Peak oil isn’t what it used to be.

That’s not simply because the theory of global oil supply peaking has been postponed courtesy of the U.S. production rebound, it is also because a second meaning to the expression is making a return, and that’s peak demand.

A fresh glimpse of demand for oil peaking came last week in the release of the April edition of Oil Market Report by the International Energy Agency.

While most interest was in oil supply, a natural focus given the glut which has depressed the price of oil, there was a more important factor in the report and that was the modest demand growth forecast from the agency.

Sluggish Demand Growth

As everyone knows when supply exceeds demand there is downward pressure on price which is exactly what’s happening to oil, adding weight to the question raised last month by fellow Forbes.com contributor, Mark P. Mills, when he asked “what if the world never again sees sustained prices for oil over $100 per barrel?”

That is a potent question, but it is one which is generally considered in the light of strong supply, especially from North America where oil producers have used technology to crack the code of tight oil by finding ways to force the release of trapped oil.

Pincer Squeeze On Price

Oil, however, is being attacked from two directions in what military strategists might call a pincer squeeze. Not only has supply risen, when Peak oil theory said it should fall, but total demand is not growing as fast as it once was and might be close to a peak.

No-one knows precisely what numbers will constitute peak supply and peak demand but that latest 1.1 million barrel a day rise in demand is a country mile short of the 3 million barrels a day increase seen in 2010, and well down on what might have been expected given the cold winter across the Northern Hemisphere.

Past attempts to nail down peak oil demand have seen a number worthy best guesses.

Peak Demand Is Coming

Two years ago the U.S. Government’s Energy Information Agency reckoned demand for oil would reach 98 million barrels a day by 2020, and then rise to 112 million barrels a day in 2035.

More recent estimates have pulled the peak demand year back to 2025 though the big price fall over the past 12-month encouraged Bank of America BAC -0.55% Merrill Lynch to shift the peak demand date back out to 2030.

Examined anyway you like there is a revolution underway in demand which will prove to be as important to the oil industry as peak supply because both economic forces, supply and demand, are absolutely fundamental to determining price.

While much has been written about the supply effect, largely because of geopolitical consequences in countries which rely on oil to balance their budgets, such as Russia and most of the Middle East, much less has been written about slowing demand and its effects on the market.

A Switch In The Oil Debate

But, some close observers of the oil sector have started taking a closer look at demand with Neil Atkinson, head of analysis at U.K.-based Lloyd’s List Intelligence saying in a media interview last week that after spending a lot of time thinking about peak oil supply we’re now talking about peak oil demand: “and that’s an extraordinary switch in 10 years”.

It certainly is an extraordinary switch but demand is part of the same oil-price equation which has always been an important factor, albeit one that was never questioned because of a common belief that oil demand would rise exponentially.

In fact, it is now recognized that oil demand in most advanced economies has already peaked thanks to the growth of alternative sources of energy, especially oil’s less polluting cousin, natural gas, while giant strides have been made in the efficiency of vehicle engines.

Emerging Market Demand Will Not Save Oil

Rising demand in emerging markets such as China and India is not completely offsetting the missing growth in mature markets, and might never do that because the emerging markets will be early adopters of oil-saving technologies.

Looked at through the decades and the fall in oil demand growth has been nothing short of spectacular with annual growth of more than 5% a year in the 1960s and 70s given way to demand growth less than 2% in recent years, and less than 1% in future years until a point of equilibrium is achieved when supply matches growth.

Royal Dutch Shell’s takeover bid for BG Group, while not described in these terms, could be a way for Shell to tackle the poor price outlook for oil by expanding exposure to gas.

It’s not stretching the point too far to say that gas is becoming the new oil and peak oil is a theory about demand, not supply.

www.forbes.com/