The basics still haven't changed

Occasionally I'll be at a social event and someone will make the following claim:

"Local production will be the norm of the future. All of the cross-country shipping and large-scale productions we're used to are based on cheap gasoline, and will go away when oil prices rise."

Honestly - my social life really does include elaborate localist encounters and rhetoric.

The fallacy here is the assumption that buying local conserves fuel.

The majority of fuel is used in the production of goods, not transportation, and local production is less efficient. Even ignoring that, it's a bogus assumption that a fleet of pickup trucks going 15 miles is always more efficient than a tractor trailer going across the country, as George Mason University's Don Boudreaux recently wrote.

The activists are claiming that only transportation fuel counts, and even those numbers are against them.

The entire notion that mere petroleum prices will throw everything we know about production out the window is cringe-worthy. I'm reminded of something Paul Krugman wrote in Pop Internationalism:

"Pop Internationalism proclaims that everything is different now that the United States is an open economy. Probably the most important single insight that an introductory course can convey about international economics is that it does not change the basics: trade is just another economic activity, subject to the same principles as anything else."

Every few years some demagogue proclaims we have to throw everything we know about economics out the window. Things are different now, they say, and we need to update the textbooks.

But those same textbooks they claim to care so much about never graced their bedside tables. They are throwing out ideas that they never understood.

I anticipate rising fuel costs to be a temporary problem. It may end up lasting for a few decades, but economic history suggests that we'll just end up finding a new energy source, like we did after whale oil peaked in the 1840s.

So what will rising oil prices actually do to local production? Since local production and transportation are both fuel hogs, the price gulf between local and regular goods will continue to widen. Unless the market is interfered with (subsidies, tariffs, localist activism) than there will be less local production in the future, not more.