It's now a truism – among oil companies, and governments alike – that even in an age when we risk catastrophic climate change, and its attendant catastrophes such as we've seen in the Gulf of Mexico this week, oil exploration is an inevitable part of our future. It may be a truism, but is it true?

As former Shell CEO Jeroen van der Veer has said several times, the era of "easy oil" is over. This means that the bulk of the oil that is left to exploit is to be found in the tar sands and in ultra-deep water and other marginal resources, such as the Arctic. All of these resources are very expensive to produce, require long lead-in times to bring on-stream and, in many cases, have controversial environmental and social impacts that will cost more to ameliorate.

Even without addressing the social and environmental costs, the break-even point for these kinds of oil projects is close to the ceiling at which oil prices could be sustained by the global economy. At between $65 and $90 a barrel, the room for long-term profitability appears slender. With the global economy remaining in a fragile state and oil prices rallying, it's important to ask whether the economy can withstand further price increases, not to mention whether the climate can sustain further growth in carbon emissions.

Will the expense of bringing this oil to market mean that the sustained oil prices needed to produce the oil will also consistently drive the global economy back into recession?

At the launch of BP's most recent Statistical Review of World Energy in early June 2009, BP's chief executive, Tony Hayward, said that as the oil price went over $90, consumers "began to change their behaviour" and that there was significant "elasticity of demand above $100 a barrel". In other words, if it costs too much, we can't – and won't – buy it.

The difference between the recovery periods following previous oil shocks and the current one is that a significant proportion of today's oil demand is in permanent decline. This particularly applies to developed countries where demand for oil is past its peak. In other words, this recession has triggered demand destruction, not demand suppression.

It's possible the day of "peak oil" has arrived – but not in the way everyone expected. Instead of peak oil, we're looking at a peak in demand for oil. The oil age won't end tomorrow, but the idea that it will go on for ever – with its attendant catastrophes and tragedies – is seriously in question.

Against this backdrop, the economic case for investing in clean technology becomes as clear as the environmental case. The faster we introduce efficiency in the transport sector, making better cars that use less fuel, adopting cutting-edge hybrid technology and pushing vehicle electrification, the faster the oil industry of the last century will be replaced by the cleaner, safer and economically more sound industries of today.