Oil Costs Crimp Globalization

Biz 'goes local' to save transportation costs
By Matt Cantor,  Newser Staff
Posted Aug 3, 2008 5:03 AM CDT
Oil Costs Crimp Globalization
In this March 13, 2008 file photo, the Polar Mariner, an oil tanker ship, passes under the Harbor Bridge toward its destination at the Port of Corpus Christi in Corpus Christi, Texas.    (AP Photo/Paul Iverson)

The soaring cost of oil is taking a toll on globalization, pushing companies to save on transportation by producing materials closer to home, the New York Times reports. The search for cheap production had been key for many firms—but now oil prices, as well as stricter import rules and environmental concerns, are pushing some to go more local.

A recent study found that transportation costs were the equivalent of a 9% tariff, making them “the largest barrier to global trade today,” offsetting “all the trade liberalization efforts of the last three decades.” But the “globalization death watch” announced by some is jumping the gun, argued one expert. “Distance and trade costs do matter, but we are still in a globalized era," he said. (More globalization stories.)

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