While some refer to peak oil demand as a symptom of transition from fossil fuels to renewables, Nadler explains that peak demand is more a function of forced austerity measures. According to Nadler, peak demand is essentially the same as demand destruction caused by high prices.
Peak demand will be a reflection of conditions in developed nations rather than developing nations. This is because developed nations are built on incumbent infrastructure that is energy inefficient. Said another way, per capita requirements are much higher in developed nations: a soccer mom in Utah drives her SUV to run daily errands, while the mom in Asia (Asia being one example of a developing region) is willing to take public transport, scooters or bikes. Therefore, the energy required to perform the same activities in Asia is far less. For this reason, economic growth in developing nations can continue despite high energy prices. Developing nations have a built-in buffer to cushion the blow from rising energy prices.
Consequently, rising energy prices will put developing nations at a competitive advantage over developed nations. OECD countries (that also happen to be heavily indebted by unsustainable future and present fiscal obligations) will struggle to operate using inefficient infrastructure while non-OECD countries will thrive.
…peak demand will be the result of a permanent state of increasing depression in which non-OECD countries not only more than make up for the loss of OECD demand, but outbid them for the marginal barrel.
In a simple sense, when two entities (e.g. companies) exist, the entity with a higher marginal return on investment will survive and thrive while the other will shrink and die. The more competitive entity can attract capital, people, power, etc. away from the less competitive entity. We are already seeing this as Emerging Markets grow as a portion of world GDP. This will continue.
Of course, this shift could change if developed countries find ways to reduce energy use per capita to developing country levels. Unfortunately, any attention paid by developed nation governments to energy policy seems to be superficial. While the US discovers more ways to burden itself with liabilities, the country will soon learn that energy = currency and a country can’t print its way out of an energy decline.
Read Chris Nadler’s article: LINK
