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Oil fell today but.
It's jumped by nearly ten bucks a barrel in less than a week and our next guest says that the rise of oil prices will lead to the end of economic growth globally.
Maybe that's not a bad thing Jeff Rubin author of the book the end of growth which is out in Canada and will be available in the US and October.
Joins us now Jeff good to see you are always provocative I got a candidate -- But let me just make sure I understand your are you say that economic growth is all about the price of oil is that right.
While I'm saying that when you change the price of oil as dramatically as we've seen over the last decade from.
Something like twenty dollars a barrel to a hundred dollars a barrel.
You don't just change the speed at which you drive your car you change the speed at which -- economy can grow because.
Just as people require food economies require energy.
And oil remains the single most important source and really as a transit fuel the only source but.
Well by the way how much I -- -- the price of oil is affected by the Fed just -- dollars.
Well -- I mean if anything the what we're seeing though is that not just the effective the US dollar what we're seeing is where we're getting oil from man.
And the problem is that where were getting oil from whether it's.
That the Bok -- are of the tar sands in Alberta our deep water.
Doesn't flow at the kind of prices that motorists would like to see or more well more or he's at our economy's gonna -- We -- we want to see pretty cheap prices no doubt about that but but look at one period for example look at the period from the beginning of the summer 2008.
When oil is you I'm sure you remember well when all the way up to 145.
Dollars a barrel and we all knew that -- the economy was going down but oil went way up.
Then that as the Fed sort of overreacted.
To -- it attempted at printing money.
It tighten up really dramatically a Nobel Prize economist Robert Mondale says.
That led to.
33 dollars a barrel so.
It's just sort of shows that that that the Fed has a huge influence on the price of -- -- maybe they are responsible for what's happened with the price.
Well I think -- what you gotta realize is that when oil fell to 33 year -- dollars a barrel in the 2009 recession.
-- because oil was plan a follow it was never more scarce because when oil also those levels you shut off millions of barrels of production for example.
In the Alberta tar sands they cut fifty billion dollars of planned capex.
Because of forty dollars a barrel neither the tar sands and -- the Venezuela heavy oil belt is economically viable.
But you know there's so many.
That are involved with a price and -- just mention one the Fed but.
Then there's there there's natural gas for example did you could you have guessed ten years ago that natural gas would be used cheap today as it is.
Now but the very fact that natural gas is so cheap and that oil is so expensive does your right there that they're not substitutes.
Thereafter it's comparing apples and normal but not necessarily I mean there are a lot of people like Boone Pickens and others who think that you can substitute a lot of what oil does now.
For natural gas eventually down the line and if you didn't see that the cheap natural gas coming made you also don't see coming a better market for that natural gas that might displays some of the -- Right now there is less than 1%.
Of the vehicles on the road in the United States.
That run on natural gas or natural gas flick I know right now in Iraq and how it's not a substance is not just dropped just trying to make -- more hopeful but I -- -- you must go to bed feeling so depressed.
I -- I think that there are there there are some very positive elements that you can never force -- Julian -- -- that -- that he made with Paul -- Paul Ehrlich was a guy in 1980 came out with a book called the population Bob -- depressing.
They kind of stuff that you're talking about how we reveals he probably that if you're married and well read they remember what -- name aid abet.
A 101000 dollar bad Julian said that eventually there will be more resources ten years down -- and Julian won the bat.
And I talk about that very bad in my book because if you make that bet for the last eight years now all of a sudden air like what -- -- and that's not because technological change isn't happening.
It's only because in the areas like oil and in so many -- the resources.
Where were extracting it now is from very high cost -- Jeff we got we got to go but I'll make you look bad you can find me in ten years I'll bet you a hundred bucks that oil be cheaper ten years are right gonna make that only because we -- -- -- grow it.
-- -- -- -- great to see effects of best of luck with a look it's not out here yet it will be it's called the end of growth Jeff Rubin great to see it.
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