Higher Oil Prices Are Starting To Bring Jobs Home

penguin_dance notes a report up at ABC News that high oil and gas prices in the US may be moving jobs back home in a trend that some economists are calling "reverse globalization." It's becoming more and more expensive to ship finished product from other countries, so some companies are moving the manufacturing back to the US. The article hints that this trend may spill over soon to raw materials such as steel. One economist is quoted: "It's not just about labor costs anymore. Distance costs money, and when you have to shift iron ore from Brazil to China and then ship it back to Pittsburgh, Pittsburgh is looking pretty good at 40 bucks an hour."

Telecommuting

Now if companies would pull their heads out and either/or/both go to a 4 day work week and re-implement telecommuting...

Re:Telecommuting

I think telecommuting only works if your entire team telecommutes because if you stay home and your teammates go to the office you will gradually suffer the appearance of declining performance, at no fault from you.

I've seen that happen because if you're not there when the execs ask the team for advice, you don't get asked and don't get a boost in perceived value. You won't get invited to adhoc meetings and you'll miss all those water-cooler conversations. You also don't get invited to lunch with the team or the management, which often spread news regarding the project, so when you actually do show up to a planned meeting, you'll appear extremely unprepared because you missed all those casual details. You also don't get the special projects handed out at a moment's notice, which generally saves someone's ass gaining you another supporter. Volunteering for those special projects makes you look like a go-getter, but you'll be completely bypassed because you weren't there to raise your hand. Also, if your teammates work late, it's assumed you're not. If they can't see you putting in extra time, you gain no benefit from doing such. You will watch helplessly as your teammates slowly rise in ranks. They will receive the flagship projects to work on, while you get handed the maintenance projects, which only buries you deeper because you have no chance to shine on those projects. Your teammates will be recognized every time they complete something, which will never happen on on your crappy maintenance project.

I worked at a job in which every member of the team was remote, and it worked out very well, but once the team was consolidated in the office, the stragglers had a difficult time proving they were working as hard as the ones showing up in person. I watched previously great workers drift off into mediocrity because they suffered declining perceived value by management.

But, like I said earlier. I think it works if everyone does it, but not if 1 or more teammates don't.

Whacked upside the head ...

... by The Invisible Hand.

Adam Smith strikes.

Macroeconomics

It's almost like there was some kind of invisible hand at work.

High oil prices will do way more than Kyoto

The fact is, for all the environmentalists out there screaming to put regulations on carbon emissions, etc., the price of energy is the only thing that's going to have a substantial impact on the amount of fuel we use. People are actually considering more fuel efficient vehicles, and at my place of work people are taking advantage of opportunities to work from home once in a while. Especially when their commute is over one hour. If we keep it up, people might move closer to work.

Re:High oil prices will do way more than Kyoto

The main problem with high oil prices is that the money is going largely to rich oil producing countries like Saudi Arabia, so that they can build monstrosities like ski resorts in the desert. I would have preferred to pay a carbon tax instead; at least the money would stay in our own economy and be used to build infrastructure. Carbon taxes could be offset by decreases in income taxes, so that we don't pay any more overall. As an environmentalist, I am strongly opposed to these high oil prices, because they are siphoning off our wealth and giving it to rich oil foreign oil companies.

The steel thing is already happening

My dad has worked in steel for the past 38 years and he says they are busy as hell because the fuel cost and weak dollar has been making US steel cheaper for a while now.

It's also putting the kibosh on the American Dream

The problem with telecommuting is that your job is basically dependent on the quality of the IT staff to a much higher degree. My employer tries to do telecommuting, but somewhere between cost cutting in IT, draconian security restrictions, and a dodgy network connection, it fails to be useful for getting real work done.

We've been looking to move out of our high cost of living area for quite some time, but the rising cost of gas has put that on hold. I would like to buy a house - and can afford one on the edge of the suburbs, but alas, any saving in mortgage payments would be consumed by the cost of fuel. Even though I'm just a fifteen minute commute from work, I spend nearly fifty dollars a week getting there and back.

So yeah, it might bring some manufacturing jobs back home. But those of us who have become used to working in the city and commuting out from the cheaper communities are finding themselves in quite a bind. I can't afford a house in my current area, and I can't afford the gas to drive from the places where I can afford a house.

I'm slowly coming to the conclusion that I'm going to have to wait another 5 to 10 years for the next housing market crash before I'll be able to move into a house. When my Dad was my age, the loan on his (our) house was up - and he was a factory worker. Today, I make almost four times what he did, and can't even afford a three bedroom house. So much for the American Dream.

Law of Unintended Consequences

Environmentalists have been hoping for high fuel prices, to encourage use of less fuel.
They weren't expecting the return of blast furnaces to Pittsburgh, however. So we burn a little less gasoline, and dump tons of coal and limestone in the steel furnaces.

Re:Interersing trend...

If high fuel cost continues, it will only bring back the sail-boats, not the off-shore jobs.

Re:Interersing trend...

It should be bringing nuclear wessels [sandia.gov]. With the cost of oil to fire a ship being what it is, the Savannah would have been competitive back in the 70's. The only problem to solve is that high seas piracy still exists and the US government doesn't want the nebulous "bad guys" to steal a nuclear wessel and reuse its atomic fuel for something nasty.

Re:Interersing trend...

"The 163 pounds of uranium she consumed is estimated to have provided the equivalent power of nearly 29 million gallons of fuel oil."

That just put everything in perspective. Holy hell. For the amount of money you saved you could hire a small army to arm your vehicle. US Government could nationalize some ships.

29 million gallons of fuel.

Damn. Just Damn.

wessels?

Thank you, Mr Checkov. Mr Sulu, lay in a course for the 1970's.

Re:Interersing trend...

"Hopefully the oil prices will cause people to become more concerned with the environment by wasting less"

With the high price of fuel....and everything else going up along with it..I could safely bet that the avg. person in the US does not have the environment topmost on their heads. If they could come up with cheap energy for running cars, etc...I think many people in the US would now be comfortable strip mining the Rocky Mountains and The Applachians down to nothing without a 2nd thought. This has hit the general public in a way they never really ever imagined before, and they are shocked. I'd say they'd be prepared to do about anything if the price keeps increasing at this rate.

Re:Interersing trend...

But we can expect to have European sized cars and European sized houses at the european $3000 per sq ft not the US $125 per sq ft.

I highly, highly doubt that. With the mortgage crisis here in the US home prices are falling not increasing. And I doubt that that will stop anytime soon. Another thing is, North America has only been explored within the last 500 years, it lacks the shortage of land which is part of why Europe has such high prices for houses, mix that with the fact that home prices are falling and people with a lot of land are cashing it in to get some cashflow... You get the picture. While this may make large buildings such as new arenas and skyscrapers more pricey, for the average person home prices will only keep falling.

Re:Interersing trend...

The fall in prices for the exburbs is not a short-term phenomena. We saw the same thing in some communities in California in 1990-91. They never "came back." This is much wider, and much more permanent. Energy costs aren't a one-time expenditure. Like takex, you pay, and pay, and pay. What are people going to do with $8/gallon for heating oil? Divide those McMansions into apartments. Unfortunately, they're poorly located, and constructed so cheaply that they won't be "desireable." When gas was a buck a gallon, people could rationalize a 2-hour commute "for the lifestyle." Even though the lifestyle essentially meant spending 3 to 4 hours a day in traffic. Now that gas is between $4 and $5 a gallon, and will probably pass $5 this winter, the commute isn't worth it.

Already there are people complaining that 1/4 of their take-home pay is going to gas. Houses that kind of made sense at $1/gallon, just aren't worth it any more. Better to pay a bit more (you can afford it from the gas savings), live closer to work, and reap the additional benefits of more free time and less wear and tear on your car tp boot.

Even if there were no foreclosure crisis, $5/gallon gas would be lowering the value of houses that were built too far from any commercial center. This is just a happy coincidence - let the get-rich-quick house flippers, speculators, and everyone who lied on their mortgage application "because they just had to have their overpriced dream" eat shit and die. I have zero sympathy for realtwhores crying about how they're going to lose their own homes because they can't find anyone else to drink the kook-aid (no, that's not a typo - too many of them were were kooks, con artists, fraudsters, hucksters, etc. and they made the mistake of believing their own lies).

Re:Interersing trend...

Umm... Most of the cost that Europeans pay for fuel is in the form of taxes, which they have voluntarily inflicted upon themselves, and not some kind of relationship to status as a world power. Oil is traded in a world market, whoever pays more gets the oil.

Also, the housing prices you linked to are in cost/square METER. Given that there are roughly ten square feet in a square meter, the costs are 2x, not 24x as you suggest.

Re:Interersing trend...

The EU is doing just fine dealing with $5+ for a gallon of gas,

Are you kidding? So far Europe has had truck drivers go on strike against fuel tax [bbc.co.uk], fuel delivery drivers go on strike for a 14% pay increase [scotsman.com], annual electricity/gas bills rising at 40%/year threatening to push a quarter of all households (5 million families) into fuel poverty [timesonline.co.uk], councils raising the cost of school meals due to the expense of transportation [northlincs.gov.uk]. Even the police are having to cut back on front line staff due to the additional expense [telegraph.co.uk]. Food bills have risen by 20% since the start of the year. [telegraph.co.uk]

The advertisements on the sides of public transport buses read "Fed up of paying fuel duty to go nowhere, take the bus instead and stop your wallet from going empty". Otherwise many people are choosing to cycle in to work, especially university staff.

All of this is predicted to send house prices down by at least 10%, and then one minister tells people that should stop being so miserable about the rising cost of living. [telegraph.co.uk]

Re:Interersing trend...

I don't care so much about the environment in Alaska. Well, I do, but it's not my primary concern. I'm against drilling there for other reasons. Even the highest estimates say we'll only get about a 10 dollar reduction in the price per barrel of oil. That translates to a few cents per gallon. I think the money and time are better spent trying to figure out how to get us off fossil fuels than just postponing the inevitable decline of oil. And as a bonus, all that territory in Alaska can remain untouched by man.

Re:Interersing trend...

Real problem is still TOO MANY PEOPLE.

Hmmm, so maybe going nuclear IS the solution...

Re:Interersing trend...

Who cares about the environment, it can recover in 20-40 years.

Where do you get this crap? Take a look at the island of Crete. This island used to be almost completely covered in forest. Then the Minoans began clear-cutting it for lumber to build ships. This continued for several generations. When the forest was clear cut, there was no longer any mechanism for the top soil to be held in place. It washed into the sea. The isle of Crete is now a wasteland in terms of the ability to grow forest -- solid forest has not grown there in thousands years.

You are naive, ignorant, short sighted, and have an offensive disregard for the natural world.

Re:Interersing trend...

I don't want to stop oil drilling in Alaska because I'm afraid for the "cute widdle animals" but because that place is a paradise and I want to enjoy it for what it is.

You do realize that the area they want opened for drilling (an area the size of Dulles International Airport, about 2000 acres, in an area covering over 19.5 million acres) are quite literally empty, right? Nine months of the year they're ice and three months of the year they're mud. Nothing non-microbial makes its habitat there. It's nothing paradisaical and talking about it as if it were does not make it true.

Re:Interersing trend...

Really ?

Most days I part with my money because I'm trapped between two evils, and I try to pick the lesser. Telecoms, overpriced food (even staples), services done to the lowest possible standards... Greed is spiraling out of control, because those who spend wisely are impossibly outnumbered by the ravenous fools of our society.

Re:Yay, Pittsburgh

my dad owns a drycleaning plant. steel hangers are one of his biggest supply expenses now. a few years ago a hanger might have been $0.10 or so, then 2 or 3 years ago it doubled overnight to $0.20, and a few weeks ago *that* doubled.

some of the larger hangers are 50 cents each. 50 cents for a metal coat hanger. he needs several hundred of these in a given week, nevermind the price of all the other supplies going up. it hurts, bad, and he has had to raise prices because of it (though not enough to actually cover the added cost)

Re:Yay, Pittsburgh

my dad owns a drycleaning plant. steel hangers are one of his biggest supply expenses now. a few years ago a hanger might have been $0.10 or so, then 2 or 3 years ago it doubled overnight to $0.20, and a few weeks ago *that* doubled.

some of the larger hangers are 50 cents each. 50 cents for a metal coat hanger. he needs several hundred of these in a given week, nevermind the price of all the other supplies going up. it hurts, bad, and he has had to raise prices because of it (though not enough to actually cover the added cost)

Perhaps your dad could provide a discount for customers who provide their own hangers.