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Peak oilist Jeff Rubin describes a paradigm shift in his latest column at The Globe & Mail.Global Sticks, a manufacturer of wooden ice cream sticks, recently moved from Dalian, China to Thunder Bay, Ontario. Rising oil prices were the critical factor:
As the price of the bunker fuel that transports those ice creams sticks to customers around the world tracks soaring world oil prices, the distance between your factory in Dalian and North American kids lining up at their neighbourhood ice cream store, becomes more expensive every day.
When the price and availability of energy start to dominate your business plan, you say goodbye to your inexpensive Chinese labour force, and pack up and leave.
Rubin also mentions factory restrictions that China has mandated to deal with power shortages. And then there’s the problem of wage growth in China. Finally, Global Sticks was drawn toward cheap wood supply in Canada.
It’s a development that Rubin has predicted for years. Oil prices will skyrocket and the global transport system will be crippled. We saw a hint of this today when shipping giant Frontline gave a gloomy outlook for the industry.