basically, the “theory” is as follows:
1) that the increasing supplies of cheap coal and later cheap oil has fueled our economic expansion in the last several hundred years;
2) that in every system, oil production must peak at some point as happened in the USA in 1970;
3) that world oil production is likely to peak during the years 2005-2010;
4) that unless a genius invents a new way to make use of solar and wind or something else, that the declining oil production will put the world economy into a series of recessions, becoming a depression;
4a) that basically, in the absence of new major technological advances for new energy resources, that oil prices must rise until they have put a stop to world economic growth. Either oil prices will put a stop to world economic growth, or the Fed’s actions will do it first;
5) that the US is in great financial danger if such should occur because it is in far worse shape that it was in the last great depression, when we measure such things as mortgage debt, reserve requirements, etc.
6) because the peak oil phenomenon is underappreciated in the general public, the market is strongly overvalued at this time.

for more details from the pessimistic point of view, see
lifeaftertheoilcrash.net