Peak oil theorists have long been regarded by mainstream economists as the boys and girls who cried wolf. But just because the outlooks of mainstream economists failed to see the wolf does not mean it was not there. Rather, according to Roger Boyd's Energy and the Financial System: What Every Economist, Financial Analyst, and Investor Needs to Know, a rather large pack of wolves have been with us for quite some time now and our failure to deal with them has meant that they have grown in strength such that jointly they could derail the global economy.
To call Boyd a peak oil theorist, however, would be to reduce the complexity of his view for according to Boyd it is not only the availability of cheap oil that is in decline but rather what is in decline is the general availability of energy sources which provide a high amount of energy in return for energy invested. Indeed, Boyd's view revolves around a measure economists refer to as EROI, which measures the ratio between the amount of energy returned relative to energy invested. Thus we might better label Boyd a peak EROI Theorist for he believes that increasingly we will need to invest more energy in order to get energy back, as we have used up the vast majority of easily accessible high energy sources of oil, natural gas and to a lesser extent coal.
The importance of EROI is that to a large extent it determines the prosperity of society. The higher the EROI, the higher the prosperity levels, as we are able to direct more energy back into society rather than into producing more energy. According to Boyd, "our modern societies have become so hooked on nearly-free energy… with an EROI of at least 8 : 1 being required to maintain the high living standards and complex society to which we have become accustomed". Higher up the sophistication level Boyd cites that a societal EROI of up to 14:1 is required to support such things as good education, health care, and the arts. As the EROI continues to drop, however, it is not only the arts that we have to worry about, rather as Boyd's book illustrates the implications are potentially far reaching and devastating with the potential to reverse global prosperity and to do so rather unequally. . . .