Welcome to Thoughts on the market. I'm Andrew Sheets, Chief Cross Asset

Strategy for Morgan Stanley. Along with my colleagues bringing a variety of

perspectives, I'll be talking about trends across the global investment landscape and how we put those ideas together.

It's Friday, October 9th at 2 p.m. in London.

Back in 2008, which at this point feels like it might as well be the 1800s, the investing world

was obsessed by the idea of peak oil. The thesis was that oil was becoming

increasingly hard and expensive to find while growth in the emerging markets was creating ever-increasing demand.

Between this mismatch and the view that higher prices would be needed to justify more production

of this harder-defined oil, prices soared.

On July 4, 2008, U.S. oil prices hit an all-time high of $145 a barrel.

Today the same barrel of oil is worth about $40 and instead of a peak in oil supply

commodity markets are now contemplating a peak in demand.

How we got here is a story of technology and environmental advocacy, and one that has material

cross-acid implications.

The technological shift was in shale oil. New processes

allowed producers largely in the US to dramatically increase output and do so much

more cheaply than things like deep water drilling. U.S. oil production which had declined steadily from 1985 to 2008 has more than doubled in the year since.

But a shift in environmental attitudes has mattered as well.

New technologies have improved energy efficiency,

while green investment is becoming a major policy theme.

At least 30% of Europe's new 750 billion euro recovery fund

will be spent on projects that aim to help the environment.

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