Barron’s has an interesting article on oil prices. For a couple of months many have been speculating on whether the current run-up in oil prices constituted a bubble or just normal supply and demand pricing. Barron’s is now openly questioning whether the current prices are sustainable and as is usual with Barron’s they make a very good argument backed up with data.

To be honest, I have been on both sides of this fence but now, I think there is a real possibility we can see a pullback in the prices.

The Saudi’s are increasing production, viable alternative energy cars, even SUVs, are in the market and better ones are on the way, public sentiment has turned in favor or more domestic exploration, the question of speculation in the oil trading market is being asked more and more, and there are hints the dollar’s slide has at least settled into a range. But, none of that has me thinking analysts like those at Barron’s are right.

There is one significant data point that has me really thinking we may see a stabilization and maybe even a pull-back in the price of oil…

The number of vehicle miles traveled declined in March of this year on a year-over-year basis for the first time since 1979. For 29 years we have seen steady year over year increases in the number of miles Americans have driven.

It declined in March and April and May. What’s more the decline is getting sharper as the months go by.

In addition to this, the airlines are actually cutting capacity for the first time in a generation. These aggressive reductions are projected to cause a 5% reduction in jet fuel consumption.

All of this is combining to the point we are likely to see global oil consumption no increase this year. It has been steadily increasing at about 1% for years. The smart money is betting 2009 may actually see a real decrease in global demand.

So, have we seen the peak? Time will tell.