Wednesday, October 3, 2007

The Enormous Cost of Tranportation

An parathentical comment in Neil Reynolds' column in the Globe and Mail today brought home to me how difficult the issue of really controlling carbon emissions is going to be (not that I did not think it hellishly difficult already). The column focused on how Canadian purchasers are suckers given the inexplicably higher prices paid by Canadians as opposed to Americans in nearby communities for the same goods. In the course of these comments he notes the following observation:

The [Federal Reserve Bank of San Francisco] observed that, in a globalized economy, distribution costs can be quite significant. It noted that Mattel buys a Barbie doll from a manufacturer in China for $2 [U.S.], sells it in the United States for $10 - but keeps only $1 for itself. The company spends $7 to get the doll to the store shelf where it will be sold.

Thus 70% of the price of the final product goes to paying for transportation of the manufactured good. This of course understates the actual portion of the costs attributable to transportation since the oil needed to make the plastic undoubtedly came from the Middle East, Africa or Russian and not from the oil well situated in the factory's backyard.

This brings how the point (near and dear to the cliamte change naysayers and the Harperites) that really controlling emissions is going to come at a real cost. The transportation of goods -- say wood from Canada to China or tables from China to Canada -- over long distances means burning fossil fuels and a lot of them. You can bicycle to work a lot but unless you are willing to adopt a strictly buy local standard or dramatically reduce your buying generally you are still going to make a significant contribution to the carbon going into the air.

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