High energy costs will bring dramatic changes in trade: CIBC World Markets HEATHER SCOFFIELD Globe and Mail Update May 27, 2008 at 9:28 AM EDT
OTTAWA — The rising price of oil is making international trade of heavy cargo prohibitively expensive, and acting as an incentive for importers to find products such as steel closer to home, new research by CIBC World Markets shows. For heavy products, rising shipping costs are eroding the low-wage advantage of China over North America, say chief economist Jeff Rubin and senior economist Benjamin Tal. If oil prices continue to rise, the soaring cost of global transport will act like a major tariff barrier and lead to a substantial slow down in international trade, they argue. “Globalization is reversible,” they state. Oil passed $133 (U.S.) a barrel on Monday, and Mr. Rubin forecasts the price will average $106 this year, $130 next year, $150 in 2010 and $225 by 2012.....
That is a smart post, I think. But the Chinese have been building one production facility after another for electric power generation, steel production, etc. You name it, they are building it. And their economic future depends on the availability of jobs that can be created by such activities because they're planning on being a non-agrarian economy just like the Western economies. I'd bet on the Chinese figuring it out, as they have so far. If they don't there will be holy hell to pay.
All of that having been said, I'd love to see an America that was more competitive in many more industries including heavy industries. I've said it many times here before but I'll say it again. Nothing would do more to make the US a fairer society than the return of some number of good factory jobs. We shouldn't let up on educational issues either because the natural progress of things should be towards services and highly engineered products but it would be nice to have a backstop.