Higher Oil Prices Are Starting To Bring Jobs Home 777
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."
Interersing trend... (Score:2, Interesting)
It would be nice if there was a favorable reaction to high fuel prices such as some manufacturing coming back home.
We can only hope that the trend continues.
I am more concerned about the distance... (Score:3, Interesting)
from my home to my office....when will my company start teleworking as an option!
But US jobs and stable prices despite the raising fuel costs is great news!
Re:Interersing trend... (Score:5, Interesting)
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.
I was hopeful this would be a trend (Score:3, Interesting)
Recently I saw a show that visited Asbury Park in NJ, and it was stated that the slow decline of the park started with cheap airfares. It immediately struck me that this trend should now start to reverse itself, as travel costs are rising while consumer confidence is dropping.
High gas prices are going to have some bad side effects, but also quite a few good ones. Hopefully, reduced travel will be effected on almost every scale: suburbs will wilt and cities will grow stronger, local foods will become more popular, inefficient business travel will be replaced by online meetings, etcetera. I think most people who have wanderlust aren't going to let higher airline prices stop them, but perhaps they'll take fewer and longer trips in order to reduce expenses - e.g., instead of going to France and Spain on one trip, and the U.K. on another, they'll wait and take a longer trip to visit all three.
Re:Interersing trend... (Score:5, Interesting)
"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.
It less oil to use rail over ships to move iron... (Score:3, Interesting)
It less oil to use rail over ships to move iron ore and other big stuff.
Re:Yay, Pittsburgh (Score:5, Interesting)
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)
Misleading about Steel! Already restricted (Score:3, Interesting)
You won't get any more local steel production unless there are local manufacturers that want it or if it can be produced at internationally competative prices. Steelmaking is one of those things that is not labour intensive so nobody can honestly blame unions or cheap labour countries on the price of the stuff - it comes down to effective or ineffective management.
Re:Interersing trend... (Score:3, Interesting)
Re:Yay, Pittsburgh (Score:5, Interesting)
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.
Too bad (Score:3, Interesting)
China is the last (Score:3, Interesting)
In the 50's it was Japan,
In the 60's it was Hong Kong
In the 70's it was Taiwan
In the 80's and early 90's it was South East Asia
In the late 90's to now it has been China
To be worthwhile producing elsewhere you have to be able to produce for less than 30% of your home costs.
There is nowhere left to go
We have to manufacture our own again
So maybe we will get decent working conditions at last!
Alternative ship energy (Score:3, Interesting)
It's also putting the kibosh on the American Dream (Score:5, Interesting)
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.
Re:Interersing trend... (Score:2, Interesting)
Yes, if we reduce the environment to rock, that's it.
However, oil spills it hasn't done as badly with.
And nuclear it seems to be doing quite well with.
General pollution, it's fine with.
What it isn't fine with is continuously adding stuff until it completely overloads and collapses.
Again-- too many people. Too many people do the same thing as deer and strip their environment until they destroy it and all die off. It doesn't matter what we do. If 6 billion people go to ANYTHING they will destroy it. And we are headed towards 9 to 11 billion last I heard.
Your view is overly simplistic.
Distance is still dirt cheap (Score:3, Interesting)
No it isn't if the alternative is (probably less than) 40 bucks per month.
True, handling and treatment of raw materials may be one of the first things to become cheaper when
handled in what I'll call "the west" as opposed to "the east", because huge quantities are handled
by relatively few people.
But what are we going to do with all those raw materials at home? They still need to be transformed
into consumable goods, which involves much more labour - cheapest done "somwhere else".
True, sea transport costs more than twice es much today than just a few years ago, but if you look at the
absolute numbers, it still is more or less for free compared to the worth of the shipped goods. There needs
to be at least another tenfold increase in shipping costs before businesses really start to feel it in
their manufacturing costs.
I know for a fact that it is (in quite a lot of cases much) cheaper to import presorted recovered paper
(for paper production) from China and India to Europe than to collect it and have it sorted in Europe directly.
Transport costs simply don't matter in that case.
This situation is changing at the moment - not because of higher bulk shipping rates, but because of developing
paper industries in China and India, consuming more of the recovered paper on the spot, thereby increasing prices for
the exported good "recovered paper". Interesting side effect: The shipping costs' percentage in the total price/weight is
therefore even decreasing.
Re:Interersing trend... (Score:4, Interesting)
Well, I think that as soon as they announce that we will start new drilling out there in previously 'banned' areas...that speculators in oil will begin selling off...and that should drop the prices almost overnight back to more normal levels.
Re:Interersing trend... (Score:1, Interesting)
Law of Unintended Consequences (Score:5, Interesting)
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.
Transportation is still a huge problem (Score:3, Interesting)
Although high oil prices will force us to live more frugally and locally (probably a good thing in terms of the environment), the US has the small problem that its transportation infrastructure is designed based around the roads. Cars specifically.
A coherent bus network simply doesn't exist, Amtrak is a pathetic mess, and Americans (white people, specifically*) hate the concept of public transport.
*I hate to bring race into this, but for whatever reason, it's more or less a heavily recurring trend that, outside of big cities, white Americans don't use public transportation. I'm white, in my 20s, and take the bus to work every day. It's an extremely rare situation to spot somebody from my own demographic on the bus that isn't also homeless.
Re:Interersing trend... (Score:3, Interesting)
Oil companies have leases all over America to drill for oil. They are currently only using 20 percent of these leases.
They want to get the Alaskan drilling rights because they are GREEDY and want them for down the road when they've drilled all their current leases.
When you see the president that drilling in ANWAR will help the US, he is LYING. (That, and his lips are moving--so you can tell he's lying.)
Re:Interersing trend... (Score:5, Interesting)
Oil was $10 a barrel in 1999.
That's down from $34 in 1982 (about $80 in 1999 inflation-adjusted dollars).
http://www.ioga.com/Special/crudeoil_Hist.htm [ioga.com]
Why would the saudi's sell oil for $10 when they could sell it for $34?
Because they can't.
Every day this goes on, the longer oil prices will be low.
Every day, more people start carpooling, move closer to work, replace a 13mpg truck with a 31mpg (or higher) car, start riding public transportation, start working from home 2 days a week, start working 9/80 schedules.
My morning commute is now consistently 5 minutes faster in the morning and 15 minutes faster in the evening because the number of cars on the road has dropped that much.
Already, Iran is stacking up tankers because their online storage tanks are full.
Already our national gas usage is down about 4% in one month.
The current prices are caused by speculation. The same bubble of excess wealth passing through it that passed through the stock market in 1996-2000, housing in 2002-2005, and commodities now. The true "last barrel" cost of producing oil right now is about $50 a barrel. Everything over that is excess.
Once demand drops like a stone, then the oil companies STILL have to pay the bills. A lot of them are spending money like water. A very few of them are investing the current profits wisely.
They will sell oil to whoever will buy it- because just like the average salaryman in the U.S., they are just a couple paychecks from being homeless.
Re:Interersing trend... (Score:3, Interesting)
Let's put it completely in perspective - Savannah's core could provide the equivalent energy of 29 million gallons of fuel oil, but that same core costs you as much as 50 million gallons of fuel oil... plus the increased costs of the crew required to operate it, the increased costs of the 'boiler' (reactor) required to 'burn' it... You aren't really saving any money.
Comment removed (Score:3, Interesting)
Re:Interersing trend... in 1985 (Score:3, Interesting)
Perhaps you missed the part where the libs, enviro-whackos, and "intellectuals" lobbied successfully against building any new reactors.
Why the hell should anyone research nuclear power generation technology when there was no way to build them and recoup the research costs?
You guys fucked it up big time in the 80s by shutting down nukes. Now you are all shitting bricks over "climate change" (not Global Warming anymore, is it?...at least not for another 10 years)
So the one thing that could have averted the latest end-of-the-world scenario is dead in the water because of a previous end-of-the-world scenario.
Here's what happened (Score:3, Interesting)
On December 12, 1952 a combination of mechanical failure and human error led to a now-famous power excursion and fuel failure in the NRX reactor at AECL Chalk River Laboratories. At the time NRX was one of the most significant research reactors in the world (rated at that time for 30 MW operation), in its sixth year of operation.
During preparations for a reactor-physics experiment at low power, a defect in the NRX shut-off rod mechanism combined with a number of operator errors to cause a temporary loss of control over reactor power. Power surged ultimately to somewhere between 60 and 90 MW over a period of about a minute (the total energy surge is estimated to be approximately 4000 MW-seconds). This energy load would normally not have been a problem, but several experimental fuel rods that were at that moment receiving inadequate cooling for high power operation ruptured and melted. About 10,000 Curies of fission products were carried by about a million gallons of cooling water into the basement of the reactor building. This water was subsequently pumped to Chalk River Laboratories' waste management facility, where the long-term ground water outflow was monitored thereafter to ensure adherence to the drinking water standard. The core of the reactor was left severely damaged.
This accident is historically important, not only because it was the first of its type and magnitude, but also because of its legacy to Canadian and international practice in reactor safety and design. Nobody was killed or hurt in the incident, but a massive clean-up operation was required that involved hundreds of AECL staff, as well as Canadian and American military personnel, and employees of an external construction company working at the site. In addition the reactor core itself was rendered unusable for an extended period. Environmental effects outside the plant were negligible, as was radiation exposure to members of the public. The health record of AECL and Canadian military personnel involved in the clean-up was scientifically reviewed in the 1980s (no significant health effects were observed).
Several of today's fundamental safety principles of reactor design and operation stem from the lessons learned at this formative stage of Canada's nuclear program, making Canada an early leader in this field. Among these were:
The accident also demonstrated that, due to a combination of redundant safety features, emergency procedures, and a level of inherent "forgiveness" (or robustness) in the technology, a major fuel-melt accident in a nuclear reactor can occur without significant environmental effects and radiation exposure to the surrounding population.
The NRX core was completely rebuilt, improved, and restarted within 14 months following the accident (the first time something like this was attempted), and the reactor continued to perform for another four decades before being retired.
As with the analysis of the accident itself, the clean-up and re
Re:Interersing trend... in 1985 (Score:3, Interesting)
Nuclear power, even when considering the one nuclear meltdown that we have had and all the deaths caused by it, has resulted in less deaths than any other form of power generation per MWh generated. Including wind and solar.
Secondly, Nuclear power in the only baseload power source which does not release significant amounts of CO2. If you believe that we need to reduce CO2 emissions significantly in the next few years to avoid catastrophic anothropogenic global warming, then Nuclear Power is your best currently available option.
Thirdly, Uranium is one of the most abundant materials in the earths crust - though it does cost quite a bit to extract. We have known reserves that will last us quite some time (though the same is true for coal).
Lastly, we are currently in the third generation of nuclear power plants, which now in the event of an emergency automatically shut down. i.e. it requires individuals to be pushing buttons to keep the reactor running and in a "dangerous" mode. If human intervention stops, the reactor ceases being dangerous (well excluding the radioactivity danger present in the fuel itself).
The problem with nuclear power is threefold - public perceptions (generally from irrational fear), high water usage and high long run marginal costs. Canada and France have shown us that nuclear power can provide a significant amount of baseload power relatively safely.
Re: piracy (Score:2, Interesting)
And then please bring back the navy patrols, the destroyers and the thirty-dozen-vessel-convoys. Because with the world today, you'd have so much more to worry about than some Nazis in slow U-Boats trolling the Atlantic. And no matter how fast that ship would be, radio transmissions within the enemy navy are faster.
One captured nuclear vessel could power a substantial part of most rogue state's economies all the while producing dirty bomb material or worse. And a small bomb hidden on the reactor could bring so much Allahu Ackbar to our ports it's not funny anymore.
So you'd better have a carrier battle group defending the thing OR an undocumented remote self-destruct mechanism, so you can wipe out the entire environment of whoever captures such a vessel. But then again, our own people might be a bit uneasy about these perceived future Chernobyls, whether that is reasonable or not.
With the world what it is today, these things would be efficient transport vessels AND readymade sea-going, self-propelled dirty bombs with free access to hundreds of large cities anywhere.
Thank you, but with some peaceful religions around, a ship like that is certainly not halal.
Re:Interersing trend... (Score:3, Interesting)
If the price of gas keeps going up the tanker trucks will probably be getting hijacked... If they're not already. At $4 a gallon a tanker truck could easily have 30,000 dollars worth of gas in it.
Re:Interersing trend... (Score:3, Interesting)
Re:Too bad (Score:2, Interesting)
Keep dreaming (Score:4, Interesting)
Guess what's different from 1999...
- the US dollar is worth ~40% less than it was in 1999
- there are over 2 billion people whose economy, and therefore demand for energy, is surging.
- there is an oil supply graph that, rather than increasing every year, has been roughly flat for the past three years (not coincidentally, the time when the price has skyrocketed)
Oil, in our lifetimes, is a finite commodity. It has an energy return on investment higher than anything else out there right now. There is still a lot in the ground, which is to say, we're not going to run out any time soon. But we have skyrocketing demand and a constrained supply. In the past, high prices have led to exploration and increased production. Well guess what. The large deposits of easy to retrieve oil have been found. We've reached a point of diminishing returns. Oh, there's still a lot of oil. The Saudis continue to pump almost 10 million barrels of it a day, more or less the same amount they've been pumping for the past 5 years. But in that time, they've been bringing new drilling projects online, in order to make up for declining production out of their old fields. And their oil exports have dropped by over 10% in just the past 2 years, due to increased domestic demand from a booming economy.
You can tell yourself it's all speculation, if it makes you happy. But the supply of oil to global markets is no longer increasing, while demand remains high, globally. And there are a whole lot of people in Asia who will gladly buy any oil that we don't.
It's the 1850's all over again. (Score:4, Interesting)
I think people forget that this is not the first time people have been looking for a new fuel for industrial purposes.
Up until the 1850's, lighting lamps were fueled by whale oil, and with the rapid decline in the whale population even by then there was considerable concern about what to substitute for whale oil. The discovery of using kerosene derived from crude oil about this period changed all that, and that was the foundation of the oil industry as we know it today.
Today, rapid changes in technology could make gasoilne obselete as a motor fuel within the next 20 years. The most important announcement was MIT's announcement of research into high-energy supercapacitors using carbon nanotubes back in 2006; that may just open the way for a drastic reduction in the size of the battery pack needed for a battery-electric vehicle (BEV), making it possible for a practical electric car that could carry four passengers in comfort yet go up to 400 km (248 miles) or more on a single charge, and the charge time for the battery pack would be a tiny fraction of even Li-On battery packs.
That same technology could make it possible to have electrical storage units from home size to city size that could provide power after being charged up by a solar cell array or wind turbine array. I can imagine a single house with a sun-facing solar cell array (now much cheaper thanks to nanotechnology) that provides power during daytime and charges a supercapacitor electrical storage unit for use at night.
In short, I see within 20-25 years most homes and apartment complexes with cheap solar arrays on their roofs and supercapacitor electrical storage units somewhere in the building.
Re:Interersing trend... (Score:2, Interesting)
Your forgetting that demand for oil will soon be driven not by the US economy but by the Indian and the Chinese economies. We may account for 25% of the worlds oil consumption but China accounts for almost 10%, and they are raising that very rapidly. They have openly said they want to provide the same standard of living that we enjoy here. China however has a little over 4 times as many people as we have and they are using less oil right now. what happens when they get up to using 50% of the amount of oil that we use per capita? That should mean they are using just about 40% of the worlds oil production then. We can not reduce our usage of oil enough to offset that. Even if we stop using oil that still means a the world would be consuming 5% more oil then than now. And that is not even considering the billion people in India raising their standard of living to ours at this moment.
There are simply too many people in this world that have been sold on the American dream. Everyone wants a slice of the pie but no one realizes that there isn't enough pie to go around.
I'm afraid that no matter what we do here demand will not be reduced to see the price of oil drop because there are more people than just us demanding it.
Re:Yay, Pittsburgh (Score:3, Interesting)
Your sarcastic reply neglects to mention that most Americans are free to move around the country to find the jobs in their field, but most Americans aren't free to immigrate to India or China or Malaysia to keep their job.
As long as labor can't flow as freely as jobs can, there's a place for tariffs.
Re:Interersing trend... (Score:3, Interesting)
There's some debate about what's actually going on, but in the absence of significant evidence of hoarding, I tend to side with Krugman [nytimes.com] on this one. The data just don't support the speculation story. As somebody else said, it's like saying that the Giants won the Super Bowl because lots of people bet that they would. I think that we're looking at the real price of oil here.
Re:Missing assumption (Score:2, Interesting)
Yes. OPEC will decrease production soon. They will do this to keep prices high. They will also do this because they have no choice.
Currently only Saudi Arabia has any excess oil production capacity, and even this is illusory: most Saudi "spare capacity" is 'sour', high-sulphur-content oil that no one especially wants; the rest of Saudi "spare capacity" can only happen if they squeeze the Ghawar facility harder, which will cause (has already caused!) a reduction in ultimate recoverable in that basin.In other words, if Saudi Arabia increases production in 'sweet oil' they risk slitting their own throats by destroying their production capacity. Oil extraction works that way.
Yes, OPEC will certainly decrease production. All the more reason to abandon oil-based systems, the sooner the better. It's a pity this will result in billions of human deaths [dieoff.com].