The cost of oil is putting a crimp in globalization, according to the
New York Times. As the cost of fuel rises, products shipped around the world become less profitable and it makes more sense to produce them nearby to consumers.
Locavores will already be ahead of the game, as food is one of the products that will start to be produced locally.
Production chains that no longer make sense include that of Tesla's electric-powered cars, whose 1,000-pound battery packs were made in Thailand, shipped to Britain for installation, with the partially-assembled cars shipped to the U.S. Now they'll be entirely made in California.
"Globe-spanning supply chains — Brazilian iron ore turned into Chinese
steel used to make washing machines shipped to Long Beach, Calif., and
then trucked to appliance stores in Chicago — make less sense today
than they did a few years ago....The cost of shipping a 40-foot container from Shanghai to the United
States has risen to $8,000, compared with $3,000 early in the decade,
according to a recent study of transportation costs. Big container
ships, the pack mules of the 21st-century economy, have shaved their
top speed by nearly 20 percent to save on fuel costs, substantially
slowing shipping times." --The New York Times
Other signs of the "neighborhood effect":
- Ikea opened a factory in the U.S. and more furniture is being made in America
- Electronics companies who moved to China from Mexico are moving back
- Chinese steel exports to the U.S. are falling while U.S. production rises
- Avocadoes in Chicago in January and bananas all year round will make less and less sense