Reversal of Globalization?

For my birthday a couple of weeks ago I received, Let My People go Surfing by Yvon Chouinard that I look forward to reading. Yvon is the founder of Patagonia (an outdoor clothing and gear company) and has strong views on corporate/social responsibility and protecting the environment and ethical business practices. His book should prove to be quite interesting as he essentially covers three topics, creating a successful company you are passionate about, being environmentally and socially responsible and it is also kind of an autobiography about an interesting life following his passions. Skimming through the book (I still have to finish my book on Marco Polo before I can sit down and read it) he brought up a point that got me thinking a little and could generate a lot of discussion about the future of our economies.

In the reprinted version from 2006 he added an intro discussing what could essentially be a reversal of globalization to a certain extent, with a localization of our economy. His reasoning brings up some interesting thoughts.

"A dozen books have come out about oil, all pretty much saying the same thing: the end of the petroleum era will come sooner then later and we should prepare for a lifestyle that will be far different then what we have been enjoying for the last 150 years"

With the increased cost of energy comes an increased cost of transportation. The primary cause is the cost of oil, resulting in the cost of fuel going up, but also with the increases in energy costs results in the cost of building and maintaining trucks, boat, planes, etc. When you take the example of the clothing manufacturers they tend to follow a process similar to the following; Purchase cotton from Turkey, ship it in bales to Thailand to be processed to fabric, then shipped to Texas to be cut, next off to Mexico to be sown and finally back to a warehouse in the States before being redistributed across North America. As transportation cost are going up, they may soon outweigh the cost of manufacturing and materials in certain cases ultimately making a global economy based on cheap transportation unsustainable.

What effects would this have on our economies? Canada Exports nearly $500,000,000,000 in merchandise goods each year. Would the effects of localisation and curbed international purchase by Canadians be enough to counter these losses. How about a country like Australia that does not have the natural resources needed for food or to obtain lumber for construction? Will their economy be able to swallow the increased transportation cost? Crude oil cost have increased nearly 400% since 2003 and nearly 160% in the last 2 year! It's more than safe to say that outweighs inflation rates by an exuberant amount. Last time crude oil cost where rising this quickly it resulted in the recession in the early 80's. Now consider that many scientist estimate that our current access to oil supplies will last about 20 to 25 years before the extraction will become much more costly to get to the oil reserves that are more isolated. Will we be able to bounce back from a recession in the same way if the oil isn't as accessible anymore?

Needless to say the research into new forms of energy, hydrogen, solar, wind, Biofuels, etc. may eventually curve these increasing cost meaning business as usual but with the continuous reports how quickly our situation is decaying it leaves you to wonder, how much things will change in the next couple decades.

That's enough about the economy for now, contiue on and read something a little lighter like last weekends race stories or something.