Various groups will continue to deny Peak Oil because to accept that oil is finite is to completely pull the rug out from under their entire construct of free markets and unlimited economic growth. To accept the reality of Peak Oil would turn their entire life upside down since Capitalism cannot exist in the energy constrained world coming at us full speed. And as you know, the resource constraints of our modern world with 7 billion humans, and 250,000 added every day, is not confined to just energy, but across the board with minerals, soil, fish, fresh water, etc.

So it comes as no surprise that we would have such a denial coming out of The American Enterprise Institute. If you do a quick search on the background of the AEI, then it becomes obvious why they would be using old-world, linear thinking to make sense of our present situation:

Some AEI scholars are considered to be some of the leading architects of the second Bush administration‘s public policy.^[7] More than twenty AEI scholars and fellows served either in a Bush administration policy post or on one of the government’s many panels and commissions. …AEI is the most prominent think tank associated with American neoconservatism, in both the domestic and international policy arenas.^[13]

Peak oil does not mean peak price. As I explained in an earlier post, Peak Oil: the Yoke on Future Growth, we are now in the world of a vicious cycle where the economy fluctuates with spurts of GDP growth which increase demand for oil and thus a rise in price. The consequent rise in price then dampens the economy which results in a decrease in demand and the price drops. This is the ‘rinse and repeat’ cycle we will see while riding the plateau of peak net energy, as explained by people such as Colin Campbell PhD:

…I’ve reached the conclusion that this industrial age that opened only about 200 years ago — started with coal which provided the energy which changed the world radically; provided the steam engine, the trains and everything that started to stimulate trade and industry and transport grew and that was followed by oil, as you say. And over the last 100 years or so we’ve seen the rapid expansion of oil that has just fueled everything that you can imagine.

But we are now more or less half way through the oil age and the production begins to go down and, as you say, once you reach the barrier of supply, the price goes through the ceiling, it prompts a recession, demand collapses, the price falls again and then the governments, who don’t really seem to understand what we’re talking about, they print more money out of thin air, make more credit available in the hope of stimulating consumerism and restoring past prosperity, but — and they meet a little brief success, but as they do, the demand for oil goes up again; it soon goes through the barrier and the price starts to surge. So the future price of oil is an interesting subject. And I would say myself that we’re talking about something in the range of $100-150 a barrel because if it goes above that, it just kills demand and you have growing recessions.

So I think you’re absolutely right. We have these, sort of, cycles of a little surge of prosperity followed by another recession. And we are entering the second half of the age of oil when this stuff just gradually declines.

Blackouts may occur in Greece this summer due to the acute problems it is facing in its energy flows:

Ekathimerini reported DEPA’s Haris Sachinis has advised the caretaker government that the liquidity crisis is so dire that the issue of a probable blackout should be considered a “special national emergency.”

DEPA[Greek Public Gas Corporation] is owed around €300 million by electrical energy producers, leaving DEPA unable to pay its own Turkish, Italian and Russian suppliers. Meanwhile Greece’s Public Power Corporation, DEI, is struggling to cope with hugely increased costs in its energy purchase bill. Athens News reported prices for natural gas and oil, which it relies on to produce electricity, have increased by 83 percent.

To compound the energy crisis Greece faces, the issue of oil imports is critical. Since the suspension of Iranian oil imports to Greece due to the EU embargo on Iranian oil, the debt-ridden nation is forced to purchase oil at premium prices, Ekathimerini reports.

Prior to the EU ban on Iranian oil Greece was largely dependant on the Persian state to supply crude oil on credit. Greece initially vetoed the ban on Iranian oil imports until it succumbed to pressure from its European partners, the majority of whom were not reliant on Iranian imports.

Now the bulk of oil imports are provided by Glencore and Vitol who charge a premium due to the risk. Ekathimerini reports that neither supplier would say if they would continue to supply oil to Greece in the event of a default and euro exit.

There can be no doubt that with our present way of life, which is extremely energy and resource intensive, we are somewhere over the arc of ecological overshoot. As we push the planetary boundaries past some unknown breaking point, there will be a convulsion of enormous magnitude in our complex and fragile, interconnected global civilization which will take out large chunks of the world population. Corporations have been on a land grab in recent years, securing dwindling resources at the expense of millions of subsistence farmers.