Chrisale, at any market clearing price supply and demand are equal.

If you look at the historical data you will see world supply/demand increase by around 2% a year, so that is why the IEA says we need 2% more each year for BAU.

Since we haven't had anything like 2% a year growth in supply for around 4 years now, either the IEA is wrong or somebody somewhere in the world doesn't have BAU demand - most likely a bit of both.

All you can be sure of is the price you have to pay for fossil fuel - that seems to suggest somebody, somewhere, is being priced out of the market - most likely a poor guy, in a poor country, just using a small amount of fuel to try to feed his family - actually quite a lot of poor (and hungry?) guys if the demand destroyed is now ~8% of current usage.

Demand is not something you can really plot. You can plot how much oil is produced, or consumed by certain nations, but you cannot plot how much oil they want.

Darwinian, it's helpful to see this stated so succinctly. It bears repeating, often, as we discuss oil production.

Darwinian -

I'm glad you put it that way.

I have always had a bit of a hangup with the way that economists use the word, 'demand', almost as if it were a tangible phyiscal thing rather than an abstraction.

To say that, by definition, supply always equals demand strikes me as a form of circular reasoning and produces a definition of 'demand' that to me is not very helpful.

While it may not be correct with respect to economic dogma, there is a far more common usage of the word demand that I think conveys a lot more of what is actually taking place.

If say your household has historically used 1,000 gallons of gasoline per year for mostly utilitarian purposes, such as commuting to work and shopping, I think that in a loose rather than a purely technical economic sense it is legitimate to say that your household demand for gasoline is 1,000 gal/year.
Now if the price of gasoline increases ten-fold and you can no longer afford to drive, your demand for gasoline, as I am using the term, has not really gone down, it's just that you are no longer financially able to fulfill that demand.

So, I guess I can't seem to reconcile the economist's narrow definition of demand from the notion of normal wants and needs. Maybe a there's a better term than 'demand' for what I am talking about.

Anyway, it is always good to remind oneself of what is a tangible physical thing and what is an abstraction. As an example, the other day I got into an argument with a non-technical person when I stated that a horsepower is not a physical thing but rather an abstraction and that you cannot directly measure horsepower. I argued that you can measure the torque put out by an engine's shaft, and you can measure how fast it's rotating, and you can then mulitply those two numbers together to come up with another number that we call horsepower, but you cannot actually measure horsepower directly. I didn't get very far in getting this notion across and gave up trying.