I was looking forward to Jeff Rubin’s keynote lunch presentation at CropSphere in Saskatoon this winter.
Back in 2008, Jeff Rubin was the CIBC’s chief economist. That spring, oil was trading at US$118 a barrel, and Rubin predicted that the price would rise to US$225 by 2012. Higher oil prices, he explained, would put pressure on the Canadian economy, on our personal finances and on growth around the world.
In July 2008, oil prices peaked at US$145 per barrel. Rubin’s powers of prediction were looking great, and he got a lot of publicity. His 2009 book, Why Your World is About to Get a Whole Lot Smaller was about how the rising price of oil would change our lives, mainly as a result of the increase in the costs of travelling and moving food and goods around the world. The book was a Canadian bestseller. In 2010, it won Canada’s National Business Book Award.
In 2012, Rubin’s next book, The End of Growth, again focused on high oil prices, and how they would make economic growth a thing of the past.
Between then and now, things have not exactly gone as expected.
On the day Rubin was scheduled to speak at CropSphere, oil had plummeted to US$30.44 a barrel. Low gas prices made it cheaper for farmers to travel to Saskatoon for the conference. The world has definitely gotten smaller for laid-off oil workers in southeast Saskatchewan, waiting for EI cheques and looking for new jobs.
So I was looking forward to Rubin’s presentation. I thought it would be a great opportunity to learn how someone with such a high profile behaves when they’ve been so spectacularly, publicly wrong. Would there be apologies? Would he start off by explaining why he was wrong or how his predictions had gone so far off track? Maybe he would talk about the perils of economic forecasting.
Boy, was I wrong.
Rubin strode out onto the stage like a rock star. There were three concert-style video screens projecting the video feed of his head in larger-than-life style. There was impressive green lighting.
And Rubin didn’t even mention those oil forecasts.
Instead, he started right in with a high-energy presentation about climate change. With all the confidence and enthusiasm of a guy who’s never been wrong in his life.
“Wow,” I was thinking to myself. “This guy’s got a lot of nerve.”
Not that having a lot of nerve is a bad thing.
That’s the saying isn’t it? Get right back on the horse. And we all do it, all the time. I find it hard to believe there’s a Grainews reader who’s bought fertilizer at the lowest price every year. Lots of farmers sold their lentils before the price went up, or didn’t plant any at all last year. Hands up — who’s never had to wish they’d bought more crop insurance?
Accurate forecasting is tough. Impossible, probably. And if you’re not going to have the guts to look past your past mis-forecasts and get right back in the cab of your combine after you’ve been wrong about something, you’re not going to last long in this business.
So good on Jeff Rubin. I learned more than I thought I might from his CropSphere presentation.
Three positive things
Since we’ve come this far, I’ll tell you more about the other things I learned from Jeff Rubin. After his talk about climate change, he also had three positive predictions for the Canadian farming community.
- Interest rates. Rubin predicts lower interest rates than today, but, even more reassuring, no risk of a run on interest rates like the one that he described as “devastating” to the farm community in the early ’80s.
- Lower Canadian dollar. Rubin expects that we’re going to see the Canadian dollar “fall below the 70 cent level,” and he doesn’t think the 65 cent range is “unreasonable.”
- Lower fuel costs. Perhaps, to the extent that natural gas prices are tied to oil, he said, this might lead to lower fertilizer prices.
With the possible exception of Grainews readers who own property in Arizona and are hoping to see the Canadian dollar back at par again, I’m sure we’re all hoping that Rubin is less wrong about these positive predictions than he was about the rising price of oil.
If you’re interested in more about Jeff Rubin, find his blog online at jeffrubinssmallerworld.com, or read his 2015 book, The Carbon Bubble: What Happens to us When It Bursts? which deals with oil prices closer to the ones we’re seeing today.
If you’re interested in more about “how to keep being a rock star after you’ve been wrong,” then look around you at every farmer in your neighbourhood. They’ve all been wrong, once or twice, and there they are — getting ready to seed another crop.