'Peak Oil' Is Back, but This Time It's a Peak in Demand

Bloomberg Businessweek: Remember peak oil? It’s the theory—current about a decade ago—that global oil production would soon top out, leading to an inexorable rise in prices. Reports and books painted a grim picture of the effects this would have on the global economy; as fracking and seabed discoveries have unlocked new sources of the fossil fuel, most have dismissed peak oil as a flawed concept.

Now a pair of reports from energy-sector analysts say we’re approaching peak oil from the opposite direction: demand.

Citigroup’s commodities division’s Seth M. Kleinman and colleagues write that “oil demand is approaching a tipping point” (PDF) and should level off by 2020. The Boston Company’s Global Natural Resources Team was less certain and direct in its forecast (PDF), indicating that Asia’s consumption growth rate would have to double to make up for shrinking North American demand, and flattening demand is among likely scenarios for the future.

Such stances are at odds with the U.S. Energy Information Agency’s prognosis, which sees global demand growing from 98 million barrels a day in 2020 to 112 million in 2035.

Citi acknowledges this “broad consensus,” but points to “several developments” that “give reason to question the consensus and raise the possibility that the tipping point for oil demand may come sooner” rather than later...