[Il_Mostro]

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oil being produced is going to decrease by 1-3% per year

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This is the optimistic assumption. The pessimistic is more like 5-6%, meaning a halfing in a mere 15 years. What might give such large depletion rates is advanced recovery systems, which for example Matthew Simmons is arguing only makes it possible to produce the same amount of oil faster, meaning that when the peak arrives the shortfall will not be 1%, but more like 15% which we have seen in some areas.

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But lets say that through energy saving initiatives the western world reduces they oil use to 1990 levels or even just stops usage from increasing

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First of all, not that I'm not a "doomer". I do not belive we will se the fall of western civlization in the coming decades, but I do belive we will face a depression that might drag on for a few decades, forcing us back into a sustainable economy. And I belive that transformation will be very hard on many people, especially those who belive the current way of life is some sort of god-given right. "The American way of life is not negotiable" and bs like that.

So, what would such measurements affect the economy? An economy where there is a huge housingbubble in some areas, there are lots of people streched thin to manage morgages and what-not.