The Bizarro Oracle, Paul Krugman, strikes again. In his latest column he notes rising prices of oil and other commodities and makes a prediction:
"So what are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources."
Now, I haven't an Economics Nobel, but I'm pretty sure I learned in Econ 101 that while demand drives up prices, high prices lead to an increase in supply -- which may take the form of substitute goods. Krugman elides past the best example of this with respect to energy: oil from shale. He also neglects to mention the enormous natural gas reserves discovered in recent years.
I suspect that what's at work is here is less prediction than wish. Krugman, like others on the left, hope we give up on challenges like our energy needs and just make do with less. I call it an aesthetic of shared misery.