Oil and energy prices will likely see a 10% correction in the next 24 months due to an excess in supply, according to economist Nouriel Roubini. Similarly, other commodities will likely continue to struggle.

Roubini spoke at an Economic Club of Canada event in Toronto on Monday.

“In the case of oil and energy, supply in the next few years is going to grow more than demand,” says Roubini. “There are lots of traditional fossil fuels and non-traditional fossil fuels [available].”

Although it is expensive to produce, there are deposits of shale gas and oil all over the world, says Roubini, in addition to the current energy boom in North America. Furthermore, there are several offshore discoveries being made throughout Latin America and sub-Saharan Africa.

Says Roubini: “From Mozambique all the way up to Kenya they’ve discovered lots of oil.”

Another factor contributing to the excess supply of oil and energy in the lessening of global geo-political risks in the world. There is less risk in countries such as Iran, says Roubini, and production could increase in Iraq if the regional situation does not deteriorate.

Conversely, while new supplies of oil and energy are found or made more accessible, actual demand is decreasing. For instance, demand from China and other emerging markets is on the decline as their economies grow at a slower pace than in years past. Meanwhile, emerging and advanced economies alike continue to invest in energy saving technology, said Roubini, thereby leading to less demand generally.

Roubini also remains bearish towards other commodities, such as metals, because of the increase in new discoveries. For example, traditionally most copper is produced in Chile, Peru and China, he says, however rising prices led mining companies to search for new deposits. When copper was discovered in other parts of the world, such as northern Zambia, the market was flooded and prices dropped.

Also, Roubini believes gold prices have declined “for lots of good reasons.” One reason is that investors can find gains in other assets, such as housing and equities. As well, there are currently fewer tail risks to the global economy, such as the financial meltdown, than in the recent past. “Luckily those tail risks today are much lower than they were one, two, three, four, five years ago,” he says, “and therefore gold is down.”