Another quarter gone by. That makes three since the foundations blew out from underneath Lehman Brothers and six quarters since the start of the U.S. recession at the end of 2007. It seems like the negativity is lasting an eternity, and in terms of economic cycles it is. Since the Great Depression, which lasted 14 quarters, the longest recession has been five quarters long, 1981 to 1982. So, at six quarters and counting, the new tag line for our current malaise, “The Great Recession,” seems appropriate.

Of course, everyone wants to know when the bad dream is going to end, especially those in the energy business; the notion being that economic recovery drives oil consumption and therefore firmer prices. Certainly the market understands the power of that longstanding relationship that has addicted so many societies. Sensing turnaround and potential recovery, oil prices rose by an average $17 a barrel in the second quarter, or almost 40 per cent over the first quarter.

Recovering-economy-equals-higher-oil-prices is a mostly valid notion in a “peak oil” world; however, everyone in the oil business should be aware that the relationship between economy and demand for petroleum products is changing significantly in mature western countries -- a block of nations that I call the “Wealthy World.” In these 30 or so rich countries, where 46 million of the world’s 84 million barrels a day of petroleum are consumed, positive economic activity no longer has much if any impact on demand growth. Put another way, don’t assume that more oil will be guzzled in Wealthy World when the big economies of the United States, Japan and European Union break out of their six-quarter blue funk.

First, let’s be clear that we are not in a recession, but a contraction. Recession means a slowdown in growth, contraction means outright shrinkage. The wealth of Wealthy World economies, of which the United States is the largest, kept shrinking through the second quarter, making them poorer on a year-over-year basis for the first time since the Second World War. Consensus estimates suggest that when the second-quarter numbers get reported, U.S. shrinkage will be around two and three per cent, a major bout of wallet tightening that, not surprisingly, has led to unemployment of 9.5 per cent (as reported last week).

For oil demand, the distinction between recession and contraction is important, because GDP growth and oil consumption typically move in tandem, especially in industrializing nations. So an economic contraction translates into a fall in absolute oil consumption, not just a stunting of growth.

But there are more forces acting on oil demand than just the economy. Similar to what happened in the early 1980s, Wealthy World nations are at another “oil break point.” High prices, the fear of even higher prices, issues of energy security, environmental concern and technological innovation are all combining with aggressive policy implementations to "get off oil." These dynamics have led to a major dissociation between economy and petroleum demand in Wealthy World. As a resident of that world, you may not feel it, but the data show it clearly.

The most recent economic outlook put together by the International Monetary Fund (IMF) and other agencies suggests that the Wealthy World economy will start expanding again by 2011. I believe some of the 2.5 million barrels a day in lost consumption will recover, but, frankly, the probability is very low that Wealthy World oil demand will ever return to the near 50 million barrels a day of record consumption set in 2005. Today, the number is closer to 46 mmbpd and showing little sign of upward movement.

As discussed a couple of weeks ago in this column, U.S. vehicle miles driven have leveled off and new telecommunication and networking technologies are "dissolving distance," reducing the need for travel at the margin. Biofuels and other oil substitutes don’t represent huge volumes at the moment, but again at the margin they are having an impact. And that's the thing: a bunch of small bits at the margin translate into meaningful consequence. Of course, higher oil prices will certainly encourage society to flatten demand if not reduce it further.

Debating the absolute consumption numbers is not as important as recognizing the very real prospect that Wealthy World, once the enthusiastic consumer of more and more oil, has hit its peak.

That’s the prognosis for Wealthy World. However, there is also the Wanting World, the large collection of non-Wealthy-World countries with 5.9 billion people that are determined to achieve the standard of living that the mere 800 million citizens of Wealthy World enjoy. Led principally by energy-hungry countries such as China, Wanting World’s oil dependency is still linear, with a robust growth dynamic and scale similar to the Wealthy World’s in the 1990s. It’s there that the next chapter of the oil story will be written. For sure, the financial crisis has hosed down economic activity in the Wanting World, too, but unlike like here, Asian countries like China are already showing greater signs of early recovery. Last week, for the first time since the crash, business consumer confidence in China surpassed the important “50” mark, the level above which sentiment is net positive.

Really it’s a matter of scale. Sensing the growth potential of Wanting World, the jittery oil market will push prices beyond $100 a barrel again; I believe it’s only a matter of time and it's compounded by looming supply-side factors like production declines and geopolitics. Yet one also has to be honest about what’s happening over the longer term: if the oil story is being "made" on the other side of the world, it may equally be "broken" on this side.

Peter Tertzakian is an author and chief energy economist at ARC Financial. His new book, The End of Energy Obesity: Breaking Today’s Energy Addiction for a Prosperous and Secure Tomorrow, is now available.