[url=http://seekingalpha.com/article/241417-the-myth-of-peak-oil-demand-and-the-example-of-loma-prieta]Myth of Peak Oil Demand[/url]
The OECD bloc of Japan Europe and the United States have been downshifting their own demand for oil the past decade as oil prices have marched higher shifting oil supply to other parts of the world. This ongoing earthquake of relentlessly higher oil prices keeps removing tranches of oil demand from here in the OECD. And it’s never been rebuilt. This process has been underway for at least five years and shows no sign of reversing.
Oil and gasoline users in the developed nations did not freely decide to change their habits. Instead price has forced that change upon them. It’s not discretionary. Instead the demand-shift is best explained by two much more important much more revealing phenomena that began to show up in the last decade.
The first has been the [b]inability of global crude oil production to exceed its annual peak of 73.781 mbpd (million barrels per day) set back in the year 2005[/b]. That fact alone both simple and incontrovertible has been powerfully deterministic in reducing OECD oil demand growth through the mechanism of price.
But the more complex dynamic at play is that the older user of oil in the OECD runs into affordability barriers more easily than the new user of oil in the developed world. The reason is as follows: the old oil user historically consumes a lot of oil. The new user is coming online using much less.
The result is a supply shift–or if you insist a demand shift–of global oil supply from the OECD to the Non-OECD. Given present trends in this regard there will be a shift through 2015 as the slow-rolling “earthquake” of higher oil prices takes tranche after tranche of OECD users off oil thus freeing supply to the developing world.
OECD oil consumption in this projection slips below 50% and Non-OECD oil consumption rises above that level as oil supply shifts from the two billion older users of oil in the world to the five billion newer users of oil. There is no peak demand.
Peak demand as a discretionary choice is a myth. Only from an OECD-centric point of view does there appear to be peak demand.
As [b]oil is the most energy-dense energy source with its 5.8 million BTU hyper-packed into each liquid barrel no economy would choose freely to get off oil. The amount of labor that can be performed by oil even at current prices is extraordinary. [/b]
And this is precisely how the new user of oil is treating the resource with a more sparing uptake process that distributes oil’s dense energy more widely.
It should come as no suprise that the developing world is on the threshold of using more oil. 2008 was a landmark year which saw the energy use from all sources in the OECD finally matched by the five billion people in the Non-OECD.
While we cannot control the geology of oil production or the price of oil we can indeed make other choices and adapt. Given that the new user of oil in the developing world can afford much higher prices however [b]we are best advised to get on with adapting and adapting quickly. The price of oil will not wait and will only continue higher.[/b]