Below you will find a blog post I wrote in June 2014 questioning the “expert” prediction of a well known and respected Canadian economist. His book sold incredibly well and I’m certain many people believed his predictions about oil prices heading for the stars and loaded up on oil stocks and oil company debt. A year and a half later, oil crashed and many oil stocks are down 75% from their highs. Do you need any more proof not to listen to people who are trying to sell you something?
Please enjoy the post.
The End of Suburbs? Who knows and why do we listen to “experts”? June 24, 2014
Jeff Rubin was the chief economist at CIBC until a few years ago. Recently, he’s been writing books about how oil will only become more and more expensive in the future and how that will change life in North America. Some things he predicts are an increase in public transportation, increased urbanization, the return of far flung suburbs to farmland, and fewer private automobiles as only the well off will be able to own their own car.
He has every right to express and profit from his opinion. We should be very skeptical of his conclusions because he is trying to predict the future and everything I’ve ever read about doing this concludes it is nearly impossible to predict the future. This is especially true when you are making very specific predictions like the price of oil, or what will happens to suburbs.
Specifically on suburbs, the conventional wisdom is suburbs are bad and are doomed to extinction in the near future. Search suburbs on Amazon and you’ll notice lots of negative books on suburbia. The reality is suburbs have existed since at least the Roman Empire and nothing lasts that long unless it serves a useful purpose and is able to adapt. I don’t what will happen to the suburbs but I’m pretty sure no one else knows either. If history is any guide, and it usually is, then the suburbs will adapt to meet any new realities.
One reality check: in an interview I read with Jeff Rubin, he mentioned that he didn’t think anyone would make the trip from Newmarket (the furthest northern tip of the Greater Toronto area) to downtown Toronto for work when gas gets more expensive. As a result, Newmarket may revert back to farmland. I did a quick calculation using fueleconomy.gov to see what it would cost to drive a Prius C from Newmarket to Toronto and back home again for 250 days (1 work year) if the price of gas were to double to $2.60/litre (about $10/gallon). Yearly cost would be $3200 which is expensive but still manageable. In 5 years, gas mileage will be even better; perhaps much much better. So maybe the SUV will go, but I’m not sure anything will happen to Newmarket.