Peak oil?
This is the issue David Rosenberg raises today. But this time, the chief economist of Gluskin Sheff + Associates says, it’s not about supply, but rather demand.

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Mr. Rosenberg cites a recent Economist article – it’s titled “Yesterday’s fuel” and comes with a cute illustration of a dinosaur holding a gas pump handle – that says demand has already peaked in wealthy nations while auto industry technology makes ever greater gains.
“In this case, it is about demand, not supply, and the implications are none too positive for crude prices going forward but this is all very good news for profit margins in the manufacturing and the aggregate costs curve in the world’s industrialized economies,” Mr. Rosenberg said in a report today.
“With the world still saddled with extremely challenging debt issues, it is nice to at least talk about one file that should help spur on growth in overall income and demand.”
Here are seven points from Mr. Rosenberg:
1. Oil demand has declined in the industrialized world since 2005. The International Energy Agency now projects global demand at 97 million barrels a day, down 13 per cent from the 112 million projected about 15 years ago.
2. Oil subsidies are falling, notably in producing nations, “offsetting natural demand growth from the emerging markets.”
3. Technology to get the stuff out of the ground is evolving quickly. “Fracking along with new discoveries of conventional gas in short order has increased world reserves to 200 years from 50 years.”
4. By 2020, natural gas will displace up to 3.5 million barrels a day of oil. “As it stands, 40 per cent of garbage trucks in the USA and 20 per cent of buses now run on natural gas. [Caterpillar and General Electric] are apparently working on building natural gas powered railway trains.”
5. Auto technology has “shifted the demand curve.” Engines are more efficient and hybrids are growing more popular. “Cars are becoming more efficient to the tune of 3 per cent to 4 per cent annually, and if this continues, it will lead to global demand seven years down the road being some 3.8 million barrels a day below what would have otherwise been the case.”
6. Environmental initiatives in emerging economies will “act as a brake on demand growth.”
7. Nuclear energy is “staging a comeback.”
What does all this mean?
"A substantially lower energy price environment is singularly the most bullish underpinning to the global cost curve and real purchasing power (the U.S. in particular), which is very constructive for capital goods industries that are highly intensive, not to mention the positive impact on disposable incomes (and cyclical consumer spending as a result)," Mr. Rosenberg said.