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If the Carter era was a rejection of globalization, then what followed was a hasty return to it. Shortly after his election, President Ronald Reagan ended Carter's bloated synfuels subsidy program, killing Colorado's burgeoning oil shale industry and devastating the regional economy. Oil prices crashed and the drill rigs were cut up for scrap. After 1985, oil imports began increasing again, and the dream of energy independence again receded.
It wasn't just oil. The now-ubiquitous "Made in China" stickers found on nearly every item on shelves from Walmart to IKEA emerged in the '80s. In 1985, the U.S. imported less than $4 billion worth of goods from China, and had only a small trade deficit. Today, Americans spend $364 billion each year on Chinese goods. Globalization took other forms, too. In the 1970s, American-based multinational corporations had already been spreading Coca-Cola, capitalism and consumerism to the rest of the world. In the 1980s, the rest of the world returned the favor, so that by 1990, the U.S. was not only home to most of the world's multinational corporations, but was also the largest host country for outside investments.
The flight abroad was good for corporate profits, American consumers, and the West's environment (if not for workers, whose real wages flatlined in the '80s). It also fueled Asian economies, most notably China's, where manufacturing jobs and economic reform have spurred the largest migration in the history of the world. At a blistering rate, a nation of land-based farmers is becoming a nation of urban, wage-earning, capitalistic consumers. Last year, the number of millionaires in China topped 1 million, putting it third after the U.S. and Japan.
Chinese automakers sold 18 million vehicles in 2010, more than any country in history. In 2005 alone, 70,000 new supermarkets were built in China. Over the past decade, hundreds of thousands of kilometers of rail lines and highways have been constructed, along with dozens of big dams and enough wind power facilities to make Wyoming's vaunted wind boom look like a child's pinwheel. China's per capita energy use remains about one-fifth of that of the most gluttonous consumers in the world (in the U.S.), but the average Chinese person uses twice as much energy as he did seven years ago. Multiply that by 1.3 billion people, and you've got a dizzyingly steep upward curve—last year, China surpassed the U.S. as the world's biggest consumer of energy.
Starting in the 1990s, China's internal natural resource production could no longer keep up with its own demand, so it started shopping in the global market. Today, China gets about 1,000 times more oil from foreign suppliers than it did in the early 1990s. Ditto for scrap metals and waste paper and pulp. The country went from supplying copper to the global market to being one of its biggest customers in the 1990s, and helped drive world copper consumption from 12 million tons in 1998 to almost 16 million in 2009, according to the U.S. Geological Survey.
"There is no historical antecedent" for the current emergence of China, India and former Soviet-bloc countries as major players in the global economy, Fed Chairman Ben Bernanke told the Federal Reserve Bank of Kansas City's economic symposium in 2006. The symposium took place in Jackson Hole, Wyo., which lies about 200 miles—and many demographic worlds away—from Douglas. "Columbus' voyage to the New World ultimately led to enormous economic change, but the full integration of the New and Old Worlds took centuries," Bernanke said. "In contrast, the economic opening of China is proceeding rapidly and seems to be accelerating."
Western towns sprawled
The factors influencing global commodity prices are varied and complex, and direct cause-and-effect relationships are hard to come by. Weather events, geopolitical tensions, the value of the dollar, fluctuations in OPEC supplies and speculation can ripple through the market chaotically like jiggling flies caught in a huge spider web. The echo of a popular uprising in the Middle East, for example, can resonate in the oilfields of Wyoming, despite the fact that the U.S. gets more oil from Canada than from the Persian Gulf. It would be foolhardy to claim, then, that any one nation is the prime mover of commodity prices worldwide. The U.S. remains the web's biggest spider. But China accounts for 50 percent or more of the increases in global consumption of many commodities over the past two decades, according to the USGS and the 2011 BP Statistical Review of World Energy.
China's rising influence became noticeable in the 2000s. Between 2003 and 2008, copper prices jumped fivefold, and Arizona's mining industry—driven by copper—added 5,000 jobs. Proposals to open and reopen mines sprouted West-wide. Vince Matthews pulls up a chart showing a nearly 1,000-percent increase in molybdenum prices between 2003 and 2008, reflecting China's demand. Then he displays a photo of the people of Leadville, Colo. celebrating on the streets as a gargantuan new piece of machinery for the soon-to-be-reopened Climax molybdenum mine passed through town in 2008.
Asian demand also helped jumpstart a stagnant domestic oil and gas industry. In 2003, oil prices began their long steep climb, pulling natural gas prices along for the ride, and drill-rig counts mimic the upward swing. Once-small Wyoming towns sprawled outward, their hotels filled with contract workers. Colorado's natural resource sector jumped from a $2 billion industry in the late 1990s to a $12 billion industry in 2006, 50 percent larger than the tourism sector.
For a time, the "New West" amenities/ growth economy that had emerged in the 1980s kept pace with the reborn Old West extraction economy, competing with it for housing and workers. (Fast-food joints near the gas patch had to fork out $300 bonuses just to get people to flip burgers.) It was a moment in history when not only real estate agents, construction workers and roughnecks could get rich, but also peddlers and thieves of scrap metal, which had become one of the region's hottest exports, most of it going to China.
Sometime in late 2006, though, the overblown housing market started to collapse: By mid-2008, the West's real estate agents were going back to waiting tables, only to find that those jobs were disappearing, too. During the early stages of the crash, Chinese demand and commodity prices remained high. This kept the West's mines and rigs running even as the rest of the economy nosedived, but ultimately even China's economy stalled out. Commodity prices plummeted at Great Depression-esque rates. Drill rigs were idled and mining expansion plans put on hold. The New West was dead, and the new Old West had expired along with it. Or so it seemed.
Drill rigs rising like flags
In late 2008, as the Great Recession swamped the planet, the Chinese government launched a stimulus package that, as a portion of total GDP, may have been the largest such infusion of cash into an economy, ever. It kicked in quickly, and by the middle of 2009, China's manufacturing machine and infrastructure buildup were back on the upswing, taking commodity prices along for the ride. After reaching a record high this February, copper is now trading for about what it had during the 2008 boom. Oil prices continue to fluctuate for a variety of reasons (including fears that China's too-rapid growth will result in unmanageable inflation), but generally have followed the same trajectory as copper, hovering around and above $100 per barrel for months.
"Sharply higher prices for many raw materials are driving up the prices...of consumer goods and services, including gas and food," said John Williams, the president of the Federal Reserve Bank of San Francisco, in a speech this May. The culprit, he said, is "the rapid rebound in the global economy in the past year and a half, led by robust growth in emerging market economies (namely China and India), which display a ravenous appetite for raw materials."
Just as Matthews predicted, it's feeling a bit like the 1970s all over again, what with rising prices at the pump and an unstable Middle East. Oil shale is back, as is Dallas, the television series about frisky Texas oil barons. Everyone from President Obama on down is invoking energy independence; mothballed mining plans are being dusted off and drill rigs are rising again like American flags on the Fourth of July.
This boom, though, has some new twists that may ultimately have bigger ramifications for the West. During the last buildup, Western coal remained a domestic product, rarely if ever venturing overseas. (U.S. demand was strong enough to keep it at home.) Now, even Powder River Basin coal is becoming a global commodity, frustrating environmentalists and helping keep coal companies in the black.