You will probably have heard of the idea of ‘peak oil’, that the supply of oil is finite and the time is approaching, or has passed, when oil production will fall as reserves are depleted. While the debate has raged on the other side of the equation has largely been ignored, i.e. what is likely to happen to the demand for oil?
Peak oil ahead (Photo credit: Viktor Hertz)
The common perception is that the demand for oil is rapidly increasing and will accelerate as living standards increase in developing countries such as India and China. The fact is that this perception is wrong: the demand for oil in rich countries has been falling since 2005; at the same time there have been massive advances in automotive technologies and there is a real prospect of a shift from oil driven cars and trucks to gas and electric.
This is well argued in The Economist
This is another example of how focusing on one side of the argument can lead to completely erroneous conclusions.