Adjusting the economy to the new energy realities of the second half of the age of oil

Our research indicates that, due to the depletion of conventional, and hence cheap, crude oil supplies (i.e. peak oil), increasing the supply of oil in the future would require exploiting lower quality resources (i.e. expensive), and thus will most likely occur only at high prices. This situation creates a system of feedbacks where economic growth, which requires more oil, would require high oil prices that will undermine that economic growth. We conclude that the economic growth of the past 40 years is unlikely to continue unless there is some remarkable change in how we manage our economy.

► The production of inexpensive conventional oil will continue to decline in the future (i.e. peak oil).
► In general, inexpensive conventional oil has a high energy return on investment (i.e. EROI).
► Economic growth tends to increase demand for oil.
► Increasing demand, in the current supply constrained system, tends to increase prices.
► High oil prices will cause economic contraction which will eventually lead to lower oil prices.