Age of scarcity is upon us, economist says

Jeff Rubin has made some attention-grabbing predictions of late, including one that oil prices will reach $225 a barrel within four years and another that interest rates soon will head upward in Canada.

Rubin doesn't have a lot of company on both calls. But the chief economist and strategist at CIBC World Markets defended his views yesterday at a lunch with clients in Montreal.

Inflation is on the way back, he warned, because we're living in an age of scarcity. That's reflected in the surging cost of oil, minerals and agricultural commodities.

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One other prediction that begs debate is his assertion that China and other developing nations will have to pay a "carbon tariff" to account for their emissions of greenhouse gases.

With climate change a growing issue in the West, he says the U.S. is likely to emulate Europe by putting a price on carbon emissions. Under Europe's cap-and-trade system, it's around $45 a tonne.

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Imports from countries that do not play by the same carbon standards will be subject to a carbon tariff, he predicts. It will be a kind of countervailing duty against what he calls China's "carbon subsidy."

At a carbon-emission cost of $45 per tonne, the equivalent tariff rate on China's exports to the U.S. would amount to 17 per cent.

And that, he says, might be enough to end the off-shoring advantage and bring jobs back to North America.

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