Peak oil, price fluctuations and globalization

Chen and Hsu have published a recent study about oil price volatility and its impact on global trade. A large annual panel data set covering 84 countries has been examined and the evidence shows that trade will be lower when oil prices fluctuate significantly. This supports the ideas presented earlier by Rubin in the book "Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization" that peak oil may in fact reverse globalization.

Abstract:
This paper examines whether higher oil price volatility causes a reversal in globalization. Using a large annual panel data set covering 84 countries all over the world from 1984 to 2008, we investigate the impacts of oil price fluctuations on international trade, namely exports and imports. We present strong and robust evidence that international trade flows will be lower when oil prices fluctuate significantly. We therefore conclude that oil price volatility hurts globalization.

Available from: ScienceDirect