Oil prices will return to triple digits and stay there, ending the globalized economy as we know it today, says Jeff Rubin, author and former chief economist at CIBC World Markets.
Globalization has fueled trade across the globe, but lofty oil prices — approaching $200 a barrel — will make transporting those goods back home much higher than the savings that come with cheaper wage costs typical of globalization.
“It's not going to make a whole lot of sense for America to import steel or food from places like China, and it's not going to make a whole lot of sense for China to be importing things from North America,” Rubin told CNBC.
The world, says Rubin, is not running out of oil, but rather, it's getting harder to extract it.
“It's not a question of running out of oil in some absolute geological sense. It's a question of running out of oil that we can afford to burn, not only in our cars but in running a whole global economy that involves transporting goods around the world,” says Rubin.
“There is a strong technical support at around the $65 level and prices are bouncing back now because the market still believes that prices will start rising towards the $75 level, when U.S. crude stocks come down in the fourth quarter,” says Tony Nunan, an analyst at Mitsubishi in Tokyo, according to the Associated Press.
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