"When I look at the big picture I see a major change that has happened in the last few years. Capitalism requires consumerism, but whereas prior to 2000 we had generally low crude prices which supported consumerism we now have much higher crude prices which have been in an uptrend for the last 10 years. How can we have sustainable consumerism with rising crude prices? We can look to Asia and other emerging markets for growth but again oil prices will trump consumerism. I would be interested if you also feel that oil will continue to be the overriding factor for global growth.

David Fuller's view Thanks for introducing a very important topic, certain to be of interest to many readers. It is also a multi-faceted subject and one to which I am sure we will return on many occasions.

I regard the extent of western and particularly American consumerism in recent decades as a bubble, based on GDP growth helped by the cheap energy to which this email refers, unprecedented choice in terms of innovative consumer goods, envy resulting in a desire to 'keep up with the Jones', an entitlement mentality, and easily obtainable credit.

That bubble burst decisively in 2008. It will not be re-inflated to anything like its former heights for a very long time, in my opinion, despite the Federal Reserve's efforts. Despite low interest rates, house prices are no longer seen as certain to appreciate, creating the illusion of a money-generating ATM. 'Needs-must' has led to a cycle of deleveraging, with consumer confidence dented by flat or declining real wages, plus job insecurity due to slower GDP growth and higher unemployment. Energy prices are higher, as the email above points out. Lastly, Baby Boomers are retiring and older people are usually less prone to the 'shop 'til you drop' mentality.

However the western world is no longer the engine of global GDP growth. Following a two-century hiatus, that role resides with Asia once again, probably for ever given the region's vastly greater population. Higher energy prices are not the same headwind for Asia's rapidly increasing middleclass consumers because their salaries are rising rapidly. Also, unlike the USA, Asia's middleclass is largely urban based. This reduces dependency on the automobile which is more of a luxury item. Consequently, I do not think that oil prices will trump Asia's burgeoning consumerism.

As for oil here are two charts from the Library which subscribers may not have seen: WTI crude oil's historic price adjusted for CPI inflation, and the daily national average for US gasoline prices, for which we have considerably less back history. Both are currently headwinds for the oil-importing portion of the global economy and gasoline prices are much higher in most countries, not least in Europe, due to taxation.

Incidentally, Fullermoney does not share the current consensus that oil prices are going to move sharply higher. Having maintained a bullish bias ever since the climactic plunge at yearend 2008 and subsequent base formation, what we see today is some trend acceleration (weekly & daily) and overextension relative to the 200-day MAs, particularly for the Brent contract (weekly & daily). If we cut out the emotion and rely on our technical disciplines from The Chart Seminar, oil has seen a peak of at least near-term significance.

With Libya's production way down and unrest continuing in some Middle Eastern countries, the short to medium-term supply/demand balance is obviously delicately poised. Therefore in the event of a renewed upward break by both WTI and Brent oil prices we would look for somewhat higher levels.

However on a longer-term basis there are sound fundamental reasons for thinking that the world can avoid a serious energy crunch over the next decade or more, despite the near certainty of rising demand. This is due primarily to the US-led development of successful technologies for the comparatively inexpensive exploitation of shale gas over the last few years and more recently, shale oil.

To date, these technologies for the comercial extraction of massive unconventional gas and oil supplies are only just beginning to move beyond the USA. The methodology will be rapidly adopted over the next few years by many other countries with sufficient reserves of shale gas and oil. Fullermoney believes this will add considerably to global energy supplies (see also Eoin's analysis yesterday). Additionally, Asia is spearheading a major expansion of the nuclear power industry.