at the institute. “You can probably get rid of about half the oil we need through efficiency” and do it in the next 20 years, he says.

- The next few decades? Even Al Gore, not so much the posterchild of a radical post-carbon economy advocates, says the USA has to be off carbon by the middle of the next decade, not in the next few decades with weaning. I think the Rocky Mountain folks are right that changing transportation is the key. But it’s not just lighter cars and one less business flight per year. It’s food. Commuting is a carbon whore, but most of most people’s food comes from too far away. When the price of our food staples reflects the real costs of transportation, will we really see 49 cent pounds of bananas ever again? The bioregional diet is an imperative. So, oil efficiencies in 20 years? Not good enough.

That such savings can be found within the current energy system is crucial in an age when big bets are being made on new technologies like electric cars. Those like Rubin are quick to pour cold water on the idea that we can wean ourselves off of gas-powered vehicles and switch over to electric power. Big cities, like Toronto, barely have enough power to keep air conditioners running all summer, he points out. But energy officials say a shortage of generating capacity isn’t the obstacle it once was. This spring, the chairman of the U.S. Federal Energy Regulatory Commission, Jon Wellinghoff, said the U.S. may not need any more nuclear or coal plants “ever,” adding that wind, solar and biomass could supply enough energy to meet demand. The technology is all there to make a much more efficient power grid, he said.

- At this point, I’m just finding Colin Campbell to be a pandering apologist for minimalist change to produce maximum effect. 20 years ago we learned the 3 Rs: reduce, reuse, recycle. We embraced the third because it allowed us to keep shopping and not bother with second hand clothes and cars so much. The bulk of the 3 Rs was to be in reduction, then reusing, then the remainder was about recycling. We turned that on its head, grinned widely when we put recycling containers in public buildings and went to sleep feeling smug. Arguing that modest energy conservation will reverse the climate breakdown from massive over-consumption is similarly ignorant. And while the new technologies are capable of some day providing us with the energy to supply our irresponsible level of desires today, will they come in the next few years before the climate breakdown window closes? We’ll see from the GM nationalization: will they re-tool for high-speed rail, buses, light rail and solar and wind infrastructure or will we have merely 35 mpg cars with a slight nod to more hybrids?

Besides, ending the dependency on oil doesn’t mean replacing every car on the road with an electric vehicle, but just enough to cool demand for crude. We may be nearing that point already. Last month, Exxon Mobil said that the U.S. consumption of gasoline has peaked, and predicted that demand for auto fuel will shrink by more than 20 per cent by 2030. Companies like the California-based Better Place are already building the necessary electric car infrastructure. Last month, it unveiled the first station where drivers can drop off exhausted batteries and grab charged ones in the time it would take to fill a tank of gas. “It’s not that big a hurdle,” says Sean Harrington, who manages the company’s Canadian arm. “It can be done.”

- Cooling demand for oil is amazing. If I widen a highway, people will drive more to fill the capacity. If I move from a one bedroom to a three bedroom apartment I will accumulate clutter to fill the space. People will not voluntarily reduce their demand for oil. And if we were to drop our demand by 20% over the next 20 years, we’ll be about 15 years too late. I guess Colin Campbell isn’t really listening to the timelines from the UN climate scientists. And while I know it can be done to shift everyone over to a new paradigm of transportation like electric cars when we have summer power brownouts, I still haven’t seen Campbell explain how we can get the alternative energy infrastructure in place fast enough to ramp up electrical demand so incredibly to get us off carbon before the UN climate deadlines pass. It works, though, if everyone just thinks the timeline is “someday.” Then it’s too late and our children will really hate us and they won’t let us even MEET our grandchildren.

Like Rubin, Tertzakian sees another oil spike on the horizon as the economy recovers—likely a return to triple-digit oil prices. But he argues that spike will be the next important catalyst that leads some of these new technologies to be even more widely adopted. Tertzakian points out the speed with which technologies like the Apple iPhone have been snapped up—one million were sold in the first three months it was on the market. Today’s energy-saving technologies are a lot like colour TVs in the 1950s, he says. They exist, but people don’t have a compelling reason to rush out and buy them—at least not yet.

- The elasticity of oil at ridiculously high prices [relatively] will determine the speed at which people switch to something new. The iPhone was not a new paradigm of phone. It’s a cell phone that processes more data than older cell phones. It’s marketing is sexier, though. Altering our transportation paradigm to one with a much smaller ecological footprint would be like moving from iPhones to postcards. And since gas prices in Europe have been twice our prices for some time, I don’t see Europe embracing the post-car culture. A friend says that while they have alternatives, cars are still ubiquitous.

When oil prices soared last summer it was hard to be optimistic about our ability to cut our addiction to cheap fuel. Almost overnight, siphoning gas from parked cars became the crime du jour. People were suddenly spending more on gas than groceries. It was during this crisis that Rubin was constructing his thesis and the warning that this was just a taste of what lies ahead.

High oil prices don’t just hit you in the pocketbook, he explains. They threaten to unravel an entire economic system that relies on shipping goods around the world. Those cheap electronics you buy at Walmart are only cheap because they’re made in China and hauled across the ocean in massive container ships. When the cost of shipping those goods more than doubles, as it did last year, then this system starts to look very vulnerable. At the very least, high oil prices will turn the clocks back 40 years to a time when nations lay “safely cocooned within huge tariff walls,” says Rubin.

It’s a terrifying scenario, if for no other reason than the fact that globalization has spread economic benefits around the world. Erasing 40 years of that kind of progress would be a catastrophe. By Rubin’s definition, globalization is little more than a “fancy word” for “moving your factory to the cheapest labour market in the world.” But that’s just one element of a much more diverse system, says Karl Moore, the co-author of The Origins of Globalization. “It’s not just economics,” he says. “It’s also how interlinked we are as societies.” More than cheap consumer goods, globalization has underwritten unprecedented improvements in the standard of living the world over, fuelled massive amounts of immigration, driven political change, as well as advances in technology and the spread of ideas. Does such a vast global system really teeter, like an upsidedown pyramid, on oil prices?

- Well, critics of neoliberal globalization are far from terrified by the end of the global ecological, labour, resource, wage, and regulatory race to the bottom. Globalization has spread oppressively uneven benefits around the world. If globalization contributed an extra 100 loonies to global GDP, distributing them by giving me 99 and you one loonie still allows me to say that all boats rise. It’s true, but people aren’t looking at rising income inequality. I’m fine erasing that 40 years of bifurcating wealth in as fast a time as possible.

- Improvements in the standard of living are notable for probably 1 billion of the 4 billion poorest humans. That’s nice and all, but honestly, this is no big deal, since the number of desperately poor is increasing. Immigration? We’re talking about illegal or “guest” workers who have little access to real immigration without a cash investment. How many new Canadians are accredited professionals back home, while they deliver pizza here? Political change? Structural adjustment programs have impoverished billions. Advances in technology are irrelevant for the majority of humans who have never made a phone call. Exchanging ideas? While I like listening to African radio stations in iTunes, the poorest several billion human beings have not enjoyed some good old-fashioned political debate on electoral reform. Food. Clothing. Shelter. Pretty basic ideas they’re still struggling for.

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.

- Globalization will evolve, sure. But before outsourcing and foreign product sourcing, the level of global trade was very much smaller than today. The guts of today’s globalization orbit cheap oil. Increase its cost tenfold to $500/barrel and we’ll still buy bananas? I certainly won’t. And I’d love to see a new kind of globalization: one that spreads economic, social and political justice around the world, universal education, healthcare, living wages, functional electoral systems. That’s MY kind of globalization!

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.

- I won’t attack Bhagwati here. I’ve done enough of that while getting my political economy degrees. He is, at best an apologist for bilking economically disadvantaged foreigners. The fact that Colin Campbell is turning to him says a lot about Campbell’s arguments.

- But Bhagwati is right in arguing that if the oil used in producing hockey sticks in Canada becomes more expensive than the oil used in making hockey sticks in Vermont or Peru, trade will occur. Fascinating premise. It applies to maybe Venezuela and few else, since they’ve been fighting Big Oil to ensure domestic oil costs are low. Once they start exporting hockey sticks to Canada, they’ll get the Bhagwati bump. And if they can do that with everything everyone produces, they’ll rule the world. Bhagwati’s premise is bunk, on the aggregate.

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.

- OK, let’s assume clean coal actually exists and is viable today. It’s not, but let’s pretend. The scale of China’s use of dirty coal is profound. The fact that they may be ahead of the USA on better coal means little since the USA is a coal whore still. So, big deal.

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.

- Last year’s oil panic was an experiment by the supply and demand curve wonks who work for Big Oil. They were doing elasticity experiments on the North American population, figuring out responsiveness to price changes that were largely speculative or merely manufactured. Then they returned the price of oil to normal to keep from interfering with the US presidential election. I’m sure they learned a lot about our dependence on oil and how to maximize profits while oil supplies dwindle. Remember, the only ones who know how much oil is actually left are Big Oil and the oil producing countries. 

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.

- Well, as someone written off as part of the doomsday set along with the hundreds of UN climate scientists who keep moving the climate doomsday deadline closer, I can’t say I share the same faith in our energy masters. Short term profit maximization and the will to avoid squandering extractable oil resources, despite the climate breakdown consequences, rule their motivations. If you trust them, you share their denial.