Dramatic changes in lifestyle are inevitable as people find themselves having to adapt to high oil prices by driving cars less, taking less trips by air and insulating their homes to save money on heating.
"There isn't a get out of jail card on this and no scenario for business as usual to continue," economist Richard Douthwaite told a conference in Dublin on energy prices and Ireland's future. "With oil at 60 US dollars a barrel, we are now at a historic turning point."
He said sustained high energy prices would make people think more about where they should live in relation to where they work, whether they really needed two cars and whether it would make more sense to take one longer holiday instead of several short breaks.
"We're going into uncharted waters here, and we will need all of our ingenuity to adapt to this," he said. Unless alternative sources of energy are developed to replace our heavy dependence on oil, "we can't expect year after year to get personally better off".
Given the steeply rising price of aviation fuel, which would have a "very serious effect" on cheap air fares, both Aer Lingus and Ryanair should reconsider expansion plans. He also said it was "nonsense" to be planning a second runway at Dublin airport. Mr Douthwaite said his Foundation for the Economics of Sustainability had sought meetings with Ryanair and Aer Lingus to discuss these issues. "We got a very prompt reply from Michael O'Leary saying he was too busy, while Aer Lingus didn't bother to reply at all."
However, he said it was clear that high oil prices would have a major impact on the tourism sector and suggested that the hotel industry should also be seriously reconsidering expansion plans based on the assumption that cheap air fares would continue forever. "There could also be a move away from the Ikea model of retailing because, if transport costs rise very considerably, it may not be so attractive in the future. Instead, we would have smaller, locally-based manufacturers that can produce goods at lower transport costs."
Mr Douthwaite said the higher cost of fuel was already being passed on to consumers in higher gas and electricity bills. This would have the effect of boosting demand for insulation materials and other energy-saving products, such as long-life bulbs.
"We all have to recognise that the past is no guide for the future. World oil output is at full stretch and we are now eating into our stock of previously discovered oil. The rate at which new oil fields are being discovered has fallen sharply. It is just not there," he declared.
Even the Corrib gas field, when it came on stream, would not supply half of the Republic's current demand for natural gas. "Ireland is very vulnerable because of our high dependence on gas for home heating and electricity generation. This raises a serious energy security issue."
Mr Douthwaite said future economic growth would be limited because "there won't be the energy to fuel it". If the price of oil rose to $120 a barrel, which was no longer inconceivable, people would have to work much longer to earn the money to buy a new car, for example.
