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A woman pumps gas at a station in Falls Church, Virginia Dec. 16, 2014.Kevin Lamarque/Reuters

Perhaps peak oil is a credible theory, after all. Not in its original prediction of declining global supply, but rather as an outlook for a structural demand shock.

Due to disruptive technologies like the electric vehicle, which claims a growing share of the automobile market, projections for long-term oil demand are increasingly constrained.

And the industry's transformation is not likely to relent, said Anna Nikolayevsky, who runs New York-based hedge fund Axel Capital Management.

As a result, the Street's average forecast for oil prices is overly optimistic, Ms. Nikolayevsky said. "Rather than expecting a bottom at $50, like many on Wall Street do, we believe that $50 is the current [cap]."

Ms. Nikolayevsky spoke in Toronto on Thursday at the Capitalize for Kids investing conference, which raises money for the Hospital for Sick Children.

The consensus view is that oil bottomed out earlier this year and is in the midst of a slow recovery from an extreme global oversupply.

Many forecasts rely on depletion analysis and required break-even prices to conclude that crude oil must be on track to converge with historical averages.

But more powerful forces are gathering on the demand side, Ms. Nikolayevsky said.

The market for gasoline accounts for more than half of the global demand for oil, she said. And gasoline's long-term prospects are increasingly receding, primarily by the rise of the electric vehicle.

Tesla Motors Inc. is actively stealing market share from established luxury competitors, who are themselves beginning to invest heavily in electric. At the Paris Motor Show last month, Daimler said it will launch more than 10 Mercedes-Benz electric cars by 2025, which could account for up to 25 per cent of sales by that time.

The cost of production of electric vehicles is expected to fall dramatically in the coming years, as battery technology reduces the single biggest input cost by up to 70 per cent over the next 15 years, Ms. Nikolayevsky said.

In June, energy consulting firm Wood Mackenzie said electric cars are poised to reduce gasoline demand by 5 per cent over the next 20 years, and by as much as 20 per cent.

"Electric vehicles are not a fad. This is a permanent industry shift," Ms. Nikolayevsky said.

Other demand constraints are building through enhanced fuel economy standards, which have increased the fuel efficiency of the average vehicle by 22 per cent since 2007, she explained.

Even on the supply side, the Street's bullish outlook for oil is unwarranted – OPEC's production is at an all-time high, as is Russia's, Ms. Nikolayevsky said.

Even the Saudis seem to be repositioning for a future in which oil's stature is diminished, she said. "If the world's biggest producer is committing to diversification away from oil, where do you think they believe prices are headed?"

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