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The Uncertain Future of Oil Demand | Jeff Rubin

November 21, 2014

The Uncertain Future of Oil Demand | Jeff Rubin.

At a recent investment conference sponsored by Royal Bank and Suncor I spoke about the likelihood that billions of dollars of carbon assets will never see the light of day. Contemplating the idea of stranded assets isn’t in either company’s interests, so both deserve credit for providing a discussion forum for a topic that’s going to become ever more important to investors.

After laying out my argument for why oil prices must fall in an emission-constrained future, I was asked a question that might seem straightforward on the surface, but in reality is anything but. Won’t falling oil prices always trigger a rebound in oil demand (and, by extension, an equally large bounce in carbon emissions)?

It’s a belief that many energy investors are likely clinging to these days. A 30 percent drop in global oil prices so far this year is stoking expectations that a big pick up in demand is just around the corner. In a world before climate change became a household term that may have been the case, but not any more.

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