Jevons paradox

The Jevons paradox was discovered in 1865 by British economist William Stanley Jevons. By studying the effects of steam engine innovations made by engineers such as Thomas Newcomen and James Watt, he found that the increases in efficiency that they created actually increased consumption of coal rather than decreasing it, as it became more economical for people to run them and thus more steam engines were being used. This could in theory also be applied to many modern technologies, such as cars; more fuel-efficient cars may result in increased consumption of oil as they would allow people to travel more often and in faster vehicles.

Why this matters
It is assumed by some (particularly "free market" fanboys) that issues such as global warming and peak oil will be solved by new technologies which will allow us to do all the things we do now but with less energy consumed, without ever having to change our behavior at all. While it would be nice to share their optimism, unless we replace fossil fuels with other energy sources (which in turn could simply result in us running out of the fuels we replace them with; peak oil may simply be replaced by peak uranium, and even renewable energy sources require finite resources in their construction), we cannot continue forever increasing our consumption of energy and not expect to eventually face environmental or economic disaster. Basically, there is actually a point where the substitution effect is insufficient and when intervention may be required.