I understand your point, but your scenario is comparatively optimistic. Oil demand is not just personal driving, it is also commercial usage, and, in case of sizable slowdown, or, even more, outright depression, this demand can drop very low. Besides that, people could be reluctant to drive a lot if they get job problems.
Deflation is another story, probably too big to discuss in this thread. One may only notice that commodities get deflated so far, not the dollar.

>Hello Ed,
>
>I see the senerio something like this:
>Since Oil is down below $80/Bl, there will be a effort amoung the producing nations to bring supply and demand into a tighter balance. This will take a bit for them to act and for the supply overhang to work through the inventory. People won't go out and buy big gas guzzlers, but will start driving more and not be as in a rush to unload their boats since prices have backed off. These two things along with the seasonal driving season next summer will once again make supplies tighter. On top of that, at some point the dollar will continue being deflated due to the presses gone wild.
>
>>>I've heard (sorry no link) that US oil consumption is down 9%
>>>
>>>Also, since americans are cutting back, China and Europe consumption is down
>>>
>>>In addition, I feel the dollar is being supported in way I don't fully understand, but that depresses the Oil price.
>>>
>>>I believe that oil will be back at record territory by next summer
>>>
>>>Bob
>>
>>How could it go up if consumption is down?