Last summer the global economy suffered the financial equivalent of a devastating bird strike. Lehman Brothers went into one engine, AIG into the other. The open question now is whether there’s a prosperous way down. It’s not clear whether Obama and Geithner have the right stuff or not, but in fairness they are dealing with a hugely more difficult problem than that which faced U.S. Airways Captain Sullenberger.

Like many of you, we have been parsing the moment, browsing the Internet, reading Nouriel Roubini and Simon Johnson, trying to understand what the hell is going on. Against the backdrop of widespread economic carnage, the fact that global oil production likely peaked last summer seems almost irrelevant. The prevailing meme has long been that since oil created prosperity, peak oil would devastate it-but derivatives launched a pre-emptive strike. Of course, the financial geniuses who invented derivatives preferred putting their own money into T-bills. For more, listen to Terry Gross interview Frank Partnoy, author of Fiasco. The current issue of Rolling Stone also does a very solid job of dissecting the avarice of AIG and the various bailouts now underway.

What is the link between energy depletion and the financial implosion? Although we disagree with those who claim that peak oil caused the current meltdown (indeed, we aren’t even convinced it was the needle that pricked the housing bubble), a short essay in the New Yorker offered this useful observation:

“The world’s financial and energy crises are connected, and they are similar because credit and fossil fuels are forms of leverage: oil, coal, and natural gas are multipliers of labor in much the same way that credit is a multiplier of wealth… Fossil fuels have enabled us to leverage the strength of our bodies, and we are borrowing against the world’s dwindling store of inexpensive energy in the same way that we borrowed against the illusory equity in our homes.”

In hindsight, last summer was a moment of “peak leverage,” when the global economy broke apart under unanticipated G-forces like the space shuttle Columbia re-entering the atmosphere. For bloggers and experts and prognosticators, the astonishing events of the last 9 months are a cautionary tale. A large dose of humble pie seems in order. Last summer, as oil touched $145 a barrel, some experts were predicting a super-spike to $200. The F150 lost its place as the most popular “car” in America. Vehicle-miles traveled fell at the steepest rate since World War II. The cost of jet fuel caused air travel to plummet, and articles about “peak oil” were ubiquitous.

Now we find ourselves in a strange new universe of unsustainably low energy prices, where both oil production and credit seem to have peaked. Once-shunned super-bears like Roubini have been elevated to the priesthood. Jon Stewart skewers CNBC’s Jim Cramer. Oil is trading for $40-50 a barrel and drilling rigs are being mothballed at the fastest rate in American history. A simultaneous collapse has occurred in US natural gas prices. Unable to obtain credit, E&P companies are slashing their budgets; drill, baby, drill has given way to chill, baby, chill. In Venezuela and Russia, Chavez and Putin are also being forced to rethink their grandiose plans.

So… where to from here? Given falling investment, the global trend in oil production now seems irreversible, but debt, particularly US debt, is destined to grow rapidly. Indeed, it already is. The Frontline documentary Ten Trillion and Counting describes how the Treasury has borrowed $450 billion already this year–or about $5 billion a day. There’s been a lot of talk about whether Citigroup is insolvent or Bank of America is insolvent. Forget the banks! The truth is, America is insolvent. The next shoe to drop will likely be the US dollar, the greenback. If the Chinese had a convenient alternative to T-bills, they would have already cut up America’s credit card.

Stimulus spending in Europe, China, and the US is an effort to reboot the system, restart the engines of growth. Will these efforts succeed, or will the recession morph into a Depression? What if, as columnist Tom Friedman opined earlier this month, the crisis of 2008 “is telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically?” Nobody really knows. Predicting the future has a lot less allure to some of us today than it did awhile ago.

In some corners of the peak oil movement, there’s always been more than a whiff of smugness, of cocksure certainty. Maybe it’s time we all reformatted our hard drives, rethought our expectations. At last fall’s ASPO conference, most took it for granted that “energy was the original currency.” There was much talk about supply constraints; the other variable in the price equation-demand–was taken as a given. We understood we had a “deficit” problem, we just didn’t fully understand its character. Yes, energy (or carbon) invented prosperity, but credit fueled the supercharged housing bubble. Borrowed money and bizarre financial instruments most of us had ever heard of turned out to be a more dangerous threat to prosperity than imported oil.

Thank God for Exxon-Mobil and petroleum geologists. If Wall Street bankers are going to dedicate themselves to destroying wealth, then someone has to be able to create it.  As we try to reboot the economy, and as we wonder what form the new system will take, it may be that energy, more than money, will prove our most important form of “liquidity.” Apple touts the iPhone as a “killer app,” but the original killer apps-oil, natural gas, electricity-remain central to our civilization’s operating software.

We can see hints of this in President Obama’s energy strategy, which-though focused on carbon emissions-emphasizes energy efficiency and conservation. Saving energy will be one of the most important economic cards we can play in the years ahead. Given peak oil and our astounding indebtedness, playing that card is no longer optional, it’s mandatory.

It’s an open question whether prosperity, of the sort we enjoyed over the last 20 years, can be preserved. Depletion will make this uphill work, a Sisyphean task. As the global economy attempts to recover, another oil price spike seems inevitable. The New York Times and McKinsey & Company are already warning against it. There is open talk in that newspaper and elsewhere of Mexico becoming a failed state, as Cantarell continues its relentless, sclerotic aging.

In short, energy depletion has not gone away, it is hiding in plain view, and it’s hard to understand how it won’t grab the economy by the throat the minute it makes noises about growing again. Cheap gasoline will save a typical American family about $1800 this year-a welcome though under-the-radar-screen stimulus package-but how long can that last? We are, it seems, through the looking glass now, onto terrain incognita. Wish Team Obama well. For if, as we suspect, expensive oil makes a return by 2011, then we may enter into a troubled world that Colin Campbell could have labeled “down the down staircase.”

After the bird strike, it would be nice to think that America will crash land safely on a large flat river, with eager tugboats and ferries standing by, hot chocolate and blankets for all, but we wouldn’t bet our money (what remains of it) on that outcome.

Randy Udall and Steve Andrews are two of the five co-founders of ASPO-USA.