Demand destruction

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In the context of the 'peak oil' crisis theory, demand destruction is the reduction (or "destruction") of demand for oil and oil derivatives. The term is used by Matthew Simmons, Mike Ruppert and other prominent proponents of the theory.

In the absence of any means for replacing oil and derivatives of oil to generate energy, reducing demand would make it possible for those who could afford it to use what remains of oil. The vast majority of people used to getting by with less energy—those without a car, a home, those who are not consumers of air travel—are, in effect, the result of demand destruction, which does not result in more resources, but in fewer users.

The term "demand destruction" is widely used in the literature on the peak oil hypothesis to refer to the impact of rising oil and gasoline prices on consumption, which it implies will be price inflation and surrounding economic consequences.

In mainstream economics, reductions in quantity demanded in response to rising prices are taken as part of the normal working of the price mechanism and referred to as movements along the demand curve. Demand destruction, by contrast, refers to a shift in the demand curve induced by increased price.