High Oil Prices Good for America, Environment

"Drill here, drill now"? Ha! Try "Build here, build now." The New York Times runs a highly informative article that describes how high energy prices are boosting American manufacturing, with the pleasant side benefits of helping the environment and (shout-out to my Sibby-peeps!) checking globalization.

How on Earth can $120/barrel oil be good for us?

• Tesla Motors planned to build battery packs for its new electric cars in Thailand, install them in Britain, and ship them to the U.S. This spring Tesla decided to save on shipping costs by building the batteries and cars together in California.
• "To avoid having to ship all its products from abroad, the Swedish furniture manufacturer Ikea opened its first factory in the United States in May."
• "Some electronics companies that left Mexico in recent years for the lower wages in China are now returning to Mexico, because they can lower costs by trucking their output overland to American consumers."
• "China’s steel exports to the United States are now tumbling by more than 20 percent on a year-over-year basis, their worst performance in a decade, while American steel production has been rising after years of decline."
• "[M]ore wood is now going to traditional domestic furniture-making centers in North Carolina and Virginia, where the industry had all but been wiped out."
• Low shipping costs made it feasible for global corporations to shift production to far-flung countries with crummy environmental regulations. Increased transportation costs mean more companies will find it just as cost-effective to stay in the U.S. and obey environmental regulations as to truck their goods back and forth across the Pacific just to get away from green requirements.
• For those of you really opposed to global free trade: a May study by Canadian investment bank CIBC World Markets "calculates that the recent surge in shipping costs is on average the equivalent of a 9 percent tariff on trade. 'The cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today,' the report concluded, and as a result 'has effectively offset all the trade liberalization efforts of the last three decades.'”

[All quotes from Larry Rohter, "Shipping Costs Start to Crimp Globalization," New York Times, 2008.08.03.]

But heads up: Rohter warns that if domestic production is about to become the new orange in global economics, the U.S. has some catching up to do. In the race to globalization, we've shed a lot of our manufacturing capacity and know-how. Even if corporations want to bring manufacturing back closer to home, they may have a tough time finding enough skilled manufacturing workers to do the jobs. Get ready for a surge, vo-techs!