The oil markets are rattled. Iran’s closure of the Strait of Hormuz—through which a fifth of the world’s oil flows—have sent prices toward $90 a barrel, with Qatar’s energy minister warning they could hit $150 within weeks. Energy analysts are invoking “the mother of all disaster scenarios.” Commentators are drawing comparisons to the 1970s. The mood is grim.
But here is an uncomfortable question worth contemplating: What if expensive oil is not a catastrophe, but an inflection point that finally aligns economic incentives to address critical issues that decision-makers in the global economy have been ignoring for decades?
That is the argument that economic historian Carlota Perez has been making for years. And right now, with oil shocks back on the front page and the energy transition stalling under political headwinds, her framework urgently deserves renewed attention.
Technology revolutions and their discontents
Perez, whose landmark work Technological Revolutions and Financial Capital traces the long waves of capitalist development from the Industrial Revolution to the digital age, argues that we are living through a pivotal transition. Each great technological revolution—steam power, railways, steel, automobiles, information technology—follows a predictable arc: an installation period of financial speculation and infrastructure-building, followed by a deployment period in which society learns to use the new technology productively and broadly, with a dramatic reduction in income inequality and shared prosperity as a result.
We are, she argues, at exactly that inflection point with digital and green technologies. The installation phase—the dot-com boom, the shale revolution, the explosion of platform companies—is behind us. What comes next, if societies make the right choices, is a potential “golden age” of broad-based prosperity, grounded not in the extraction of physical materials but in the creation of knowledge, services, and sustainable production.
The catch? Getting from here to there requires making the old paradigm less attractive. And that is precisely where expensive oil comes in.
When high prices are the point
For Perez, the relative price of energy and materials is a steering mechanism for the entire economy. Cheap oil has historically facilitated mass production, long supply chains, suburban sprawl, disposable goods, planned obsolescence and carbon-intensive industry. It has made the incumbent model—stuff-intensive, energy-hungry, globally fragmented—far more economically competitive against alternatives.
Expensive oil changes that calculus. It accelerates the relative attractiveness of dematerialized products and services: software over hardware, streaming over shipping, local services over global supply chains, energy efficiency over energy consumption. It makes renewable energy, which has near-zero marginal fuel costs, look dramatically better against fossil alternatives. It incentivizes the kind of circular economy thinking—repair, reuse, and redesign—that the green transition requires.
Perez is explicit that she is not celebrating energy poverty or global supply disruptions. She is arguing that a world of persistently higher resource costs is more likely to generate the innovation incentives, the policy seriousness, and the investment reallocation needed to build a fundamentally different kind of economy—one that employs more people in high-value services, invests in intangible assets, and goes easier on the physical environment.
The irony playing out right now
The Atlantic’s Roge Karma has noted a bittersweet irony in the current moment: no president has done more to throttle clean energy development than Donald Trump, yet the oil shock his Middle East policy may be triggering could inadvertently accelerate the energy transition more than any amount of climate regulation would have. Columbia’s Jason Bordoff agrees: prolonged oil crises have historically been the most reliable forcing functions for energy diversification.
This is exactly what Perez would predict. Market signals, when they become undeniable, do what policy debates often cannot: they change behavior at scale. The 1973 oil shock sparked the first serious wave of energy efficiency innovation. The 1979 crisis accelerated it. Both produced more lasting change in energy consumption patterns than any amount of exhortation.
The difference now is that the alternatives are genuinely ready. Solar, wind, and battery storage have achieved cost curves that were unimaginable even a decade ago. Digital tools enable service-based business models at scale. The knowledge economy infrastructure—broadband, cloud computing, remote work capability—exists. What has been missing is urgency.
The dematerialization dividend
Perez’s vision for a green golden age is not a story of austerity. It is a story of transformation—from an economy organized around the production and movement of physical things to one organized around knowledge, care, creativity, and sustainability.
In this model, employment grows in services: healthcare, education, software, design, arts, and personal services that are inherently local, relatively low in energy intensity, and high in human value. Manufacturing does not disappear, but it becomes cleaner, more automated, more circular. Supply chains shorten. Urban environments become more livable. The pressure on ecosystems from extraction and waste declines.
None of this is automatic. Perez is clear that the transition to a golden age has never happened without deliberate policy choices—about financial regulation, industrial strategy, and the distribution of productivity gains. The installation phase always ends in a speculative crash and a moment of reckoning. We have had ours, arguably more than once. The question is whether the crisis of the moment becomes the impetus for genuine transformation, or simply another disruption to be muddled through.
What business leaders should take from this
For executives and strategists, the Perez lens suggests a reframe. The instinct when oil prices spike is to treat it as a cost problem: hedge the exposure, cut the energy-intensive activities, lobby for relief. That is the wrong frame if the signal is structural rather than cyclical.
The right question is: what business models become more viable in a world of persistently expensive physical inputs? Which of our activities depend on cheap energy in ways we have never fully noticed? Where are the opportunities in dematerialization—in selling outcomes rather than products, in building local rather than global, in investing in human capability rather than physical throughput?
Companies that used the 1970s oil shock to rethink their operations—Japanese automakers being the canonical example—did not merely survive the crisis. They redefined their industries. The companies that treated it as a temporary inconvenience found themselves structurally disadvantaged for decades.
The uncomfortable conclusion
None of this is to minimize the real human costs of energy price spikes. Households and small businesses that cannot easily absorb higher energy costs need support. Transition assistance is a genuine policy imperative. And geopolitical instability in the Middle East carries risks that go well beyond energy markets.
But for those thinking about the longer arc—about what kind of economy we are building and how we get there—the current moment may look, in retrospect, less like a disaster and more like an inflection point. A moment when the costs of the old model finally became undeniable, and the alternatives were finally ready.