The Global View

Is the post-cheap-oil, de-globalized future upon us?

President Barack Obama’s State of the Union address this week highlighted a lot of issues related to energy and sustainability, sandwiched between opening and closing nods to the military.

Which, when you consider the oil-rich hotspots where US armed forces have been engaged lately and how much fuel the military itself consumes, is also an issue related to energy and sustainability.

Coming from a leader who has emphasized the need for clean energy and advanced technology development throughout the first three years of his term, most of Obama’s speech wasn’t surprising in content. The tone in many parts, though, was more forceful than usual — almost in-your-face forceful — clearly a message intended for political opponents from the right wing.

So what do Obama’s words signal for the year ahead and, depending on the outcome of November’s presidential election, the four years following?

  • Early hints of de-globalization – The end of cheap oil, as economist Jeff Rubin has noted, will make all those cheap imported goods from places like China, Thailand and Vietnam … well, increasingly not so cheap for consumers on the other side of the world. While he didn’t pin the reason on oil, Obama did note in his speech that “it’s getting more expensive to do business in places like China,” and gave the example of one company — Master Lock — that has already de-globalized some and is back to running a manufacturing plant in Milwaukee at full capacity.
  • Speaking of China … — East-west relations don’t appear to be heading for chummier times, as Obama gave notice the US will be on the lookout for unfair foreign trade practices and intellectual property piracy. In addition to a new Trade Enforcement Unit, the president said, “There will be more inspections … ” That question raises the question about how China might respond, especially, say, in the area of rare earth minerals, which it has lots of and the US, Japan and Europe, not so much of.
  • Hunting for energy change — Not so much change of the “we’re-doing-it-differently-now” variety, but change as in the stuff you look for under the couch cushions when your wallet’s running on empty. Basically, Obama said, if there’s energy to be found somewhere, we’ll be looking to develop it: oil, natural gas, wind, solar, even the so-called “fifth fuel”: energy efficiency. The strategies he outlined include energy-efficiency incentives for businesses, more military use of renewables and, apparently, cleaner fracking (chemical-dependent hydrofracturing to free natural gas from underground rock formations).
  • The long-awaited “peace dividend”? — The first President Bush and Britain’s Prime Minister Margaret Thatcher promised more spending on other domestic needs after the end of the Cold War, and Obama suggest the post-Iraq War era offers a similar opportunity: “Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.” Given the current fervor for austerity and deficit-cutting, though, don’t hold your breath on this one.