Degrowth, Expensive Oil, and the New Economics of Energy

Abstract

In order to grow, industrial economies require a cheap and abundant supply of energy, especially oil. When the costs of oil increase significantly, this adds extra costs to transport, mechanised labour, and industrial food production, among many other things, and this pricing dynamic sucks discretionary expenditure and investment away from the rest of the economy, causing debt defaults, economic stagnation, recessions, or even longer-term depressions. That seems to be what we are seeing around the world today, with the risk of worse things to come. Since crude oil production has been on an undulating plateau since 2005 while demand has increased, this has put huge upward pressure on the price of oil, and several commentators have drawn the conclusion that these high oil prices signify the end or at least the twilight of economic growth globally. If the world is to deal effectively with the ecological and economic problems it is facing, we urgently need to infuse a new economics of energy into our economic thinking and economic systems, both at the local and macro-economic levels.

Keywords: degrowth, peak oil, energy descent, voluntary simplicity, new economics, sufficiency