What would happen if researchers developed a new, cost-effective energy source that could replace fossil fuels like oil?

A decrease in prices and an increase in output-if we created a substitute for fossil fuels, there would be a positive impact on production that would be permanent for the most part. this translates to an increase in both lras and sras, which would increase the level of output and decrease price levels as depicted by the equilibrium points at the intersection of ad and sras below. (note that this does not represent an increase in ad because we have not moved to an entirely new ad curve; consumers will buy more because of the lower prices but that would imply an increase in the quantity of ad.)