2) Oil was and remains cheap (yes at $4 a gallon) because the energy return on energy invested (EROI--my thing) in getting it was very high and remains fairly high.
3) Nevertheless EROI is declining – this has many economic effects.
4) The EROI for any conceivable substitute to oil is far less than oil for the foreseeable future.
5) Hence there is no possible substitute, qualitatively and quantitatively, for oil.
6) We are using oil 4 to 5 times faster than we are finding it.
7) Therefore we are just using up our remaining oil reserves, faster or slower depending in part upon economic growth.
8) Increased drilling historically has NOT led to increased oil finding or production.
9) Food prices and availability, subprime mortgages and Wall Street are all tightly related to oil availability and price.
10) Discretionary income in the US is declining and is likely to virtually disappear in the future as more and more of the output of our society is dedicated to the dollars and energy that must be used to get the energy required to run the economy. We must plan for this.
11) Efficiency is important but over rated (long story). It is not a silver bullet.
12) Most oil exporting countries cannot lower prices much as their own population growth requires the oil revenues for public programs. The money does not go only for luxury.
13) All of these issues were laid out very clearly by geologists and ecologists more than 30 years ago but were suppressed by economists who believe too much in markets and technology. The world is finite, we must adjust accordingly.