When in the late 1990s it was recognized that world oil production was likely to start declining early in the twenty-first century, petroleum geologists and other industry observers started talking and writing about the economic damage this event would cause. Serious economic consequences were a virtual certainty because, since the beginning of the industrial age, economic growth had required increasing quantities of fossil fuels. During most of the twentieth century economic growth increased the demand for oil, which had come to serve as our primary transportation fuel, the source of energy for many production processes, and the raw material for an ever-increasing range of industrial products. Unless satisfactory substitutes could be found quickly, economic growth was likely to stop. And without alternatives, economic decline—if not a collapse—was likely.

This chapter explores the relationship—as it is understood thus far—between the peaking of oil production, which started around 2005, and the current global recession, which officially started in late 2007. In the long run, global warming may turn out to be of more significance than the peaking of fossil-fuel supplies. However, it is clear that the peaking of global oil production has already had economic consequences, which will become increasingly serious as time goes on, and that the global economic recession is due at least partially to the lack of significant growth in world oil supplies since 2005.

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It seems reasonable to conclude the following concerning the peaking of world oil production and economic recession:
1. Although oil shortages and higher prices would have eventually caused major economic troubles, overextension of credit and overleveraging by financial institutions started the economic troubles a year or two earlier than was expected.
2. The substantial increase in the price of oil during the last eight or nine years, coupled with the 2008 oil price spike, certainly made a United States/ European Union recession global and much worse.
3. Global oil production has probably reached as high as it ever will. Any increases beyond 86 million to 87 million bpd are likely to be insignificant.
4. The global reduction in the demand for oil caused by falling economic activity and high oil prices has delayed significant declines in world oil production by two to three years.
5. The decline in oil industry investment caused by the current recession and low oil prices in the winter of 2008–2009 will lead to an even steeper decline in oil production than would have been the case.
6. Any increase in the demand for oil caused by improving economic conditions will cause much higher prices, which in turn will choke off the economic upturn.
7. It is unlikely that there will ever be an economic recovery in the conventional sense; the economic downturn is likely to continue in one form or another for many years, perhaps overlapping the economic calamities wrought by global warming.