How can this be?

From my graduate economics textbook:

"Should we be taking steps to limit the use of these most precious stocks of society's capital so that they will still be available for our grandchildren? … Economists ask, Would future generations benefit more from larger stocks of natural capital such as oil, gas, and coal or from more produced capital such as additional scientists, better laboratories, and libraries linked together by information superhighways? … in the long run, oil and gas are not essential." (p. 328, ECONOMICS, Paul Samuelson and William Nordhaus)

Because the 'rules' that governed the first half of oil were 'made up' under conditions of plenty, and the same 'formulas' will not work when basic goods become more scarce. But economics wasn't designed with its own demise built in - there is no natural transition to 'something else' built into the discipline - only continued growth and utility for more. The practitioners of modern Walrasian welfare economics just assume that resource shortages will be met by technology and new substitutes. A graph of US oil production shows pretty clearly that price and technology did little to change the production profile, and we are more dependent than ever on liquid fuel to supply basic goods.

Every major corporation and government entity has high level and well paid economists repeating the false rationales underpinning modern economics - which even if you ignore the now countless examples disproving the demand side assumptions of humans as rational actors, you are still left with basing economic decisions on fiat money, which is ultimately an abstraction that has worth because we say it does. Economists are not trained in biophysical principles. I sense that just now, finally, some of them are starting to scratch their heads wondering where all these resource needs for water, natural gas, oil, food, etc are going to come from - but concepts like net energy, sadly, will likely remain in obscurity/academia until they can be analyzed in the rear view mirror, e.g. history.

Here is a recent Scientific American article with an interesting take on the false foundations of neoclassical economics, "The Economist Has No Clothes